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QUAL-MED CHANGES OFFER TO ACQUIRE HEALTH NET TO ALL CASH

 QUAL-MED CHANGES OFFER TO ACQUIRE HEALTH NET TO ALL CASH
 New Proposal Also Includes Offer to Increase
 Qual-Med's Original Bid of $300 Million, If Health Net's
 1991 Profits Exceed Health Net Management's Projection
 PUEBLO, Colo., Jan. 24 /PRNewswire/ -- Qual-Med Inc. (NASDAQ: QLMD) announced today that it had changed its $300 million offer to acquire Health Net to all cash instead of its original offer of $70 million in cash and the balance of the $300 million in a note.
 In addition, Qual-Med said it would supplement its offer price with additional funds if Health Net exceeded its projected 1991 pre-tax profit of $36.4 million.
 The supplement would equal 8.4 times the amount by which the 1991 pre-tax profit exceeds the $36.4 million pre-tax profit Health Net has projected. The actual profit would be determined by the audit of Health Net's books and records for 1991 according to Generally Accepted Accounting Principles.
 (Health Net management projected a pre-tax profit of $36.4 million when it proposed its own leveraged buyout bid of Health Net for $127 million which it submitted to the Department of Corporations. Under Health Net's proposal, Health Net's management would only put up $1.5 million in cash, with the remaining $125.5 million in the form of notes from Health Net.)
 The changed offer, which was made in a letter from Dr. Malik Hasan, chairman and president of Qual-Med, to Roger Greaves, president and chairman of Health Net, also contained a request to meet with Greaves since Qual-Med's "offer is substantially superior to any offer submitted by any other party."
 The beneficiaries of Qual-Med's offer would be agencies of the state of California engaged in health related matters such as cancer and heart research, the state Medicaid program and care for the homeless. "In view of the severe budget problems confronting the state, it seems our offer deserves consideration by the Department of Corporations which must approve the transaction," said Hasan.
 Qual-Med's proposal is subject to the negotiation of a definitive agreement approved by the boards of both companies, the receipt of all required regulatory approvals and completion of due diligence.
 Qual-Med's initial offer to acquire Health Net was announced July 12, 1991. However, Health Net has not accepted the offer. Health Net is the second largest HMO in California with more than 840,000 members. Qual-Med headquartered in Pueblo, provides comprehensive health care services to members (approximately 224,000 at Sept. 30, 1991) in California, Colorado, Idaho, New Mexico, Oregon and Washington. Its members pay a fixed monthly premium for services rendered and choose among a broad network of independent primary care physicians.
 -0- 1/24/92
 /CONTACT: Dr. Malik Hasan, president, chairman and CEO of Qual-Med, 719-542-0500/
 (QLMD) CO: Qual-Med Inc.; Health Net ST: California IN: HEA SU:


KJ-JL -- LA009 -- 3126 01/24/92 08:30 EST
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Publication:PR Newswire
Date:Jan 24, 1992
Words:475
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