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CARENETWORK RECORDS $0.16 PER SHARE SECOND QUARTER LOSS

 CARENETWORK RECORDS $0.16 PER SHARE SECOND QUARTER LOSS
 MILWAUKEE, Wis., July 22 /PRNewswire/ -- CareNetwork, Inc.


(NASDAQ: CRNT) announced a $740,000 loss in the second quarter of 1992, primarily due to higher than anticipated commercial benefit expenses in June for the Wisconsin Health Organization (WHO) subsidiary.
 The second quarter of 1992 loss was $740,000 on revenues of $45,738,000. Revenues were up 14.8 percent over the second quarter of 1991 revenues of $39,853,000. For the six months ended June 30, 1992, a loss of $1,290,000 was realized on revenues of $90,531,000. The quarterly and year-to-date results include tax benefits of $475,000 and $887,000, respectively, due to net operating loss carrybacks. On a per share basis, the second quarter of 1992 results reflect a $0.16 per share loss, compared to a $0.28 per share gain for the second quarter of 1991. For the six months ended June 30, 1992, a $0.27 per share loss was recognized versus a $0.61 per share gain for the six months ended June 30, 1991. WHO enrollment as of June 30, 1992, was 139,916, a 2.8 percent increase versus 136,068 as of June 30, 1991.
 The larger than expected loss for the current quarter was due to an unanticipated increase in June benefit expenses for WHO. Historically, June has been the most favorable utilization month of the year. However, the company experienced a 96.7 percent medical loss ratio in June of this year. The higher benefit costs are primarily attributable to: three bone marrow transplants; pharmacy costs greater than projected due to the availability of nicotine patches; and higher lab and x-ray costs from direct contracting with certain physicians. WHO has taken steps to limit the utilization of the nicotine patches to one course of treatment per member during their lifetime. WHO is also negotiating for further reduction in lab and x-ray costs for direct physician contracts. Given the second quarter loss, CNI expects to operate at a loss for 1992.
 "The second quarter results are very disappointing. We were planning on better second quarter utilization, particularly in the month of June," said Kip Kaplan, president and chief executive officer. "Unfortunately, unexpected increases in several medical benefit expense areas combined to drive costs above our original estimates," he added.
 Craig R. Kasten, chief operating officer, said, "The second quarter benefit expenses are again disappointing. However, our premium and enrollment figures remain firm and we decreased our administrative expenses since the first quarter as well. We are continuing to implement an operating plan to restore CNI to profitability in 1993. At this point, we expect to show year-end losses for 1992."
 CareNetwork, Inc. is the parent company for Wisconsin Health Organization Corp.; Network EPO; Geneva Benefits Administration Corp.; and CareNetwork Medical Management Corp.
 CARENETWORK, INC.
 CONDENSED CONSOLIDATED BALANCE SHEET
 (Amounts in thousands)
 6/30/92 12/31/91
 (Unaudited)
 Assets
 Current assets:
 Cash and marketable securities $27,155 $39,566
 Receivables and advances to providers 5,538 6,241
 Deferred income taxes and prepaid expenses 5,517 2,677
 Contract provider claim funds 2,741 4,517
 Total current assets 40,951 53,001
 Long-term investments 1,193 702
 Property and product development 9,214 8,472
 Goodwill and other intangibles 3,241 3,545
 -- $54,599 $65,720
 Liabilities and shareholders' equity
 Current liabilities:
 Accrued claims payable $15,152 $17,838
 Accounts payable and accrued liabilities 2,803 5,676
 Unearned insurance premiums 1,774 966
 Current maturities of long-term debt 403 432
 Contract provider claims payable 3,573 5,787
 Total current liabilities 23,705 30,699
 Long-term debt 138 355
 Shareholders' equity 30,756 34,666
 -- $54,599 $65,720
 Enrollment data:
 Wisconsin Health Organization Insurance
 Corporation 139,916 137,863
 Network EPO, Inc. 6,795 8,164
 Total enrollment 146,711 146,027
 CARENETWORK, INC.
 CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per-share data)
 (Unaudited)
 Three Months Ended Six Months Ended
 6/30/92 6/30/91 6/30/92 6/30/91
 Revenues:
 Premiums $45,641 $39,799 $90,353 $78,051
 Other income 97 54 178 140
 Total operating revenues 45,738 39,853 90,531 78,191
 Expenses:
 Physician 17,166 13,973 33,621 27,280
 Hospital 15,725 12,864 30,959 25,562
 Other 9,862 8,141 19,525 16,142
 Total health care
 services 42,753 34,978 84,105 68,984
 Selling, general and
 administrative expense 4,513 3,216 9,183 6,191
 Operating income (loss) (1,528) 1,659 (2,757) 3,016
 Investment income 324 474 691 747
 Interest expense (11) (2) (40) (25)
 Loss on disposal of asset -- -- (71) --
 Income (loss) before income taxes
 and minority interest (1,215) 2,131 (2,177) 3,738
 Provision for (benefit from)
 income taxes (475) 739 (887) 1,290
 Minority interest -- -- -- 27
 Net income (loss) $(740) $1,392 $(1,290) $2,421
 Earnings (loss) per share $(.16) $.28 $(.27) $.61
 Weighted average number
 of shares 4,597 5,033 4,738 3,981
 Operating statistics (in percents):
 Medical loss ratio (health
 care services as a percentage
 of premium revenue 93.7 87.9 93.1 88.4
 Administrative expenses as a
 percentage of operating
 revenue 9.9 8.1 10.1 7.9
 -0- 7/22/92
 /CONTACT: Kipton Kaplan, 414-223-7710; Craig R. Kasten, 414-223-7712; Patrick A. Roberts, 414-223-7752; or Walter R. Barry, 414-223-0172, all of CareNetwork/
 (CRNT) CO: CareNetwork, Inc. ST: Wisconsin IN: INS SU: ERN


KH -- MN006 -- 2087 07/22/92 16:13 EDT
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Date:Jul 22, 1992
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