When money manager Arnold Schmeidler was shopping for a managed-care company that would provide his investment firm with quality medical services at the most competitive cost, he came across Oxford Health Plans. He was so impressed that he not only signed up his company, A.R. Schmeidler & Co., for Oxford's services but also purchased Oxford shares. Now at 19 a share, the stock is one of his biggest holdings.
What's so hot about Oxford? Operating only in New York, Connecticut, and New Jersey--a $20 billion to $30 billion health-benefits market--Oxford has been moving ahead at a furious pace, with enrollment growing at a 60% annual rate. And it has plenty of room for more growth. Compared with a 46% penetration in San Francisco and 32% in Los Angeles, health maintenance organizations hold only 13% of the New York market. "With the pressure on Corporate America to contain their health costs and maintain benefits, the HMO market is assured of tremendous growth," says Schmeidler.
No wonder Oxford's revenues have jumped from $5.6 million in 1987 to $94.9 million last year. Schmeidler projects $130 million this year. Earnings have gone up as fast: From a 71 loss in 1987, earnings shot up to 82 last year, and he expects a net of $1.45 next year. Debt-free, with some $10 a share in cash, Oxford "is a very cheap growth stock," says Schmeidler.