News in brief - Dec. 24/31, 2001

HMOs post losses in Texas, North Carolina

Third quarter results are starting to roll in at state insurance departments with Texas and North Carolina showing losses for HMOs.

In Texas, HMOs lost $207 million during the third quarter, according to the Texas Dept. of Insurance. Of the 39 HMOs operating in the state, 11 saw a profit during the quarter. Projected losses for 2001 are expected to exceed $500 million. In 2000, HMOs lost $562.2 million.

In related news, the Texas Managed Care Review said HMO enrollment for the state fell 224,000 members or 5.7% for the first half of the year.

In North Carolina, more than half of the HMOs lost money in the third quarter, with 10 seeing losses, seven banking profits and four not providing state-specific data.

Principal Financial Group has agreed to sell its remaining stake of $15.2 million shares in Coventry Health Care common stock, which it acquired with the merger of Coventry and Principal Health Care in 1998.

Coventry will buy the stock for $175 million with money from senior notes and cash on hand. The deal is expected to be completed during the first quarter of 2002.

Principal previously sold 10 million shares of Coventry in May 2000.

Oxford Health Plans paid $20 million to Caremark Rx Inc. to end its contract for mail-order prescription drug services with the company and will transfers the business to Merck-Medco as of Jan. 1, 2002.

Caremark accused Oxford of trying to back out of its five-year contract in October.

As part of the settlement, Caremark will continue to supply Oxford with specialty drugs through September 2004, the original end of the contract.