MAMSI REPORTS POSITIVE THIRD QUARTER EARNINGS OF $0.10 PER SHARE

Released: November 12, 1997

CONTACT: Paul E. Dillon 301-294-3702

Rockville, Maryland,--Mid Atlantic Medical Services, Inc. (MAMSI) (NYSE-MME), one of the leading managed healthcare companies in the Mid-Atlantic region, today announced the results of its operations for the third quarter and first nine months ended September 30, 1997.

Earnings per share for the first nine months of 1997 were $0.18 per share on 46,849,087 weighted average shares outstanding, compared with earnings of $0.01 per share on 47,176,616 weighted average shares outstanding for the same period in 1996.

Revenue for the first nine months of 1997 was $835.5 million, compared with $841.0 million for the same period in 1996, a decrease of $5.5 million or 0.7%. Net income for the first three quarters of 1997 was $ 8.3 million, compared with $0.6 million for the same period in 1996, an increase of $7.7 million. Medical and home health patient services costs for the nine months ended September 30, 1997 were $722.6 million, compared with $748.7 million for the same period in 1996. Administrative expenses for the first three quarters of 1997 were $97.9 million compared with $89.5 million for the same period in 1996.

Revenue for the third quarter of 1997 was $269.9 million, compared with $288.0 million for the same quarter in 1996, a decrease of $18.1 million or 6.3%. Net income for the quarter was $4.7 million, compared with a net loss of $(4.7) million for the same period in 1996, an increase of $9.4 million. For the current quarter, medical and home health patient services expenses were $230.1 million, compared with $264.8 million for the same period in 1996. Administrative expenses for the third quarter of 1997 were $31.9 million, compared with $29.6 million for the same quarter in 1996.

Enrollment in MAMSI's health care plans continued to grow during the first nine months of 1997. Total lives covered under all of MAMSI's health plans is now 1,693,800, an increase of 18,300, or 1.1%, from September 30, 1996 and up 18,200, or 1.1%, year-to-date. Membership in MAMSI's HMO, Indemnity and ASO products stands at 681,800 at September 30, 1997, down 62,700 year-over-year due primarily to the Company's exit from certain Medicaid products during 1997. Membership in the Company's non-risk PPO stood at 1,012,000 at September 30, 1997, up 81,000 or 8.7% year-over-year. Additionally, MAMSI's provider network included 25,686 physicians, specialists and affiliate providers, and 267 hospitals at quarter's end.

Commented George T. Jochum, MAMSI's Chairman, CEO and President, "The results of the third quarter continue the quarter over quarter improvement that has been our goal. I believe that, with the improvement in our medical management, physician contracting and claims adjudication and audit systems, in combination with the premium increases planned for the future, MAMSI should continue to see improvement."

Selected Income Statement Information

(in thousands except share amounts)

(unaudited)

Note 1: Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: All forward-looking information or statements contained in this release are based on management’s current knowledge of factors, all with inherent risks and uncertainties, affecting MAMSI’s business. MAMSI’s actual results may differ materially if these assumptions prove invalid. Significant risk factors, while not all-inclusive, are: the possibility of increasing price competition in the Company’s marketplace; the possibility of state or Federal budget mandates that reduce premium levels; the possibility of increased medical expenses due to increased utilization, inflation or legislative mandates; and the possibility that the Company is not able to expand its Service Area as planned. Investors should review other risks and uncertainties contained in Company documents filed with the Securities and Exchange Commission.

Note 2: MAMSI is a regional holding company for health care organizations that provide comprehensive health insurance products and services including: M.D. IPA, a traditional HMO, and M.D. IPA Preferred, an open-ended version of the HMO; Optimum Choice, Inc., a non-federally qualified HMO; Optimum Choice of the Carolinas, Inc. (OCCI); Optimum Choice, Inc. of Pennsylvania (OCIPA); Alliance PPO, Inc., a preferred provider organization; Mid Atlantic Psychiatric Services, Inc. (MAPSI), a preferred provider organization offering managed psychiatric health care services; MAMSI Life and Health Insurance Company, an indemnity insurance company; HomeCall, Inc. and FirstCall, Inc., home health care companies; and HomeCall Pharmaceutical Services, Inc., a mail order pharmacy and home infusion services company.

Note 3: Mid Atlantic Medical Services, Inc. securities are traded on the New York Stock Exchange (NYSE-MME).