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Oxford Health Earnings Tumble on Settlement Charge

Meredith Derby

Oxford Health(OHP) said third-quarter earnings narrowed sharply because of an offer to settle with shareholders who were burned by the company's infamous 1997 profit warning.

Including the $151.3 million charge to cover lawsuit expenses, the company earned $23.8 million, or 26 cents a share, in the latest quarter, down from $85.7 million, or 85 cents a share, in the year-ago period.

Excluding the charge, the company earned $1.04 a share. Analysts were expecting the company to earn $1.03 a share.

The charge, which the company disclosed about a week ago, relates to Oxford's 1997 disclosure of a $50 million charge and profit warning that eventually led to the ouster of management, sent the shares to about $6 each and prompted a slew of suits by shareholders who claimed they'd been misled about the firm's financial health. Oxford has offered to settle the class action for $161.3 million; the charge represents the settlement minus $10 million the company expects to recover from insurance.

Revenue was $1.27 billion in the quarter, compared with $1.11 billion in the third quarter of last year. Oxford said total membership grew to about 1.6 million, from 1.5 million a year ago.

Shares of the Trumbull, Conn.-based company closed $40.37 Monday on the New York Stock Exchange.