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To: Michael Burry who wrote (2727)	12/10/1997 11:52:00 AM
From: Michael Burry	Read Replies (1) \| Respond to of 78560

More on OXHP I'm reposting this from the OXHP thread for comments here by people that may see an error in my accounting. The way I see it (and remember my worry is a short-term liquidity criis, so I'm not looking at things like plant and LT assets - if it gets to the point that they are selling property and equipment to pay off people, the battle is lost anyway - bankruptcy would be preferable): 568M reserves as of 3Q end + 164M NY reserves +36M NJ and CT reserves = 768M in reserves expected at 4Q + 97M trade accounts payable = 865M due in less than 6 mos On the asset side, 659M cash and shrt term investments 354M premiums receivable (certified by KPMG) = 1013M So there is 148M in ST liq before charges for Medicare restructuring/closing operations, lawsuit costs, fines by regulators/NY Attorney General. If they are profitable, and IF these additional charges are less than $148M or so that is a good thing. But are they profitable? Est -120M loss (including one time gain of $18M) + 164M + 38M gives 62 M in operating profits. But it is not clear whether that extra 38M is included in the 120M loss projection. In fact, when pressed in the conference, Wiggins said he didn't know, but that the press release says 120M so "Let's just go with that." Sheesh. If that 38M is not included, we're looking at another disappointment and an operating profit of only 18M (and a total loss of $158M). This is only half of last 4Q operating profit. And they will be raising rates, closing certain operations, and probably cutting back on expansion plans, so further profit expansion is really up in the air. So where is Wiggins getting 500M in equity (and you can be sure he's rounding up)? Well, plant and equipment is included there. That is 145M less than equity at the end of 3Q. So he really is looking at a loss of about $145M or more all told (greater than the 120 in the press release - again, sheesh). This is in line with the discussion in the paragraph above that adds the 38M to the already announced loss of 120M. The net of it is management wasn't even realy honest in its press release - it was more candid with the analysts in the conference, but only on much prodding. I'll admit it - I feel burned. Other views more than welcome. Mike