FOUNDATION HEALTH SYSTEMS: Share Prices Take Another Dive
Shares of Foundation Health Systems Inc., California's largest managed care health insurer, fell 15% "amid investor concern that the managed care company's earnings outlook is worse than it has indicated," Bloomberg News/Los Angeles Times reports. At the request of the New York Stock Exchange, Foundation issued a statement saying "it is aware of no corporate developments that would account for the plunge in its shares." Last week, Foundation "warned ... that trouble with its Medicare operations will hurt earnings" ( see CHL 8/12). Foundation spokesperson David Olson said the problem may be "short sellers," investors "who borrow shares of a stock and sell them on the expectation the price will fall and they'll be able to profit by buying them back cheaper." Harris Associates analyst William Jacobs said, "We're going through a rough patch here, and clearly there is a lot of blood in the water. It's a hated industry" (8/20).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.