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

To: Tom Hua who wrote (962)	2/8/1998
From: Raptor	Read Replies (4) \| Respond to of 2068

I hadn't seen the Michael Price filings on the other HMOs recently. It seems to make the reaction in OXHP Friday seem a bit excessive, particularly if a hard look at the fundamentals is taken. This is important if no imminent MP takeover is in the works. - We aren't sure just how many members the company has. Remember, they have already reduced membership estimates once, and the computer systems still aren't working right. (Those 1099s sent to individuals last week, rather than doctors and hospitals). - As a result of the writeoffs taken and to be taken in the 4th quarter, the company is quite short of capital. The newspaper says the company is seeking $200 million. They would likely need closer to $400 million (adding to their exisiting $600 million capital to cover $4 billion in annualized premiums). Of course these numbers could change if loss estimates and/or membership figures change. - The company last week asked for 50-100% rate increases on their individual business. They may well be attempting to exit this business, but it certainly makes one wonder how underpriced their overall product was compared to costs. - These price increases lead to two possible scenarios. 1) losses on existing business are much higher than we think, as the computers gave no real chance of catching the problem sooner, and 2) future price increases will have negative implications for client retention and enrollment growth. - In sum, I expect the numbers to be revealed between now and the end of February to be truly ugly. Capital may well be infused into this company, but I believe it will be at much lower prices. The picture is extremely fluid and very murky. Investors may make money on a two year or however long you hope to hold, but in the short run, the short side looks fine to me. - Take only small comfort from Michael Price's involvement. He is no longer very active in day to day operations, and his lieutenants haven't shown a particular Midas touch in names such as Cityscape, Money Store and Advanta, to name a few less than timely investments in the finance area. And OXHP is a financial company now. Good luck to all.