<<So we should brace ourselves for a loss in the order of $150 for the 4th quarter which
has to offset against equity. Therefore the Wiggins statement for equity being around
$500m as on 12/31/97 seems OK to me.>>
Yep, although actually the number adds up to less than 500M,
rounding up gets you 500M. Remember that it doesn't at all
jive with the press release, though.
Re: income, if you take the 28M gain included in the 120M
loss figure, add them then subtract this sum from the 164M
charge you get 18M operating profit as OXHP's guidance
to analysts. This doesn't jive with
your $31M number from estimates. Maybe you aren't accounting
for in the red Medicare operations?
<<I try now to get a shot at the liability side of the balance sheet as of 12731/97: Going back to $475 per head
(avg. head count 1'996'300) for medical expenses for the 4th qtr, we arrive at a total of $948m before
charges or 948 + 164 + 36 = $1148m including the announced medical charges.>>
That is an appropriate way to do it. I had assumed that outside
of charges, AP and AR would grow by the same absolute amount (this is
fairly conservative). It is key to get an asset A/R side to your
calculation because AP seems to explode before charges in your
model. If AR doesn't keep up, that's a ST liquidity crisis.
In all this we should remember (from WSJ):
"Oxford's initial announcement about the added reserve said the
fourth-quarter loss would be about $120 million, compared to a $32 million
profit in the year-ago period. But the ink was barely dry on the press
release when Oxford Chairman Stephen Wiggins said during a conference
call that he expected an even greater loss, admitting the company would add
"probably $36 million or so for other non-New York subsidiaries, and then
there will be other dollars that we will add also."
Wiggins also backed away from giving guidance on 1998 earnings. This
comes slightly more than a month after he provided a worst-case earnings
scenario of $1.32 a share for 1998.
From the analysts:
"You have
to make assumption upon assumption."
"It's very hard to value the stock at this time,"
"There will likely be
further balance-sheet weakening over the next couple of quarters."
It is definitely hard to get a grip here.
I had missed that "other charges" comment initially, and it
doesn't fit in the model yet.
Good Investing,
Mike |
