FOR IMMEDIATE RELEASE CONTACT: Diane Landry King
Wednesday, August 11, 1999 (301) 838-5636

MAMSI REPORTS 26% INCREASE IN EARNINGS
OVER SECOND QUARTER 1998

Rockville, Md. -- Mid Atlantic Medical Services, Inc. (MAMSI) (NYSE-MME), one of the mid-Atlantic region's largest managed care companies, today reported earnings for the second quarter and first half ended June 30, 1999. Year over year, net income for the second quarter increased 26%.

Diluted earnings per share for the first six months of 1999 was $.25 on 42,239,249 shares outstanding, compared with $.22 on 47,112,435 shares outstanding for the first half of 1998.

Revenue for the first six months of 1999 was $ 636.7 million, compared with $583.7 million for the same period in 1998, an increase of $53.0 million or 9.1%. Net income for the first half of 1999 was $10.4 million, compared with $10.3 million for the first half of 1998, an increase of $0.1 million. Medical and home health patient services costs for the six months ended June 30, 1999 were $545.4 million, compared with $499.2 million for the same period in 1998. Administrative expenses for the first half of 1999 were $73.3 million, compared with $66.4 million for the same period in 1998.

"These results continue the momentum we began in the first quarter," said Mark D. Groban, M.D., MAMSI's Chairman of the Board. "We are focusing on margin expansion, strong pricing discipline and improved fixed cost ratios to drive earnings. We are on track for a good year."

"Administrative efficiency, excellent service, along with competitively and appropriately priced products remain our key strengths," stated Thomas P. Barbera, President and CEO of MAMSI. "We have successfully recruited highly talented employees including three new specialized Medical Directors, a Senior Vice President for Hospital and Practitioner Contracting, a Human Resources Vice President, a Vice President for our new Physician Liaison Department and a Chief Information Officer. These key appointments, added to a sales force that's highly motivated to add and retain business, position MAMSI for a bright future."

Diluted earnings per share for the second quarter of 1999 was $0.11 on 41,933,811 shares outstanding, compared with $.08 per share on 47,246,079 shares outstanding for the same period in 1998.

Revenue for the second quarter of 1999 was $323.5 million, compared to $294.2 million for the same quarter in 1998, an increase of $29.3 million. Net income for the quarter was $4.5 million, compared with $3.6 million for the same period in 1998. Medical and home health patient services expenses for the second quarter of 1999 were $279.0 million, compared with $253.9 million for the same period in 1998. Second quarter 1999 administrative expenses were $36.5 million, compared with $33.7 million for the same period in 1998.

The Company's provider network numbered 37,718 physicians, specialists, and affiliate providers; 331 hospitals; and 18,527 pharmacies as of June 30, 1999.

Total membership in MAMSI's health plan subsidiaries rose to 1,825,300 covered lives as of June 30, 1999, up from 1,774,600 one year ago. Of the 1999 enrollment, 760,300 are HMO, indemnity, and ASO members; and 1,065,000 are PPO members.

Membership figures for individual product categories are as follows:

Product 6-30-99
Membership		 12-31-98
Membership		 Increase/
(Decrease)		 %
Change
HMO/Commercial * 714,200 681,800 32,400 4.8
HMO/Medicaid 35,100 30,900 4,200 13.6
HMO/Medicare 0 7,000 (7,000) N/A
ASO 11,000 11,000 0 0
Subtotal 760,300 730,700 29,600 4.1
PPO 1,065,000 1,060,000 5,000 0.5
TOTAL 1,825,300 1,790,700 34,600 1.9

* Includes indemnity members.

The Company repurchased 513,600 shares of its common stock for approximately $5.1 million during the second quarter. The Stock Purchase Program, with a remaining authorization of approximately $8.7 million, is expected to continue in the third quarter as well.

Mid Atlantic Medical Services, Inc.'s health plan subsidiaries cover over 1.8 million lives in Maryland, Washington D.C., Virginia, West Virginia, Delaware, North Carolina and Pennsylvania. It is one of the mid-Atlantic region’s largest managed care companies. Visit the Company's web site at www.mamsi.com.

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

  2Q 1999 2Q 1998 1st Half-YTD '99 1st Half-YTD '98
Revenue $ 323,530 $ 294,225 $ 636,728 $ 583,727
Expenses $ 316,560 $ 288,496 $ 620,687 $ 567,339
Income Before Taxes $ 6,970 $ 5,729 $ 16,041 $ 16,388
Diluted Earnings per Common Share $ 0.11 $ 0.08 $ 0.25 $ 0.22
Weighted Average Shares Outstanding 41,933,811 47,246,079 $ 42,239,249 $ 47,112,435

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.; Optimum Choice, Inc. of Pennsylvania; Alliance PPO, LLC., a preferred provider organization; Mid Atlantic Psychiatric Services, Inc., 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. common stock is traded on the New York Stock Exchange (NYSE-MME).

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

 

QUARTER ENDED

  

QUARTER ENDED

  

QUARTER ENDED

  
 

6/30/99

  

6/30/98

  

3/31/99

  

MEMBER MONTHS

2,211,884

 

2,063,937

 

2,192,104

 

MEMBER MONTHS - ASO

33,012

 

32,008

 

33,180

 
             

HEALTH PREMIUM

$307,880

 

$278,029

 

$298,661

 

PMPM

  

$139.19

 

$134.71

 

$136.24

FEE AND OTHER

5,375

 

6,099

 

5,464

 

LIFE AND SHORT-TERM DISABILITY

2,005

 

1,695

 

1,949

 

HOME HEALTH SERVICES

5,839

 

5,410

 

4,909

 

INVESTMENT

2,431

 

2,992

 

2,215

 
             

TOTAL REVENUE

323,530

 

294,225

 

313,198

 
             

MEDICAL EXPENSE

274,096

 

249,805

 

262,489

 

PMPM

  

$123.92

 

$121.03

 

$119.74

MED LOSS RATIO

  

89.0%

  

89.8%

  

87.9%

LIFE AND SHORT-TERM DISABILITY

1,028

 

819

 

887

 

HOME HEALTH COSTS

4,900

 

4,136

 

3,953

 

ADMINISTRATIVE

36,536

 

33,736

 

36,798

 

ADMIN EXPENSE RATIO

  

11.3%

  

11.5%

  

11.7%
             

INCOME BEFORE TAX

6,970

 

5,729

 

9,071

 

TAX PROVISION

2,464

 

2,144

 

3,200

 

EFFECTIVE TAX RATE

  

35.4%

  

37.4%

  

35.3%
             

NET INCOME

$4,506

 

$3,585

 

$5,871

 
             

DILUTED EPS

$0.11

 

$0.08

 

$0.14

 
             

WEIGHTED AVERAGE SHARES

41,934

 

47,246

 

42,545

 
             

NET MARGIN

1.4%

  

1.2%

  

1.9%

  
             

MEDICAL CLAIMS PAYABLE AT END OF PERIOD

$144,970

 

$115,867

 

$138,104

 
             

ADDITIONAL INFORMATION:

            
             

MEDICAID PROGRAM:

            
             

PREMIUM

$12,667

 

$9,200

 

$10,760

 

PMPM

  

$124.49

 

$109.23

 

$116.93

             

MEDICAL EXPENSE

11,807

 

7,552

 

9,759

 

PMPM

  

$116.04

 

$89.66

 

$106.05

MED LOSS RATIO

  

93.2%

  

82.1%

  

90.7%
             

MEDICARE PROGRAM:

            
             

PREMIUM

    

$11,867

     

PMPM

      

$441.15

   
             

MEDICAL EXPENSE

    

12,337

     

PMPM

      

$458.62

   

MED LOSS RATIO

      

104.0%

    

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

   

SIX MONTHS ENDED

  

SIX MONTHS ENDED

  
   

6/30/99

  

6/30/98

  
           

MEMBER MONTHS

  

4,403,988

 

4,107,820

 

MEMBER MONTHS - ASO

  

66,192

 

64,294

 
           

HEALTH PREMIUM

  

$606,541

 

$552,095

 

PMPM

    

$137.73

 

$134.40

FEE AND OTHER

  

10,839

 

11,194

 

LIFE AND SHORT-TERM DISABILITY

  

3,954

 

3,300

 

HOME HEALTH SERVICES

  

10,748

 

10,435

 

INVESTMENT

  

4,646

 

6,703

 
           

TOTAL REVENUE

  

636,728

 

583,727

 
           

MEDICAL EXPENSE

  

536,585

 

490,847

 

PMPM

    

$121.84

 

$119.49

MED LOSS RATIO

    

88.5%

  

88.9%

LIFE AND SHORT-TERM DISABILITY

  

1,915

 

1,812

 

HOME HEALTH COSTS

  

8,853

 

8,321

 

ADMINISTRATIVE

  

73,334

 

66,359

 

ADMIN EXPENSE RATIO

    

11.5%

  

11.4%
           

INCOME BEFORE TAX

  

16,041

 

16,388

 

TAX PROVISION

  

5,664

 

6,113

 

EFFECTIVE TAX RATE

    

35.3%

  

37.3%
           

NET INCOME

  

$10,377

 

$10,275

 
           

DILUTED EPS

  

$0.25

 

$0.22

 
           

WEIGHTED AVERAGE SHARES

  

42,239

 

47,112

 
           

NET MARGIN

  

1.6%

  

1.8%

  
           

MEDICAL CLAIMS PAYABLE AT END OF PERIOD

  

$144,970

 

$115,867

 
           

ADDITIONAL INFORMATION:

          
           

MEDICAID PROGRAM:

          
           

PREMIUM

  

$23,427

 

$17,838

 

PMPM

    

$120.90

 

$107.10

           

MEDICAL EXPENSE

  

21,566

 

14,537

 

PMPM

    

$111.30

 

$87.28

MED LOSS RATIO

    

92.1%

  

81.5%
           

MEDICARE PROGRAM:

          
           

PREMIUM

      

$25,934

 

PMPM

        

$446.50

           

MEDICAL EXPENSE

      

27,236

 

PMPM

        

$468.91

MED LOSS RATIO

        

105.0%

# # #