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QUAL-MED ANNOUNCES FIRST QUARTER RESULTS

 PUEBLO, Colo., May 13 /PRNewswire/ -- Qual-Med Inc. (NASDAQ: QLMD) today reported that revenues for the first quarter ended March 31, 1993 increased 86 percent to $136.2 million compared with revenues of $73.2 million for the first quarter of 1992. Of the $63 million increase, 83 percent was attributable to plans acquired in 1992.
 In the first quarter of 1993, income from operations increased 40 percent to $7.0 million compared with first quarter 1992 results of $5.0 million.
 Income before the effect of an accounting change last year of $3.5 million compares with $4.5 million in 1993. Net income for the first quarter of 1993 was $4.5 million compared with $4.6 million for the like period in the prior year, which included $1.1 million as a cumulative effect on prior years from a change in accounting for income taxes. On a per share basis, net income was 26 cents (on 17.3 million weighted average shares outstanding) compared with 26 cents, including 6 cents from the accounting adjustment, (on 17.3 million weighted average shares outstanding) in the prior year.
 Malik M. Hasan, M.D., chairman of the board, president and chief executive officer, said, "Qual-Med is making progress toward enhancing shareholder value by reducing administrative expense ratios, controlling health care costs for its members and beginning to grow membership internally. These efforts are consistent with our plan for improved operating performance this year. Further, we are not waiting on health care reform movements to define our business. Instead, we are taking the initiative because whatever path reform measures may take, competitive companies like Qual-Med, which can clearly demonstrate an ability to provide accessible, cost-effective and high-quality health care products and services, will be rewarded."
 In the first quarter, shareholders' equity rose to $110.0 million at March 31, 1993 compared with $105.2 million at Dec. 31, 1992. Total assets were $202.7 million at March 31, 1993 compared with $199.6 million at Dec. 31, 1992. Working capital increased in the first three months by nearly 3 percent to approximately $28.5 million.
 Health Care Expenses
 Qual-Med reported that its first quarter total medical loss ratio (medical costs as a percent of premium revenues) for pre-1992 plans improved to 75.5 percent compared with 76.4 percent for the 3 months ended March 31, 1992. The medical loss ratio for pre-existing commercial HMO groups improved to 74.4 percent in the quarter from 76.4 percent last year.
 The medical loss ratios in the first quarter of 1993 for HMO plans acquired last year was 83.7 percent for commercial HMO groups and 89.0 percent for Medicare risk membership. The consolidated medical loss ratio for 1992-acquired plans was 86.0 percent, reflecting a seasonally higher level of utilization. By comparison, the consolidated post- acquisition medical loss ratio for these plans in the last 9 months of 1992 was 85.3 percent.
 The consolidated medical loss ratios for all Qual-Med plans in the quarter ended March 31, 1993 was 79.6 percent compared with 76.4 percent a year ago. Reflecting the higher utilization levels at 1992-acquired plans, the first quarter comparison of consolidated medical loss ratios for commercial HMO business was 77.0 percent in 1993 compared with 76.4 percent in 1992.
 "Qual-Med's physician-based, rigorous attention to delivering consistent quality care continues to improve at our pre-1992 owned plans," Hasan said. "We expect further improvements in acquired health plans, as the Qual-Med approach to medical management becomes firmly entrenched at those plans, and we will be working to moderate expenses related to Medicare risk business without compromising the quality of care delivered."
 Enrollments
 In the first quarter of 1993, Qual-Med experienced overall enrollment growth of 53 percent over the like period in 1992 with membership at March 31, 1993 of approximately 334,000. Membership through May 1993 increased to approximately 335,000 compared with 327,000 as of Dec. 31, 1992. "Same store" membership for plans acquired prior to 1992 increased 8.2 percent to 237,000 in the first quarter of 1993 compared with 219,000 in the like period a year ago.
 CHAMPUS Proposals
 The date for submission of best and final offers for the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) Reform Initiative contract with the U.S. Department of Defense for California and Hawaii has been set for June 1, 1993. The contract award date has been changed to Aug. 1, 1993 from June 1, 1993, as previously announced. The company noted that, as of March 31, 1993, approximately $1.2 million (net of a valuation allowance) has been capitalized in connection with its proposal for this contract.
 The company announced on May 7, 1993 that it had received written notice that its initial proposal for providing managed health care services under the CHAMPUS Reform Initiative in Washington and Oregon was accepted for consideration. An award date, however, has not been announced. Qual-Med said that approximately $700,000 has been capitalized in connection with this proposal as of March 31, 1993.
 If either proposal is successful, the respective costs will be amortized over the contract period; if unsuccessful, the respective costs will be expensed as development and acquisition related costs.
 Health Net
 As of March 31, 1993, approximately $3.8 million had been deferred by the company in connection with the potential acquisition of Health Net, a California HMO, which the company is pursuing. If the company consummates the acquisition and the acquisition is accounted for under the purchase method, the costs will be included in the total cost of the acquisition. If the company decides to pursue an alternate type of transaction with Health Net under which the deferral of such costs would no longer be appropriate or if no acquisition occurs, the costs will be expensed as development and acquisition related costs.
 NYSE Listing
 On May 11, 1993, Qual-Med announced that it had filed an application to list its common stock on the New York Stock Exchange. The company said that is expects to commence trading in June.
 Qual-Med, headquartered in Pueblo, provides comprehensive managed health care products and services to approximately 335,000 commercial HMO and Medicare risk members in California, Colorado, Idaho, New Mexico, Oregon and Washington. Through its subsidiary, Preferred Health Network Inc., the company also provides access to preferred provider networks in 16 states for more than 2.3 million covered persons. The company's common stock presently trades on the NASDAQ National Market System under "QLMD."
 QUAL-MED INC.
 (Unaudited)
 Three Months Ended
 March 31,
 1992 1993
 Revenues $73,225,000 $136,234,000
 Operating expenses:
 Health care services 55,318,000 105,809,000
 Selling, general & admin. 12,122,000 21,005,000
 Depreciation, amortization
 & development costs 825,000 2,461,000
 Total expenses 68,265,000 129,275,000
 Income from operations 4,960,000 6,959,000
 Other income, net 758,000 682,000
 Income before tax 5,718,000 7,641,000
 Provision for income tax 2,265,000 3,156,000
 Cumulative effect for
 accounting changes 1,110,000 ---
 Net income $4,563,000 $4,485,000
 Earnings per share:
 Income before accounting
 changes $0.20 $0.26
 Change in accounting for
 income taxes $0.06 ---
 Net income $0.26 $0.26
 Weighted average primary
 shares outstanding 17,265,951 17,333,478
 QUAL-MED INC.
 Commercial HMO and Medicare Risk Enrollment
 (Figures have been rounded)
 March 1992 March 1993
 California 74,000 171,000
 Colorado 26,000 30,000
 New Mexico 24,000 28,000
 Washington/Idaho 75,000 84,000
 Oregon 20,000 19,000
 Total 219,000 332,000
 May 1992 May 1993
 California 164,000 171,000
 Colorado 26,000 31,000
 New Mexico 22,000 29,000
 Washington/Idaho 76,000 85,000
 Oregon 20,000 19,000
 Total 308,000 335,000
 -0- 5/13/93
 /CONTACT: E. Keith Hovland or Jerry Davis of Qual-Med, 719-542-0500, or Steven Silvers of Hill & Knowlton, 303-623-7772, for Qual-Med/
 (QLMD)


CO: Qual-Med Inc. ST: Colorado IN: MTC SU: ERN

BB -- DV007 -- 8294 05/13/93 16:29 EDT
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Date:May 13, 1993
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