Shares of PacifiCare Health Systems Inc. leaped 31% Friday after the nation's biggest operator of Medicare health plans raised its fourth-quarter earnings estimate.
The Santa Ana company's stock rose $3.31 to close at $14 a share in Nasdaq trading. During the day, the stock had jumped 44% to $15.38 a share before falling back.
But even with the gain for the day, the stock has fallen nearly 74% this year.
PacifiCare, which operates Secure Horizons for the elderly as well as managed-care plans for others, said late Thursday that it expected fourth-quarter profit to be 20 cents to 30 cents a share, more than the 7-cent average estimate of analysts surveyed by First Call/Thomson Financial.
The company's third-quarter profit fell 98% to $5.2 million, or 15 cents a share, including a one-time credit. Without the credit, the company earned $1.4 million, or 4 cents a share. The disappointing results were still better than analysts had expected.
The company announced steps to stem the drain on earnings. It said it will freeze Secure Horizons membership next year in 41 counties nationwide, most of them in California. It also said it would raise premiums 10% to 25% next year for its 3 million non-Medicare members in various health-maintenance organization plans.
PacifiCare blamed insufficient federal funding of the Medicare reimbursement program for rising costs, and it said it also needs to address inflation of medical expenses, rising prescription drug costs and network instability issues before it can accept more members.