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PacifiCare Posts Profit on Higher Premiums

February 13, 2003|From Reuters

Health insurer PacifiCare Health Systems Inc. on Wednesday swung to a fourth-quarter profit from a year-ago loss on higher premiums and cuts in membership.

The Cypress-based managed health care company reported a net profit of $37 million, or $1 a share, from a loss of $26 million, or a 77 cents, a year ago.

Excluding certain items, PacifiCare said it earned 97 cents a share. Wall Street analysts polled by Thomson First Call forecast earnings, on average, of 95 cents.

Revenue dropped to $2.74 billion.

Steeper premiums are offsetting PacifiCare's shrinking membership base, which fell to 3.1 million members.

The company is exiting markets it has deemed too costly to insure, and dropping costly individuals on the government's Medicare health plan.

PacifiCare, the biggest private provider of Medicare, has dropped thousands of members in recent years.

The HMO industry contends that the government payment method is skewed and doesn't allow them healthy margins.

For the year, PacifiCare lost $757.8 million, or $21.51 a share, because of a large write-off tied to changes in accounting rules.

A year earlier, the company posted a profit of $19 million, or 55 cents and revenue fell to $11.1 billion.

PacifiCare reiterated its 2003 profit forecast of $4.25 to $4.35 a share.

"Our plan is to continue focusing on our goal of diversifying revenues and transforming the company into a consumer health organization," Chief Executive Howard G. Phanstiel said.

The company reported results after the markets closed. In regular Nasdaq trading Wednesday, PacifiCare fell 75 cents, to $27.

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