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HEALTHSOURCE REPORTS 23 PERCENT INCREASE IN ANNUAL EARNINGS PER SHARE; NET INCOME INCREASES 34 PERCENT; REVENUE INCREASES 103 PERCENT

 CONCORD, N.H., Feb. 16 /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 Dec. 31, 1992 was up 38.8 percent to $4.7 million from the $3.4 million earned in the three month period ended Dec. 31, 1991. All common share and per share amounts reflect the 3-for-2 stock split effected as a 50 percent stock dividend on Dec. 15, 1992 to shareholders of record as of Nov. 16, 1992.


Fourth Quarter 1992
 Earnings per share on a fully diluted basis increased 35.7 percent to 38 cents for the three months ended Dec. 31, 1992, vs. 28 cents for the same period a year ago. Total revenues for the quarter increased 118 percent to $52.0 million compared with $23.9 million for the fourth quarter in 1991.


1992 Full Year Results
 For the year ended Dec. 31, 1992, net income increased 33.8 percent to $17.0 million from $12.7 million in the previous year, and earnings per share on a fully diluted basis increased 23.0 percent to $1.39 compared with $1.13 for 1991. Weighted average shares outstanding on a fully diluted basis increased 9.1 percent primarily as a result of the sale of 2.625 million shares of common stock in a public offering during May 1991. Revenues for the period reached $177.6 million, up 102.9 percent from $87.5 million for the comparable period of 1991.


January HMO Enrollment Increased To 248,100 Members
 The company has completed its January enrollment period and reported an increase in membership in its owned or partially owned HMO and other fully insured managed care plans to 248,100 members, compared to 149,400 in January 1992. Exclusive of the May 1992 acquisition in Indiana, membership increased 37 percent in HMOs owned by the company in January 1992. January is the month in which much of the company's new enrollment and renewal activity takes place.
 In addition, enrollment in the company's employer insured point-of- service plans increased to 59,400 company wide. Healthsource began offering customized point-of-service products to self-insured employers in January 1992. The company provides other managed health care services including third party claims administration, PPO and indemnity insurance services.
 Norman C. Payson, M.D., president and chief executive officer of Healthsource, Inc., commented, "Our record revenue and earnings are principally due to the company's ongoing success in controlling health care costs over a rapidly expanding membership base. This substantial membership increase more than offsets slightly higher medical loss ratios. Our medical loss ratios remain among the best in the industry, as does our growth rate. Moreover, the company's qualitative and pricing advantages over its competitors have become more pronounced in many of these markets. The growth in enrollment in January of this year also reflects the continued geographic expansion of our health plans into adjacent areas similarly underpenetrated by managed care such as Columbia, S.C.
 "The company's position in all its markets is enhanced by its ability to offer multiple health care financing products such as point- of-service, and preferred provider plans either fully insured or self- funded. The company also continues to grow through acquisition, including recently purchased plans in Tennessee, Indiana and TakeCare's plan in Maine. The previously announced acquisition of the remaining interest of the company's South Carolina affiliate, Physicians' Health Services, is anticipated to be closed within approximately 45 days."
 Healthsource, Inc. sponsors or manages HMOs in New Hampshire, Maine, South Carolina, North Carolina, Tennessee, Indiana and New York and owns EBPA, one of the largest third-party claims administrators in New England.
 Healthsource also provides utilization review services and preferred provider networks primarily to self-insured employer plans and Blue Cross and Blue Shield of Vermont.
 HEALTHSOURCE, INC.
 Financial Summary
 (unaudited)
 (amounts in thousands)
 Three Months Ended
 Dec. 31,
 1992 1991
 Revenue:
 Premiums $45,940 $19,758
 Administrative and managed care fees 4,115 2,579
 Management fees 1,966 1,522
 Total revenue 52,021 23,859
 Expenses:
 Health care 35,358 14,653
 Premium tax 597 391
 Selling, general and administrative 10,526 5,963
 Depreciation and amortization 1,323 429
 Total expenses 47,804 21,436
 Operating income 4,217 2,423
 Interest and other income 1,198 1,224
 Interest and other expense (2) (17)
 Income before provision
 for income taxes and equity
 items 5,413 3,630
 Equity in income of unconsolidated
 affiliates 876 777
 Provision for income taxes (1,596) (1,036)
 Minority interest in net earnings
 of consolidated entity (15) ----
 Net income $4,678 $3,371
 Net income per share:
 Primary 38 cents 28 cents
 Fully diluted 38 cents 28 cents
 Weighted average number of common
 and common equivalent shares
 outstanding:
 Primary 12,300 12,084
 Fully diluted 12,338 12,149
 Year Ended
 Dec. 31,
 1992 1991
 Revenue:
 Premiums $155,755 $70,875
 Administrative and managed
 care fees 14,422 10,018
 Management fees 7,409 6,624
 Total revenue 177,586 87,517
 Expenses:
 Health care 118,983 50,700
 Premium tax 2,236 1,397
 Selling, general and administrative 36,493 22,235
 Depreciation and amortization 3,913 1,743
 Total expenses 161,625 76,075
 Operating income 15,961 11,442
 Interest and other income 4,730 4,011
 Interest and other expenses (19) (72)
 Income before provision
 for income taxes and equity
 items 20,672 15,381
 Equity in income of unconsolidated
 affiliates 3,006 2,098
 Provision for income taxes (6,626) (4,646)
 Minority interest in net earnings
 of consolidated entity (65) (133)
 Net income $16,987 $12,700
 Net income per share:
 Primary $1.39 $1.13
 Fully diluted 1.39 1.13
 Weighted average number of common
 and common equivalent shares
 outstanding:
 Primary 12,222 11,199
 Fully diluted 12,242 11,225
 SELECTED BALANCE SHEET
 (in thousands) Dec. 31, Dec. 31,
 1992 1991
 (Unaudited)
 Cash, cash equivalents, and
 current marketable securities $67,103 $63,104
 Current assets 77,314 69,928
 Long-term marketable securities 27,847 18,535
 Total assets 146,568 115,240
 Medical claims payable 19,600 9,049
 Current liabilities 25,540 13,342
 Shareholders' equity 119,480 101,100
 COMMON USED RATIOS
 (Unaudited) Dec. 31, Dec. 31,
 1992 1991
 Book value per common shares
 outstanding (12,036,000 at
 Dec. 31, 1992 and
 11,932,500 at Dec. 31, 1991) $9.93/share $8.47/share
 Working capital $51.8 million $56.6 million
 Current ratio 3.0 5.2
 Days of health care expense
 in medical claims payable
 (medical claims payable divided 51.0 days 47.4 days(a)
 by average daily health care
 expenses for the three months
 ended Dec. 31, 1992 and the
 year ended Dec. 31, 1991)
 ---
 NOTE: (a) Dec. 31, 1991 calculation includes medical claims payable and medical expenses for Healthsource New Hampshire, Inc. only.
 NOTE TO EDITORS: Additional financial information is available.
 -0- 2/16/93
 /CONTACT: Thomas Congoran, chief financial officer, or Tracey Turner, shareholder relations, of Healthsource, 603-225-5077; or Kerry Thalheim, 212-661-8030, or Kathy Waller, 312-266-7800, of The Financial Relations Board, Inc. for Healthsource/
 (HLTH)


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

CH -- NE011 -- 6804 02/16/93 12:48 EST
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