Pacificare Reports Profits Up 164% in 1st Quarter

Pacificare Health Systems Inc. got off to a fast start in the first quarter with earnings rising 164% to $6.6 million from the previous year, the company said Monday.

Revenue for the three months ended Dec. 31 climbed 29% to $360 million from $279.1 million in the year-earlier quarter. The company’s per-share earnings totaled 57 cents, contrasted with earnings of $2.5 million, or 21 cents, the previous year.

The Cypress-based health maintenance organization owns and operates HMOs in California and four other states.

Though Pacificare’s first-quarter earnings were higher on a year-to-year basis, they were down from the fourth quarter total of $7.9 million. Alan Hoops, chief operating officer, attributed the drop to a seasonal increase in advertising expenses.

“A lot of companies have open enrollment this time of year, so we advertise quite heavily,” Hoops said. Pacificare also added prescription drug benefits to its Medicare program, which helped boost costs.

For its latest fiscal year ended Sept. 30, Pacificare’s earnings jumped 45% to $25.7 million. Its membership rocketed from 681,171 to 873,807. The big membership increase was largely due to Pacificare’s merger with The Health Plan of America, a 130,000-member HMO based in Orange.

Pacificare, which serves about 2,000 companies in California, has benefited from its ability to charge higher rates to commercial customers, while at the same time holding down hospital costs.