I ran across an article titled, 'Earnings Woes Push Oxford Shares off Cliff' in the 3Nov97 issue of National Underwriter magazine. Highlights include: "In July, a backlog of unpaid provider claims forced Oxford to settle with the New York Attorney General...to voluntarily extend cash advances of over $271 million to prevent financial hardship for physicians...In its latest disclosure, Oxford said ...it had overestimated revenues and membership while underestimating medical claims payments...the delay in the flow of information, particularily in respect to claims, could lead to a continued downturn in Oxford's earnings for the first half of 1998, since most of its Jan. 1 renewal book of business may have already been sold, said Arun Kumar, a director at Standard and Poors in New York. Many managed care concerns price Jan.1 renewals based on the latest pricing assumptions, and if loss ratios are higher than expected, Oxford won't be able to reprice until next year to reflect that experience, he said...After applying its capital adequacy model, Mr. Kumar said of the Oxford unit, "The level of capital on the balance sheet was below what they need, given the amount of business." Given the significant growth the company has undergone in the past few years, liquidity wasn't a strength as well, under a model scenario of huge unpaid liabilities, he said. (At presstime, Oxford officials had not responded to National Underwriter requests for interviews.)"
Technicals are all still bearish too.
Christopher |
