Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Oxford Health Plan (OXHP) -- Ignore unavailable to you. Want to Upgrade?

To: Thomas Haegin who wrote (362)	12/7/1997 3:28:00 PM
From: jeffbas	Respond to of 2068

Rising health care cost trends are inherent in the business and priced into the products. Earnings expectations per member would only be affected by this if the forecast built into pricing is different than that which is actually experienced in the future. I have a problem with $100 net profit per member. The last quarter"s report indicated about 2 million members and a run rate of $4 billion revenue - or about $2,000 per member. Also, that most of the growth was in fully insured business. I was in the fully insured health insurance business for thirty years with plenty of HMO experience as well. I think 5% of revenue after tax (100/2000) is too high. One exercise I would suggest is to add up earnings over the last say 3 years, including this recent loss, and divide by revenues over the same period. Under-reserving is equivalent to overstating earnings in prior periods - for all companies, but especially in this business where the charge is related to the ongoing business, as opposed to some business being discontinued. This will give a better idea of the historic profitability of the company.