PacifiCare Reports Lower Fourth-Quarter Earnings
Cypress-based PacifiCare Health Systems on Thursday reported fourth-quarter net income of $31.5 million, or 36 cents per share, down about 15% from $37 million, or 50 cents per share, a year earlier, the Los Angeles Times reports (Girion, Los Angeles Times, 2/13). PacifiCare said that the decrease was caused by a one-time $28 million charge related to the retirement of $175 million in debt (Wolfson, Orange County Register, 2/13). Company officials said that before the charge, per-share earnings were 55 cents, above analysts' estimates of 52 cents per share. Fourth-quarter revenue increased 2% from the previous year to $2.8 billion, in part because of premium increases. For 2003, PacifiCare posted a profit of $242.7 million, or $3.04 per share, compared with $141 million, or $3.92 per share, in 2002, adjusted to reflect an accounting change. Unadjusted earnings for 2002 were $757.8 million (Los Angeles Times, 2/13). Because of the expansion of Secure Horizons, its Medicare HMO division, PacifiCare forecast net income for the current fiscal year of $280 million to $290 million, up 15% to 19% from 2003. PacifiCare said that "with more money to spend on richer benefits" as a result of the new Medicare bill, enrollment in Secure Horizons should grow by 7.5% to 8% in 2004 after "shrinking steadily since 2001," the Register reports. CEO Howard Phansteil said that the company would not "fall into the trap of over-dependence on Medicare that hammered its stock price and forced it to rethink its entire business three years ago," the Register reports (Orange County Register, 2/13).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.