PacifiCare Reports Second-Quarter Earnings Tripled to $73 Million
Cyprus-based PacifiCare Health Systems yesterday announced that second-quarter earnings more than tripled to $73 million, or $1.92 per share, from $20.3 million, or 56 cents per share, a year earlier as a result of reduced medical costs and increased premiums, the Los Angeles Times reports. PacifiCare posted $2.73 billion in second-quarter revenue, a decrease from $2.77 billion a year earlier. Edmund Kroll, a health care analyst at SG Cowen Securities, attributed the increase in second-quarter earnings to reduced medical costs and reserves that PacifiCare allocated last year to cover the cost of medical claims. PacifiCare CEO Howard Phanstiel last year took "major steps" to improve the profitability of the company; PacifiCare exited a number of profitable markets and dropped coverage for Medicare beneficiaries. PacifiCare officials said that the company's medical loss ratio, the percentage of premium revenue spent on medical services, decreased to 83.8% in the second quarter from 87.5% a year earlier. PacifiCare also increased premiums by 18% this year to help offset decreased membership; the company had 2.8 million members in the second quarter, compared with 3.2 million a year earlier. PacifiCare increased full-year earnings estimates to between $6.45 per share and $6.55 per share, compared with estimates of $4.35 per share in early February (Vrana, Los Angeles Times, 8/1).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.