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HEALTHSOURCE, INC. REPORTS 61 PERCENT INCREASE IN SECOND QUARTER EARNINGS; UNVEILS PLAN FOR A NEW HMO IN GEORGIA

 CONCORD, N.H., July 20 /PRNewswire/ -- Healthsource, Inc. (NYSE: HS), a leading operator of HMOs and managed health care services, today reported that net income for the three month period ended June 30, 1993 was up 61 percent to $6.0 million from the $3.7 million earned in the three month period ended June 30, 1992.


Quarterly Earnings Per Share and Revenue Growth
 Earnings per share on a fully diluted basis for the quarter ended June 30, 1993 increased 48 percent to 46 cents vs. 31 cents for the same period a year ago. Last year's earnings per share have been adjusted to reflect a 3-for-2 stock split effected in the form of a 50 percent stock dividend and paid on Dec. 15, 1992. Total revenues for the second quarter increased 70 percent to $72.9 million compared with $42.8 million for the second quarter in 1992.


Six Month Results
 For the six month period ended June 30, 1993, net income increased 46 percent to $11.5 million from $7.9 million for the same period in the previous year and earnings per share on a fully diluted basis increased 42 percent to 91 cents compared with 64 cents in 1992. Revenues for the period reached $131.8 million, up 76 percent from the $74.8 million for the comparable period of 1992.


Acquisitions, Membership and Medical Loss Ratios
 The increase in earnings and revenue for the 1993 periods include the effect of the company's recent acquisition of the majority interest in its South Carolina affiliate which occurred on March 31, 1993 and the effect of the acquisition in May 1992 of its Indiana managed care plan.
 In addition, earnings reflect membership increases in owned and affiliated HMOs of 28 percent to 251,800 on June 30, 1993 compared to 196,900 at June 30, 1992 and improved medical loss ratios for owned HMOs of 75.1 percent for the six months ended June 30, 1993 compared to 75.6 percent for the same period in the previous year.


Georgia Expansion
 Healthsource also announced an agreement to enter the Savannah, Ga., market in a joint venture with Candler Hospital, a 335-bed hospital in Savannah. Candler has entered into a 10-year provider contract with the new venture. As part of the agreement Candler will have the ability to own up to 20 percent of the new company with Healthsource owning at least 80 percent. Healthsource will invest $5.0 million for its interest in the new company, and will utilize, in part, its Charleston, S.C. management and administrative resources. On Dec. 31, 1992 the state of Georgia had 6.5 percent HMO penetration compared to 16.1 percent nationally.
 Healthsource, Inc. is a geographically diversified provider of a broad range of managed health care services. Healthsource, Inc. owns HMOs operating in New Hampshire, South Carolina, Indiana and Tennessee and has minority ownership interests in and provides services to HMOs in North Carolina and Maine. Healthsource, Inc. also offers point of service plans, preferred provider organizations and utilization review managed care services, and provides managed care services to other health care payors, primarily Vermont Blue Cross. Healthsource, Inc. also owns EBPA, one of the largest third party claims administrators in New England. Effective April 1, 1993 Healthsource began providing managed care services to Liberty Mutual for the New Hampshire workers compensation residual market. On April 13, 1993, Healthsource announced a joint venture with Chubb LifeAmerica to develop an HMO in New York City.
 HEALTHSOURCE, INC.
 Financial Summary
 (in thousands, except per share data)
 Three Months Ended
 June 30,
 1993 1992
 (unaudited) (unaudited)
 Revenue:
 Medical premiums $66,087 $37,780
 Administrative and managed care fees 5,265 3,284
 Management fees 1,593 1,774
 Total revenue 72,945 42,838
 Expenses:
 Cost of medical premiums 49,822 29,288
 Premium tax 703 545
 Selling, general and administrative 14,343 8,704
 Depreciation and amortization 1,464 983
 Total expenses 66,332 39,520
 Operating income 6,613 3,318
 Interest income 1,463 1,172
 Income before provision
 for income taxes and equity
 items 8,076 4,490
 Equity in income of unconsolidated
 affiliates 681 745
 Provision for income taxes (2,717) (1,476)
 Minority interest in net earnings
 of consolidated entity (26) (27)
 Net income $6,014 $3,732
 Net income per share:
 Primary 46 cents 31 cents
 Fully diluted 46 cents 31 cents
 Weighted average number of common
 and common equivalent shares
 outstanding:
 Primary 13,074 12,207
 Fully diluted 13,103 12,207
 Six Months Ended
 June 30,
 1993 1992
 (unaudited) (unaudited)
 Revenue:
 Medical premiums $118,145 $64,736
 Administrative and managed
 care fees 10,136 6,388
 Management fees 3,557 3,632
 Total revenue 131,838 74,756
 Expenses:
 Cost of medical premiums 88,708 48,932
 Premium tax 1,399 1,080
 Selling, general and administrative 26,306 15,993
 Depreciation and amortization 2,673 1,643
 Total expenses 119,086 67,648
 Operating income 12,752 7,108
 Interest income 2,650 2,301
 Income before provision
 for income taxes and equity
 items 15,402 9,409
 Equity in income of unconsolidated
 affiliates 1,342 1,436
 Provision for income taxes (5,188) (2,965)
 Minority interest in net earnings
 of consolidated entity (55) (27)
 Net income $11,501 $7,853
 Net income per share:
 Primary 91 cents 64 cents
 Fully diluted 91 cents 64 cents
 Weighted average number of common
 and common equivalent shares
 outstanding:
 Primary 12,691 12,195
 Fully diluted 12,705 12,200
 SELECTED BALANCE SHEET DATA
 (in thousands) June 30, Dec. 31,
 1993 1992
 (unaudited) (unaudited)
 Cash, cash equivalents, and
 current marketable securities $70,527 $67,103
 Current assets 87,061 77,313
 Long-term marketable securities 50,497 27,847
 Total assets 190,940 146,568
 Medical claims payable 30,266 19,600
 Current liabilities 38,294 25,541
 Shareholders' equity 151,158 119,480
 COMMONLY USED RATIOS
 (Unaudited) June 30, Dec. 31,
 1993 1992
 Book value per common shares
 outstanding (12,796,300 at
 June 30, 1993 and
 12,036,000 at Dec. 31, 1992) $11.81/share $9.93/share
 Working capital $48.8 million $51.8 million
 Current ratio 2.3 3.0
 Days of health care expense
 in medical claims payable
 (medical claims payable divided 55.3 days 51.0 days
 by average daily health care
 expenses for the three months
 ended June 30, 1993 and
 Dec. 31, 1992)
 -0- 7/20/93
 /CONTACT: Thomas Congoran, chief financial officer, or Tracey Turner, shareholder relations, both of Healthsource, 603-225- 5077; or Kerry Thalheim, 212-661-8030, or Kathy Brunson, 312-266-7800, both of The Financial Relations Board, Inc. for Healthsource/
 (HLTH)


CO: Healthsource, Inc. ST: New Hampshire IN: HEA SU: ERN

DJ -- NE026 -- 3628 07/20/93 17:44 EDT
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