PacifiCare Reports 28% Increase in Net Income for First Quarter
Cypress-based PacifiCare Health Systems on Thursday reported that first-quarter net income increased by 28% from $67 million, or 71 cents per share, in the year-earlier period to $85.7 million, or 89 cents per share, this year, the Los Angeles Times reports (Lin, Los Angeles Times, 4/29). Wall Street analysts had forecast earnings of 88 cents per share for the quarter (Reuters, 4/28).
Revenue increased by 15.9% from $2.96 billion in the year-earlier period to $3.44 billion this year. According to the Orange County Register, the earnings growth came despite a $5 million charge for expenses related to PacifiCare's planned participation in the new Medicare drug benefit starting in 2006.
The company attributed the revenue and earnings growth to:
- Increased enrollment in its Medicare HMO and Medicare supplemental policies;
- The acquisition in 2004 of Wisconsin-based American Medical Security Group, which sells health insurance to individuals and small employers; and
- Rising volume of mail-order prescriptions at its pharmacy benefit manager, Prescription Solutions (Orange County Register, 4/29).
PacifiCare forecast second-quarter earnings of between 92 cents and 97 cents per share, up from year-earlier earnings of 80 cents per share. On average, analysts predict second-quarter earnings of 94 cents per share.
For 2005, the company forecast earnings of between $3.70 and $3.85 per share, up from earlier estimates of earnings between $3.64 per share and $3.80 per share. On average, analysts estimate full-year earnings of $3.77 per share.
The company also raised its revenue forecast for 2005, predicting growth of between 17.5% and 18.5%, or between $14.43 billion and $14.55 billion. PacifiCare previously had projected a 15% revenue increase for 2005. Analysts forecast revenue of $14.13 billion for the year.
In addition, the company raised its forecast for commercial membership growth from its prior estimate of between 3% and 5% to between 5% and 6%. At the end of 2004, PacifiCare's commercial group had 2.6 million members (Dow Jones, 4/28).