FOUNDATION HEALTH: Posts Q4 Loss, but Noteworthy Cash Flow
Foundation Health Systems Inc. yesterday posted a "hefty" fourth-quarter loss of $103 million, but pointed to an impressive cash flow increase to $345.9 million as a "harbinger of more profitable times to come," the Los Angeles Times reports. The losses included $185.9 million in pretax charges and $29.2 million in lost assets. "This quarter was the last cleanup opportunity. Expectations will be for considerable earnings improvement in 1999," said Greg Crawford, an analyst with Fox-Pitt Kelton (3/10). Losses for the quarter were down from $114 million in the same quarter last year. Foundation CEO Jay Gellert said the quarter held signs that the company's turnaround strategy is working.
Foundation also announced plans to sell its Colorado and New Mexico operations, valued by analysts at $10 million to $15 million, to WellPoint Health Networks Inc. (Rundle, Wall Street Journal, 3/10). Under the deal, WellPoint will acquire more than 100,000 of Foundation's Colorado members (Fletcher, Colorado Springs Gazette, 3/10). Foundation also announced that by the end of the year it will phase out its Service Center in Pueblo, CO, which supports operations for Western Foundation health plans (FHS release, 3/9).