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Orange County Health-Care Firms Post Profit Gains

July 29, 1999|From Times Staff and Wire Reports

Three of Orange County's health-care giants, PacifiCare Health Systems Inc., Allergan Inc. and Bergen Brunswig Corp., each reported double-digit gains in quarterly profits Wednesday.

The news sent Allergan stock up 7% and PacifiCare up nearly 10%, making them among the top gainers on Wall Street.

PacifiCare, the nation's largest operator of Medicare health-maintenance organizations, said second-quarter earnings rose 41% as it increased premiums for its commercial plans. But the company had previously warned analysts to lower their expectations, partly because of tightening Medicare reimbursement policies.

Net income rose to $68.9 million, or $1.49 a share, from $48.9 million, or $1.06, in the year-earlier period. Revenue rose 2.4%, to $2.45 billion from $2.4 billion.

While the results were in line with forecasts, estimates had declined since late last month, when the Santa Ana-based company warned it would miss the then-average forecast of $1.58 of analysts polled by First Call Corp. That caused the stock to lose about a third of its value.

"This quarter should go a long way to making this stock a little less controversial than it's been in recent weeks," said Kevin Risen, a fund manager with Neuberger & Berman, which holds 1.3 million PacifiCare shares.

PacifiCare shares rose $6.06 to close at $68.13 on Nasdaq.

Eye- and skin-care products maker Allergan said second-quarter profit rose 35% to $46.9 million, or 69 cents a share, from $34.8 million, or 52 cents, a year ago. The average estimate of analysts surveyed by First Call was 61 cents a share.

Part of the increase was attributed to a 5-cents-a-share gain from sales of investments and other credits.

Nevertheless, the profit gain helped send Irvine-based Allergan's stock up $6.44 to close at $94.38 on the New York Stock Exchange. Net sales at the company rose 13% to $367.8 million for the quarter.

Orange-based Bergen Brunswig, the No. 3 U.S. drug wholesaler, said third-quarter earnings rose 21%, but poor performance at its PharMerica unit cut into profitability.

Bergen's net income rose to $32.8 million, or 26 cents a share, from $27.2 million, or 26 cents, a year earlier. Revenue rose to $4.5 billion from $3.51 billion.

Bergen warned earlier this month that it would miss analyst expectations for the quarter and the year because of problems at PharMerica, the supplier of pharmacy services to nursing homes it bought for $1.1 billion in April.

Medicare changes are hurting revenue at the unit because nursing homes are accepting fewer seriously ill patients, cutting drug usage.

Bergen Brunswig shares rose 56 cents to close at $15.56 on the NYSE.

Tenet Healthcare Corp., a hospital operator based in Santa Barbara, said its fiscal fourth-quarter profit dropped 13% as the second-largest U.S. hospital chain struggled with cuts in Medicare and a slowdown in payments from health insurers.

Profit from continuing operations fell to $130.1 million, or 42 cents a share, from $148.8 million, or 47 cents, a year earlier. Revenue rose 14% to $2.92 billion for the three months ended May 31.

Tenet fell 13 cents to close at $16.69 on the NYSE.

* MORE EARNINGS: C1, C3, C7

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