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FOUNDATION HEALTH REPORTS THIRD QUARTER RESULTS

 RANCHO CORDOVA, Calif., April 27 /PRNewswire/ -- Foundation Health Corp. (NYSE: FH) today announced that net income for the quarter ended March 31, 1993, rose 35.4 percent to $18.7 million, or 62 cents per share, from $13.8 million, or 48 cents per share, for the comparable period a year ago.
 Pretax income for the quarter increased to $30.5 million on revenues of $383.1 million from $23.6 million a year ago on revenues of $319.4 million. The average number of shares outstanding was 30.3 million versus 28.8 million a year earlier.
 Net income for the nine months ended March 31 -- before one-time charges and related tax effects in the second quarter for acquiring and restructuring two companies -- was $52.2 million, or $1.72 per share, compared with $37.8 million, or $1.37 per share a year earlier. After the one-time charges and related tax effects, net income for the latest nine months was $43 million, or $1.42 per share.
 Revenues for the latest nine months were $1,066 million, compared to $946.6 million a year ago. The average number of shares outstanding was 30.3 million, versus 27.5 million a year ago.
 All financial and enrollment data for prior periods have been restated to reflect the acquisitions of Century MediCorp. Inc. and Occupational Health Services Inc. in October 1992. Each has been accounted for as a pooling of interests.
 "The company's earnings reflect our continued containment of health care costs," said Daniel D. Crowley, president and chief executive officer of Foundation. "Also evident is the dramatic growth of our specialty services operations which were acquired as part of our strategic plan over the past 18 months. Their nine-month revenues, including the dental and vision plans, were $61.4 million, up from $33.2 million a year ago. While these subsidiaries still represent a small part of the company, we expect them to grow significantly in the months and years ahead."
 The ratio of health care expenses to premiums for the company's medical health maintenance organization (HMO) was 75.4 percent for the quarter and 75.3 percent for the nine months, compared to 76.8 percent and 77 percent for the comparable periods a year ago. The ratio of health care and subcontractor costs to revenues for the CHAMPUS business was 83.5 percent for the quarter, and 84 percent for the nine months, compared to 85.4 percent and 88.9 percent for the same periods a year ago.
 Enrollment in the company's medical HMO and insured medical products grew to 451,000 at March 31, from 423,000 a year ago. Enrollment in the specialty services operations grew to 1.9 million at March 31, from 1.5 million a year ago. Approximately 240,000 CHAMPUS Prime beneficiaries have been enrolled versus 173,000 a year ago.
 "The managed care industry is operating in a changing environment that presents both challenges and opportunities," said Crowley. "The rate of premium and enrollment growth in our commercial HMO business has been lower than those achieved in recent years due to persistent competitive and economic conditions in California. We believe our low medical HMO health care expense ratio will come under pressure due to these conditions. In addition, the industry is being affected by uncertainties surrounding proposed changes in state and federal health care programs and policies. Yet we believe that opportunities are simultaneously being created for managed care companies that can effectively market a continuum of integrated health care products and compete in relatively untapped areas such as Medicare, Medicaid and Workers' Compensation. We are positioning the company to play an increasing role in our quickly evolving managed care industry."
 Crowley noted that during the quarter ended March 31, the company integrated the three recently acquired Century HMOs so that the company now markets its HMO products under the Foundation Health name throughout its service areas in Northern, Central and Southern California. As a result, the company's HMO will be available later this year to members of the California Public Employees Retirement System (CalPERS) in Southern California for the first time. CalPERS is the largest employee group in the state.
 The company also established a mail-order pharmacy subsidiary as part of its stand-alone pharmacy benefit management program and to serve the membership in existing Foundation products.
 Foundation is a leading managed health care company serving industry and government. Through its HMO, specialty services and government contracting subsidiaries, the company administers a variety of health benefits for more than 3.2 million eligible individuals.
 FOUNDATION HEALTH CORP.
 (Dollars in thousands, except per-share amounts)
 Consolidated Statement of Operations
 (Unaudited)
 Quarter Nine Months
 Ended March 31: 1993 1992 1993 1992
 REVENUES:
 Commercial premiums $159,673 $143,108 $462,686 $409,964
 Government contracts 186,182 150,062 499,204 463,984
 Patient service revenue,
 net 12,450 10,569 33,504 30,218
 Specialty services
 revenue 21,928 12,255 61,391 33,187
 Interest and other
 income 2,838 3,406 9,167 9,283
 Total 383,071 319,400 1,065,952 946,636
 EXPENSES:
 Commercial health care
 services 120,724 109,832 349,601 315,723
 Specialty care services 5,672 5,109 15,620 13,852
 Government contracts
 health care services 39,140 33,531 126,593 119,956
 Government contracts
 subcontractor costs 115,112 94,665 289,332 292,730
 Selling, general and
 administrative 67,378 48,218 185,479 133,294
 Amortization and
 depreciation 4,331 3,747 12,693 11,301
 Interest expense 262 741 1,368 2,220
 Provision for restructuring --- --- 12,413 ---
 Total 352,619 295,843 993,099 889,076
 Income before income
 taxes 30,452 23,557 72,853 57,560
 Provision for income
 taxes 11,796 9,774 29,851 19,802
 Net income $ 18,656 $ 13,783 $ 43,002 $ 37,758
 Earnings per common
 share $ 0.62 $ 0.48 $ 1.42 $ 1.37
 Weighted average common
 and common stock
 equivalent shares
 outstanding 30,319,924 28,827,562 30,267,150 27,483,489
 Condensed Consolidated Balance Sheet
 March 31, June 30,
 1993 1992
 ASSETS:
 Current assets $406,500 $327,923
 Intangible assets 72,487 74,590
 Other assets 70,007 60,640
 Total assets $548,994 $463,153
 Liabilities
 Current liabilities $257,506 $210,773
 Long-term obligations 8,896 24,150
 Deferred income taxes
 payable 6,711 3,803
 Total liabilities 273,113 238,726
 Stockholders' equity 275,881 224,427
 Total liabilities and
 stockholders' equity $548,994 $463,153
 Stockholders' equity per
 share $ 9.18 $ 7.50
 -0- 4/27/93
 /CONTACT: Jeffrey L. Elder, senior vice president and chief financial officer, 916-631-5381, or Kurt D. Davis, director of investor relations, 916-631-5288, both of Foundation Health/
 (FH)


CO: Foundation Health Corp. ST: California IN: HEA SU: ERN

GT-SG -- SF003 -- 1088 04/27/93 07:03 EDT
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Date:Apr 27, 1993
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