FOR IMMEDIATE RELEASE CONTACT: Diane Landry King
May 12, 1999 (301) 838-5636

FIRST QUARTER EARNINGS MEET EXPECTATIONS

Rockville, Md. -- Mid Atlantic Medical Services, Inc. (MAMSI) (NYSE-MME), one of the largest managed care companies in the mid-Atlantic region, today reported it earned $ 0.14 per share for the quarter, meeting the consensus of analysts’ expectations.

Diluted earnings per share (EPS) on net income for the first quarter of 1999 was $0.14 on 42,544,686 shares outstanding, compared with $0.14 per share on 46,978,792 shares outstanding for the first quarter of 1998.

Revenue for the first quarter of 1999 was $313.2 million, compared to $289.5 million for the same quarter in 1998, an increase of $23.7 million. Net income for the quarter was $5.9 million compared with $6.7 million for the same period in 1998. Medical and home health patient services expenses for the first quarter of 1999 were $266.4 million, compared with $245.2 million for the first quarter of 1998, an increase of $21.2 million. Administrative expenses were $36.8 million for the first quarter of 1999 and $32.6 million for the same quarter in 1998.

"We are off to a good start and plan to continue our upward momentum," said Mark D. Groban, M.D., MAMSI’s Chairman of the Board. "Our core health care business accounts for the expected results. Remaining operationally profitable is the right way to increase shareholder value and this is where we will continue to focus."

"Our successful first quarter is a tribute to our talented and dedicated employees," Thomas P. Barbera, President and CEO remarked. "We are working to improve our partnership with our participating physicians. Working together with our physician partners will strengthen our regional franchise."

As of March 31, 1999, 36,900 physicians, specialists, and affiliate providers; 330 hospitals; and 11,800 pharmacies participated with the Company’s health care subsidiaries.

Total membership in all products was 1,812,800 covered lives as of March 31, 1999, up from 1,740,500 one year ago, an increase of 72,300 or 4.2%. Membership growth continues. As of April 30, 1999, the total number of covered lives under all managed care plans reached 1,821,000. Of that figure, 756,000 are HMO, indemnity, and ASO plan members; and 1,065,000 are PPO members.

Membership figures for individual product categories are as follows:

Product 3-31-99
Membership		 3-31-98
Membership		 Increase/
(Decrease)		 %
Change
HMO/Commercial * 706,400 651,700 54,700 8.4
HMO/Medicaid 30,400 28,200 2,200 7.8
HMO/Medicare 0 9,600 (9,600) (100)
ASO 11,000 11,000 0 0
Subtotal 747,800 700,500 47,300 6.8
PPO 1,065,000 1,040,000 25,000 2.4
TOTAL 1,812,800 1,740,500 72,300 4.2

* Includes indemnity members.

The Company repurchased 665,800 shares of its common stock for approximately $6.2 million during the first quarter. The Stock Purchase Program, with a remaining authorization of approximately $13.8 million, is expected to continue in the second quarter, as well.

Mid Atlantic Medical Services, Inc. is one of the largest managed care companies in the mid-Atlantic region, with its health plan subsidiaries covering more than 1.8 million lives in Maryland, Washington DC, Virginia, Pennsylvania, North Carolina, Delaware, and West Virginia. The company's Internet address is www.mamsi.com.

Selected Income Statement Information
IN THOUSANDS EXCEPT SHARE AMOUNTS
(UNAUDITED)

  1Q 1999 1Q1998
Revenue $ 313,198 $ 289,502
Expenses $ 304,127 $ 278,843
Income Before Taxes $ 9,071 $ 10,659
Diluted Income per Common Share $ 0.14 $ 0.14
Weighted Average Shares Outstanding 42,544,686 46,978,792

 

MID ATLANTIC MEDICAL SERVICES, INC.
IN 000’s EXCEPT PMPM AND PER SHARE
(UNAUDITED)

 

QUARTER ENDED

 

QUARTER ENDED

 

QUARTER ENDED

 
 

3/31/99

 

3/31/98

 

12/31/98

 
             

MEMBER MONTHS

2,192,104

 

2,043,883

 

2,135,791

 

MEMBER MONTHS – ASO

33,180

 

32,286

 

31,651

 
             

HEALTH PREMIUM

$298,661

 

$274,066

 

$290,376

 

PMPM

 

$136.24

 

$134.09

 

$135.96

FEE AND OTHER

5,464

 

5,095

 

5,096

 

LIFE AND SHORT-TERM

           

DISABILITY

1,949

 

1,605

 

1,825

 

HOME HEALTH SERVICES

4,909

 

5,025

 

4,356

 

INVESTMENT

2,215

 

3,711

 

2,975

 
             

TOTAL REVENUE

313,198

 

289,502

 

304,628

 
             

MEDICAL EXPENSE

262,489

 

241,042

 

256,412

 

PMPM

 

$119.74

 

$117.93

 

$120.05

MED LOSS RATIO

 

87.9%

 

88.0%

 

88.3%

LIFE AND SHORT-TERM

           

DISABILITY

887

 

993

 

1,018

 

HOME HEALTH COSTS

3,953

 

4,185

 

5,037

 

ADMINISTRATIVE

36,798

 

32,623

 

34,991

 

ADMIN EXPENSE RATIO

 

11.7%

 

11.3%

 

11.5%

LOSS ON RETIREMENT OF

           

COMPUTER EQUIPMENT

       

183

 
             

INCOME BEFORE TAX

9,071

 

10,659

 

6,987

 

TAX PROVISION

3,200

 

3,969

 

1,474

 

EFFECTIVE TAX RATE

 

35.3%

 

37.2%

 

21.1%

             

NET INCOME

$5,871

 

$6,690

 

$5,513

 
             

DILUTED EPS

$0.14

 

$0.14

 

$0.13

 
             

WEIGHTED AVERAGE SHARES

42,545

 

46,979

 

42,628

 
             

NET MARGIN

1.9%

 

2.3%

 

1.8%

 
             

MEDICAL CLAIMS PAYABLE

           

AT END OF PERIOD

$138,104

 

$115,712

 

$129,265

 
             

ADDITIONAL INFORMATION:

           
             

MEDICAID PROGRAM:

           
             

PREMIUM

$10,760

 

$8,638

 

$10,177

 

PMPM

 

$116.93

 

$104.92

 

$110.77

             

MEDICAL EXPENSE

9,759

 

6,985

 

8,664

 

PMPM

 

$106.05

 

$84.84

 

$94.30

MED LOSS RATIO

 

90.7%

 

80.9%

 

85.1%

             

MEDICARE PROGRAM:

           
             

PREMIUM

   

$14,067

 

$10,125

 

PMPM

     

$451.11

 

$460.92

             

MEDICAL EXPENSE

   

14,899

 

10,739

 

PMPM

     

$477.77

 

$488.90

MED LOSS RATIO

     

105.9%

 

106.1%

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, LLC, 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).

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