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Biotech / Medical : Oxford Health Plan (OXHP)
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To: Premier who wrote (659)12/25/1997 2:00:00 PM
From: Michael Burry  Read Replies (1) of 2068
 
OXHP will have to raise capital.

IMHO, the talks of OXHP's death
are premature.

That's exactly the solution to an upcoming short-term
crisis - they've got to move some near term obligations
back a bit and get some breathing room. Would it make
an investment safer? Not in itself.

I can't imagine OXHP selling equity now; the more likely
route is debt. But it would be junky. As always, there is
never a good option when a company is in trouble; there is
only the lesser of two (or three) evils.

The safety comes now from the future viability of Oxford's plans
in the marketplace, and their ability to earn supra-normal
rates of returns in that marketplace. The commercial
plans are viable, but will the HMO environment still be able
to offer supra-normal returns? That's a question, not an
insinuation.

I still expect restructuring charges this Q or next (though
I can't imagine why they'd wait) for the Medicare operations
and other one-time operational costs.

Good Investing,
Mike
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