PacifiCare Stock Falls Despite Beating Q2 Earning Estimates
Shares of PacifiCare Health Systems Inc. dropped 8.9% Tuesday, one day after the company announced that its second-quarter profits "beat estimates," Bloomberg News/Los Angeles Times reports. Less than two months ago, PacifiCare cut earnings projections for the full year, and the changing financial forecast "suggests ... that management is uncertain about underlying medical cost trends," according to Joseph France, an analyst at Global Health Care Partners. Last Friday, Pacificare's stock rose 18% on speculation that earnings for the quarter would be "better than expected," but shares fell $1.78 to $18.27 on the Nasdaq yesterday. PacifiCare expects to earn 45 cents a share for the second quarter, up from estimates of 32 cents a share. David Shove, an analyst at Prudential Securities, said, "We are not encouraged by this all-over-the-map behavior. It strikes us that earnings visibility at the company remains nonexistent, and each quarter is as much a surprise to management as it is to us." Meanwhile, PacifiCare is planning to privately sell $500 million of debt (Bloomberg News/Los Angeles Times, 7/18).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.