PacifiCare Health Systems Third-Quarter Profit Increases 54%
Officials for Cypress-based PacifiCare Health Systems on Wednesday announced that third-quarter net income rose 54% to $67.5 million, or $1.72 per share, from $43.8 million, or $1.20 per share, a year earlier, the Wall Street Journal reports. Third-quarter revenue fell 1.4% to $2.74 billion, in part because enrollment decreased 10% to 2.9 million (Wall Street Journal, 11/6). PacifiCare is increasing profitability by reducing the number of members in its "relatively low-margin" HMO plans and exiting unprofitable markets, such as Medicare+Choice, the Los Angeles Times reports (Vrana, Los Angeles Times, 11/6). As a result of that strategy, year-over-year Medicare+Choice membership decreased 12% in the third quarter, the Journal reports. In addition, third-quarter commercial membership dropped 9%, primarily because CalPERS dropped PacifiCare as a health insurance provider effective Jan. 1 (Wall Street Journal, 11/6). PacifiCare officials said that the company raised its premium rates 18% this year in the commercial market, helping to reduce the company's third-quarter medical loss ratio -- the percentage of premium revenue spent on medical services -- to 83.6% from 85.5% a year earlier (Los Angeles Times, 11/6). PacifiCare officials also said that monthly commercial revenue per member increased 17%, while revenue per senior member increased 3% (Wall Street Journal, 11/6). According to PacifiCare officials, the company has saved $117 million over the past 12 months by enrolling members in disease management programs, the Orange County Register reports (Luna, Orange County Register, 11/6). In addition, company officials said that enrollment in its mail-order drug business increased 51% from the year-ago period and that membership in its behavioral health unit increased 24% from a year earlier. "We're no longer a one trick pony," Howard Phanstiel, PacifiCare president and CEO, said, adding, "We're building a stronger, more diversified company for the future" (Los Angeles Times, 11/6). The company raised its full-year 2003 earnings-per-share estimate to between $6.52 and $6.57 from a July estimate of between $6.45 and $6.55 (Wall Street Journal, 11/6).
Officials for Long Beach-based Molina Healthcare announced that third-quarter net income fell 3.4% to $11.7 million, or 46 cents per share, from $12.1 million, or 59 cents per share, a year earlier, the Los Angeles Times reports. Third-quarter revenue increased 14% to $197.7 million from $172.1 million a year earlier. Third-quarter enrollment increased 11% to 530,000, as the company continued efforts to expand in Michigan, Utah and Washington. Almost 53% of Molina's membership is in California, the Times reports. Molina, which specializes in serving Medicaid beneficiaries, went public July 2. J. Mario Molina, president and CEO of Molina, said that the third-quarter results were "strong" (Vrana, Los Angeles Times, 11/6).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.