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MAMSI Announces Third Quarter Earnings: Net Income up 54%.

Business Editors/Health & Medical Writers

ROCKVILLE, Md.--(BUSINESS WIRE)--Nov. 8, 2000

Mid Atlantic Medical Services, Inc. (MAMSI) (NYSE:MME), one of the mid-Atlantic region's largest managed care companies, today reported diluted earnings per share of $0.28 for the third quarter of 2000. "MAMSI's strong third quarter affirms that we are moving in the right direction with our focus on disciplined pricing, diversified products offering access to a large physician network and excellent service to members and health care practitioners," remarked Mark D. Groban, M.D., Chairman of the Board. "The Company is well positioned to maintain its earnings and membership growth." The Selected Income Statement Information below summarizes the Company's third quarter performance.


 Selected Income Statement Information
 (In thousands except share amounts, unaudited)

 3Q 2000 3Q 1999 YTD 2000 YTD 1999
----------------------------------------------------------------------
Revenue $ 371,428 $ 335,250 $1,099,880 $ 971,978
Expenses $ 356,779 $ 324,689 $1,060,998 $ 945,376
Income Before
 Taxes $ 14,649 $ 10,561 $ 38,882 $ 26,602

Net Income $ 10,974 $ 7,120 $ 26,889 $ 17,497
Basic Earnings
 per Common
 Share $ 0.29 $ 0.17 $ 0.71 $ 0.42
Weighted
 Average Shares
 Outstanding 37,388 40,896 38,026 41,751
Diluted
 Earnings per
 Common Share $ 0.28 $ 0.17 $ 0.69 $ 0.42
Weighted
 Average
 Shares
 Outstanding 38,994 40,928 38,858 41,802


Net income increased 54% over the third quarter of 1999 while diluted earnings per share increased 65% due to the effect of the Company's share repurchase program. The third quarter of 2000 included favorable one-time tax adjustments amounting to $1,300,000 or $0.03 per diluted share. Net income per diluted share excluding these adjustments was $0.25.

Commercial health premiums for the third quarter of 2000 were up 10.2% on a per member per month basis over the third quarter of 1999 and totaled $353,090,000. Commercial medical expenses incurred in the third quarter of 2000 were up 8.8% on a per member per month bases over the third quarter of 1999 and totaled $306,221,000. The medical care ratio for the third quarter of 2000 was 86.7%, a 120 basis point improvement over the commercial medical care ratio for the third quarter of 1999. Administrative expenses totaled $44,178,000 in the third quarter of 2000 and were 11.9% of revenue. This compares with 11.2% of revenue for the third quarter of 1999.

For the nine months ended September 30, 2000, net income increased 54% over the nine months ended September 30, 1999 and diluted earnings per share increased 64%. Commercial health premiums were up 10% for the nine months ended September 30, 2000 on a per member per month basis over the same period in 1999 and totaled $1,039,324,000. For the nine months ended September 30, 2000, commercial medical expenses were up 8.5% on a per member per month basis over the same period in 1999 and totaled $904,060,000. The medical care ratio for the nine months ended September 30, 2000 was 87.0% compared with 88.2% of the same period in 1999, a 120 basis point improvement. Administrative expenses were 11.8% of revenue for the first nine months of 2000 compared with 11.4% of revenue for the comparable period in 1999.

Commercial membership in MAMSI's subsidiaries continued to grow. As of September 30, 2000, membership in all MAMSI's subsidiaries was 1,791,300 covered lives. Membership by product is as follows:


 Increase/
Product 9-30-00 9-30-99 (Decrease) % Change
--------------------------------------------------------------------
HMO/Commercial (1) 758,300 725,000 33,300 4.6%
HMO Medicaid --0-- 37,000 (37,000) (100.0%)
ASO 11,000 11,000 --0-- --0--
 --------- --------- ---------
 Subtotal 769,300 773,000 (3,700) (0.5%)
PPO 1,022,000 1,070,000 (48,000) (4.5%)
 --------- --------- ---------
 Total 1,791,300 1,843,000 (51,700) (2.8%)


(1) Includes indemnity members

MAMSI also announced:
-- The Board of Directors has authorized an additional $10,389,000 for the
share repurchase program. This brings the total amount currently authorized for
the share repurchase program to $20 million total.

-- Since October 1, 2000, the Company has repurchased 132,300 shares of its
common stock, bringing the total shares repurchased year to date to 2,569,800.

-- Optimum Choice of the Carolinas, Inc. (OCCI) is now marketing an open access
HMO product to employers in North Carolina.

-- The Company's third quarter conference call will be broadcast on its Web
site. Interested persons may listen to the conference call on November 9, 2000
at 11 a.m. on www.mamsi.com. Those without access to the Internet may listen to
the conference call by phone at 1-703-871-3627. Interested persons may listen
to the conference call at a later time by calling the replay number
1-703-925-2533, passcode 4670802.


"We are pleased with our third quarter earnings and will continue to improve our market position," said Thomas P. Barbera, President and CEO. "We are developing our technology applications and improving our mix of product offerings to capitalize on our business advantages in the Mid-Atlantic region."

MAMSI's subsidiaries operate in Maryland, Virginia, North Carolina, Pennsylvania, West Virginia, Delaware and Washington, D.C.

Note 1: Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: All forward-looking information or statements contained in this release, including expectations regarding future or continued performance, 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 that the Company is not able to increase its market share at the anticipated premium rate; the possibility of increased litigation, legislation or regulation that might increase regulatory oversight which, in turn, would have the potential for increased costs; the possibility of increased medical expenses due to increased utilization, inflation or legislative mandates; and the possibility that the Company is not able to negotiate new or renewal contracts with appropriate physicians and health care practitioners. 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 provides comprehensive health insurance products and services including: three health maintenance organizations, MD-Individual Practice Association, Inc. (M.D. IPA), Optimum Choice, Inc.(R)(OCI) and Optimum Choice of the Carolinas, Inc. (OCCI); two preferred provider organizations, Alliance PPO, LLC, and Mid Atlantic Psychiatric Services, Inc.; a life and health insurance company, MAMSI Life and Health Insurance Company (MLH); and home care companies such as HomeCall, Inc., FirstCall, Inc., and HomeCall Pharmaceutical Services, Inc.


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

 QUARTER ENDED QUARTER ENDED QUARTER ENDED
 9/30/00 9/30/99 6/30/00
 ---------------------------------------

MEMBER MONTHS 2,264,435 2,259,662 2,275,074
MEMBER MONTHS - ASO 29,036 32,813 28,943

HEALTH PREMIUM $ 353,090 $ 318,794 $ 351,809
PMPM $ 155.93 $ 141.08 $ 154.64
FEE AND OTHER
 5,409 5,224 5,308
LIFE AND SHORT-TERM
 DISABILITY
 2,040 2,089 1,983
HOME HEALTH SERVICES
 7,455 6,531 6,026
INVESTMENT
 3,434 2,612 3,213
TOTAL REVENUE 371,428 335,250 368,339

MEDICAL EXPENSE 306,221 281,050 308,147
PMPM $ 135.23 $ 124.38 $ 135.44
MEDICAL CARE RATIO 86.7% 88.2% 87.6%
LIFE AND SHORT-TERM
 DISABILITY
 552 934 957
HOME HEALTH COSTS
 5,828 5,264 5,006
ADMINISTRATIVE 44,178 37,441 43,059
ADMIN EXPENSE RATIO 11.9% 11.2% 11.7%

INCOME BEFORE TAX 14,649 10,561 11,170
TAX PROVISION
 3,675 3,441 3,857
EFFECTIVE TAX RATE 25.1% 32.6% 34.5%

NET INCOME $ 10,974 $ 7,120 $ 7,313

BASIC EPS $ 0.29 $ 0.17 $ 0.19
WEIGHTED AVERAGE SHARES 37,388 40,896 37,706

DILUTED EPS $ 0.28 $ 0.17 $ 0.19
WEIGHTED AVERAGE SHARES 38,994 40,928 38,443

NET MARGIN 3.0% 2.1% 2.0%

MEDICAL CLAIMS PAYABLE
 AT END OF PERIOD $ 172,596 $ 151,320 $ 167,062

ADDITIONAL INFORMATION:
------------------------
MEDICAID PROGRAM:
PREMIUM $ -- $ 14,698 $ 2,437
PMPM $ -- $ 133.78 $ 190.05
MEDICAL EXPENSE -- 13,774 2,333
PMPM $ -- $ 125.38 $ 181.91
MEDICAL CARE RATIO -- 93.7% 95.7%


 MID ATLANTIC MEDICAL SERVICES, INC.
 IN 000's EXCEPT PMPM AND PER SHARE

 (UNAUDITED)
 NINE MONTHS NINE MONTHS
 ENDED ENDED
 9/30/2000 9/30/1999
 ------------- ------------

MEMBER MONTHS 6,827,120 6,663,650
MEMBER MONTHS - ASO 88,243 99,005

HEALTH PREMIUM $1,049,261 $ 925,335
PMPM $ 153.69 $ 138.86
FEE AND OTHER 15,935 16,063
LIFE AND SHORT-TERM
 DISABILITY 5,990 6,043
HOME HEALTH SERVICES 19,120 17,279
INVESTMENT 9,574 7,258
TOTAL REVENUE 1,099,880 971,978

MEDICAL EXPENSE 913,053 817,635
PMPM $ 133.74 $ 122.70
MEDICAL CARE RATIO 87.0% 88.4%
LIFE AND SHORT-TERM
 DISABILITY 2,332 2,849
HOME HEALTH COSTS 15,821 14,117
ADMINISTRATIVE 129,792 110,775
ADMIN EXPENSE RATIO 11.8% 11.4%

INCOME BEFORE TAX 38,882 26,602
TAX PROVISION 11,993 9,105
EFFECTIVE TAX RATE 30.8% 34.2%

NET INCOME $ 26,889 $ 17,497

BASIC EPS $ 0.71 $ 0.42
WEIGHTED AVERAGE SHARES 38,026 41,751

DILUTED EPS $ 0.69 $ 0.42
WEIGHTED AVERAGE SHARES 38,858 41,802

NET MARGIN 2.4% 1.8%

MEDICAL CLAIMS PAYABLE
 AT END OF PERIOD $ 172,596 $ 151,320

ADDITIONAL INFORMATION:
MEDICAID PROGRAM:
PREMIUM $ 9,937 $ 38,124
PMPM $ 191.62 $ 125.56
MEDICAL EXPENSE 8,993 35,341
PMPM $ 173.41 $ 116.39
MEDICAL CARE RATIO 90.5% 92.7%
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