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PacifiCare Sees Profit Drop Because of One-Time Items

The HMO says paying off debt and issuing new stock will cut earnings, but that otherwise results are on track.

November 13, 2003|From Times Staff Reports and Reuters

PacifiCare Health Systems Inc. warned investors Wednesday that fourth-quarter net income would fall because of the cost of paying off debt and the dilutive effect of issuing new stock.

But the company later clarified its remarks, saying full-year results excluding one-time items still would be in line with its recent guidance.

Separately, Standard & Poor's raised the company's debt ratings one notch.

The Cypress-based health maintenance organization, one of the largest providers of the government's Medicare health plan, said early Wednesday that it expects quarterly earnings of between 59 cents and 64 cents a share, down from an earlier forecast of between $1.02 and $1.07.

The decline would reflect charges related to the debt payoff and a stock offering of 3.8 million new shares, PacifiCare said.

The stock opened at $50.75 a share, down sharply from Tuesday's close of $52.37 on the New York Stock Exchange. But the shares recovered later in the day, and closed up $1.02 at $53.39.

In a statement issued after the market closed, PacifiCare said that excluding the one-time charges, there was "no change" to the forecast it gave on Nov. 5 for full-year earnings of $6.52 to $6.57 a share, up from the range of $6.45 to $6.55 given previously.

Chief Executive Howard Phanstiel said the financial restructuring move "positions us well for future growth."

S&P appeared to agree in raising PacifiCare's debt ratings. It said the firm's capital base had improved and also cited "strong earnings performance."

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