FOUNDATION: Unit Purchase Sparks Rumors of Sale
Foundation Health Systems Inc. has sold the "back-office operations" of its pharmacy benefit management division to Texas- based Advance Paradigm Inc. for $70 million. Coupled with recent reports of year-end losses totalling $165.2 million, the Sacramento Business Journal reports that Foundation's dumping of unprofitable businesses is fueling speculation that it is "preparing itself for a possible sale." Foundation spokesperson Lisa Haines said, "We don't comment on speculation. Our strategy is to focus on areas that are strong and have potential for future growth in order to turn ourselves around." Ed Keany, an analyst with Volpe, Brown, Whelan, said Foundation's strategy is the same whether it is sold or not. "They really felt overleveraged -- too much debt, stretched too thin -- and needed to improve performance in every locality. ... They need to get rid of small losers, bring down the debt and focus on fundamental managed care operations" (Robertson, 3/15 issue).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.