PacifiCare Reports $70.8 Million in First-Quarter Earnings

As expected, Cypress-based PacifiCare Health Systems, the nation's largest Medicare health plan operator, yesterday reported first-quarter earnings of $70.8 million, or $1.91 per share, compared to a loss of $858.8 million, or $24.86 per share, a year earlier, the Wall Street Journal reports (Wall Street Journal, 5/1). The announcement equaled estimates released April 16 that PacifiCare would post first-quarter earnings of at least $1.90 per share (California Healthline, 4/17). The company attributed the results to an 18% increase in premiums for commercial health plans and a 5% increase in premiums for Medicare health plans. A reduction in first-quarter health care costs, from 88.5 cents per premium dollar a year earlier to 84.8 cents, also contributed to the results (Wolfson, Orange County Register, 5/1). PacifiCare also exited a number of unprofitable Medicare markets, reduced the number of beneficiaries in Medicare health plans and almost doubled membership in more profitable preferred provider organization and indemnity insurance plans (White, Los Angeles Times, 5/1). "They are trying to focus on the growth of their non-Medicare business, and they are becoming more of a full-service health-care company," William McKeever, an analyst at UBS Warburg, said (Reed, Bloomberg/Los Angeles Times, 5/1).