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PHP HEALTHCARE ESTIMATES LOSS COUPLED WITH PRODUCT AND ACQUISITION INITIATIVES

 ALEXANDRIA, Va., June 28 /PRNewswire/ -- PHP Healthcare Corporation (NYSE: PPH) announced today that it anticipates a significant loss in the fourth quarter ended on April 30, 1993. The loss is a result of the impact of re-competitions of the company's major government contracts coupled with the costs of transforming the company into a full-service, primary care-based, managed health care company. The company will release audited annual results in late July. However, it expects to report a profit for the fiscal year ended April 30, 1993, which includes the fourth quarter loss.
 As the company has previously announced, it has been successful in winning a substantial portion of the PRIMUS/NAVCARE contracts that were up for re-competition last year, which has had the effect of increasing its government contract backlog to approximately $400 million, the largest backlog in the company's history. Costs associated with the completion of the 16 original contracts and the start-up of the 12 successful re-competitions, however, adversely impacted earnings. As expected, due to the highly competitive nature of this business, the company will not be able to maintain the level of historical gross margins on these government contracts. In addition, the cost of closing several smaller unprofitable operations will be recognized in the fourth quarter. Finally, PHP has, in order to provide for its long-term growth, committed substantial resources to the development and marketing of its primary care and other managed care products and will continue its efforts to develop the private sector market which has resulted in contracts with GTE, Bethlehem Steel and Chrysler.
 Charles H. Robbins, chairman, stated: "I am committed to the transformation of the company to capitalize on the changes taking place in the nation's health care delivery system which will allow us to concentrate on our core business of managed care through primary care."
 The actions taken to transform the company include the previously announced acquisition of Eastwest Research, specializing in the design and development of provider networks. In addition, the company has agreed to acquire a substantial controlling interest in Chartered Health Plan (CHP), an HMO operating in the District of Columbia, which largely services the MEDICAID population in DC. The company intends to design, develop and operate primary care gatekeeper centers to improve access for CHP beneficiaries, while at the same time improving cost effectiveness. The company intends to expand CHP's managed care techniques to other regional MEDICAID populations throughout the nation. CHP's last fiscal year's revenues exceeded $21 million. In addition, PHP has entered into a letter of intent to acquire a company that designs and implements utilization management systems which can be applied at the point of service as well as by remote operation.
 PHP intends to integrate these systems into its primary care gatekeeper clinics and delivery sites, providing a unique ability to manage the care of the patient from the primary care centers. Robbins stated: "It is our strong conviction that the primary care gatekeeper function will be the cornerstone of the health care reformation process. It is considered to be the most efficient, cost effective model of health care delivery. PHP's knowledge, experience and expertise in providing primary care services over the past eight years will position it to be a significant participant in the health care reformation."
 To capitalize on its expertise, PHP has begun to offer a new product, its "Integrated System of Care" (ISOC), described by Robbins in a recent letter to shareholders. This product provides the full array of PHP services, including primary care gatekeeper clinics, utilization management services, network design and development, physician practice management, and facilities design and development "With this product," Robbins stated, "we are in a key position to address our emerging large scale markets for ISOC services, which include health insurers, large employers, coalitions of employers, managed care plans, hospital systems, and major government programs such as MEDICAID."
 -0- 6/28/93
 /CONTACT: Charles H. Robbins, chairman and president, or Anthony M. Picini, vice president/finance, 703-998-7808, both of PHP Healthcare Corporation/
 (PPH)


CO: PHP Healthcare Corporation ST: Virginia IN: MTC SU:

DC-KD -- DC035 -- 6406 06/28/93 16:26 EDT
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Publication:PR Newswire
Date:Jun 28, 1993
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