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O. SEGMENT INFORMATION
The Company has three reportable segments: Commercial, Medicare and Medicaid products. The products are provided to a cross section of employer groups and individuals throughout the Company’s health plans. Commercial products include health maintenance organization (“HMO”), preferred provider organization (“PPO”), and point-of-service (“POS”) products. HMO products provide comprehensive health care benefits to members through a primary care physician. PPO and POS products permit members to participate in managed care but allow them the flexibility to utilize out-of-network providers in exchange for increased out-of-pocket costs. The Company provides comprehensive health benefits to members participating in Medicare and Medicaid programs and receives premium payments from federal and state governments.
The Company evaluates the performance of its operating segments and allocates resources based on gross margin. Assets are not allocated to specific products and, accordingly, cannot be reported by segment. The following tables summarize the Company’s reportable segments through gross margin and include a medical loss ratio (“MLR”) calculation:
Years Ended December 31,
(in thousands)
|
 |
|
Commercial
|
Medicare
|
Medicaid
|
Total
|
| 2001
|
|
|
|
|
| Revenues |
$ 2,347,614
|
$ 352,130
|
$ 383,081
|
$ 3,082,825
|
| Gross Margin |
$ 331,432
|
$ 37,263
|
$ 63,137
|
$ 431,832
|
| MLR |
85.9%
|
89.4%
|
83.5%
|
86.0%
|
2000
|
|
|
|
|
Revenues
|
$ 1,859,155
|
$ 404,090
|
$ 293,708
|
$ 2,556,953
|
| Gross Margin |
$ 272,028
|
$ 44,438
|
$ 47,588
|
$ 364,054
|
| MLR |
85.4%
|
89.0%
|
83.8%
|
85.8%
|
1999
|
|
|
|
|
| Revenues |
$ 1,541,082
|
$ 348,468
|
$ 192,525
|
$ 2,082,075
|
| Gross Margin |
$ 227,353
|
$ 27,037
|
$ 35,033
|
$ 289,423
|
| MLR |
85.2%
|
92.2%
|
81.8%
|
86.1%
|
The following are reconciliations of reportable segment information to financial statement amounts, in thousands:
|
Years Ended December 31,
|
| |
2001
|
2000
|
1999
|
| Revenues:
|
|
|
|
| Reportable segments
|
$ 3,082,825
|
$ 2,556,953
|
$ 2,082,075
|
| Management services
|
64,420
|
47,957
|
80,297
|
|
Total revenues
|
$ 3,147,245
|
$ 2,604,910
|
$ 2,162,372
|
Earnings before income taxes:
|
|
|
|
| Gross margin from
|
|
|
|
|
reportable segments
|
$ 431,832
|
$ 364,054
|
$ 289,423
|
| Management services
|
64,420
|
47,957
|
80,297
|
| Selling, general and administrative |
(379,234)
|
(330,899)
|
(299,942)
|
| Depreciation and amortization
|
(25,910)
|
(27,026)
|
(28,205)
|
| AHERF recoveries
|
-
|
8,429
|
6,282
|
| Other income, net
|
43,574
|
39,553
|
29,906
|
| Interest expense
|
-
|
-
|
(1,761)
|
|
Earnings before income taxes
|
$ 134,682
|
$ 102,068
|
$ 76,000
|
49
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