PacifiCare Health Systems: Cypress

Nature of Business: Owns and operates health maintenance organizations, other medical facilities and a life insurance company.

Employees Total: 1,600

In Orange County: 1,300

Stock Designation: Listed on NASDAQ as “PacifCr”

Ticker Symbol: “PHSY”

Friday’s Close: $35.00

One week Change: -$5.50

Analyst Review: The future for the HMO business dictates that the strong will get stronger and the weak will get weaker. PacifiCare is one of the best-managed companies in the HMO business. It has strong, well-regarded plans in good markets and it does an outstanding job of managing costs. It continues to take market share away from traditional carriers. In 1991, I expect their earnings to be up more than 36% over 1990. Last year earnings were up 50% over 1989; 1989, up 68% over 1988, and 1988, up 89% over 1987. It is a conservative estimate to say it will grow by at least 20% per year over the next five years.

--Todd Richter, senior vice president Dean Witter Reynolds Inc., New York

Revenues and Profits

Dollar amounts in millions.

Fiscal year ending Sept 30 Sept 30 Sept 30 Sept 30 Sept 30 1986 1987 1988 1989 1990 Net Revenue $168.9 $306.0 $428.5 $650.2 $975.8 Net Profit (Loss) $3.0 $3.0 $6.3 $10.9 $17.6

Corporate Outlook: Managed-care firms, such as PacifiCare, that can offer high quality, cost-effective health care at an affordable price should experience continued growth. PacfiCare’s goal is to increase the bottom line 15% to 20% each year with an average return on equity in excess of 20%.

--Wayne Lowell, Chief Financial Officer

5-YEAR SUMMARY: RETURN ON STOCKHOLDER INVESTMENT

Fiscal year ending Sept 30 Sept 30 Sept 30 Sept 30 Sept 30 1986 1987 1988 1989 1990 52-Week High $9.63 $7.00 $6.25 $26.25 $30.38 52-Week Low $5.75 $4.75 $2.88 $ 5.63 $12.00 Price Per Share $6.13 $5.00 $6.00 $25.00 $14.75 Net Earnings/Loss Per Share $0.25 $0.25 $0.57 $ 0.96 $1.48 Price to Earnings Ratio 25:1 20:1 11:1 26:1 10:1 Average Return to Investor 14% 9% 18% 25% 24% Total Membership 183.6 246.0 324.1 553.2 673.4

For more information: PacifiCare, 5995 Plaza Drive, Cypress, CA 90630-5028. (714) 952-1121 Source: PacifiCare Health Systems Inc.; Newport Securities