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HMO Shares Rally as Profit Concerns Ease

October 30, 1998|Bloomberg News

Health insurance shares posted their biggest gain in at least four years, led by WellPoint Health Networks Inc., after two insurers met earnings forecasts, easing concern the industry had a tough third quarter. The Morgan Stanley Health Care Payer Index surged 9.35%, its biggest one-day percentage gain since the index was established in December 1994. (See Investor Spotlight, C9.) The group soared after results from Woodland Hills-based WellPoint and Humana Inc., one of the largest U.S. managed-care companies, did not indicate any unexpected troubles such as increased health-care costs. Oxford Health Plans Inc., United HealthCare Inc. and Foundation Health Systems Inc. have surprised investors with problems that caused them to report losses within the last year. WellPoint shares rose $9.69 to close at $71.94 on the New York Stock Exchange. This week, the company said third-quarter profit rose 20% before a gain to $66.7 million, or 95 cents a share. Other gainers included Santa Ana-based PacifiCare Health Systems Inc., whose Class B shares rose $5.75 to close at $74.75 on Nasdaq.

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