Tony, I refer to your chat post with CIGNA: First of all, thanks that you took the time and called them. Assuming a similarily priced deal for OXHP, where do we come out?
OXHP has only HMO members? I'm asking - I never read anything about any "indemnity type". Please correct me if I'm wrong. Whichones are the more valuable ones? I would think the indemnity ones. So Healthsource was taken over at $1.6+bn for 3.1m enrollment or about $530 per member. OXHP has about 2m enrollment, that equals an approx. $1+bn take-over price or $13+ per share at 80m shares outstanding in OXHP... Doesn't sound too good, huh? Am I getting it wrong? Please comment!
The other view is that CIGNA paid 4 times book-value. Book value at OXHP will be out in a few days. As of 09/30, equity was $645m or about $8 per share. But OXHP will announce a loss of about $150m+ for 12/97, so true book is more around $480m or $6 per share. Then we would come up with a max. price of about $24 per share, probably less IMO because of all the unsettled stuff like Medicare/-caid, reserves, maybe more fines, 500 lawsuits, etc... Still not a very good outlook, is it?
How do maybe the other factors you cite affect any takeover of OXHP? How valuable is OXHP goodwill, the franchise? Nice plans for members are nifty, but if OXHP has trouble managing their cost, it may be not so good from a business point of view.
Please feel free to abuse me if I put up BS here. I consider it my 2c proposition only and work in progress.
Thomas |
