FHP Sees 49% Jump in Earnings, Cites Membership Gains : Health care: Rebounding from fiscal 1992, the HMO has been aggressively pursuing new clients while controlling costs.

FHP International Corp. said Thursday that membership gains helped boost its quarterly profits 49%.

The health maintenance organization, based in Fountain Valley, increased its membership by 16% during the second quarter, which ended Dec. 31. It was another sign that FHP is rebounding from fiscal 1992, when high unemployment in Southern California cut membership at FHP-owned facilities.

Membership was 771,000 at the end of the second quarter, up from 663,000 at the same time last year. Analysts have predicted that FHP membership could reach 800,000 by the end of this fiscal year.

FHP posted second-quarter net income of $6.1 million, or 19 cents per share, compared to $4.1 million, or 13 cents per share, in the same period a year earlier. Revenue increased 24%, to $464.5 million from $375.1 million in the same period a year earlier.

“We have had a very good membership pickup overall from year to year,” said FHP Treasurer Michael Montevideo. “We’ve also seen a decline in our administrative expenses as a percentage of revenue.”

Analysts have given FHP high marks for aggressively pursuing new members while making strides in controlling expenses.

During the second quarter, primary health care costs jumped 25%, and administrative, marketing and other expenses climbed 15%. But the percent of company revenue spent on health care, or its medical loss ratio, fell to 84.8% from 85.3% in the first quarter.

FHP also received approval for a 12% rate increase for its Senior Plan, which company officials say should boost earnings in the second half of its fiscal year. FHP has about 274,000 senior members, just over a third of its total membership.

FHP is awaiting approval from the state Department of Insurance to acquire Great States Financial Corp., an Anaheim insurance company that would administer its 24-hour workers’ compensation program. In this way, an employee’s workers’ compensation and health plans would be administered by a single company.

“That will be a very attractive feature to be able to offer their (health) plan as a package with a workers’ compensation plan,” said Thomas Hodapp, an analyst at Robertson, Stephens & Co., a brokerage in San Francisco. He added that FHP’s membership among corporate employees grew by 13%, “probably the fastest growth among any (HMO) in the state.”

In the six months ending Dec. 31, FHP profits increased 26%, to $12.6 million, or 38 cents per share, compared to $10 million, or 30 cents per share, in the same period a year earlier. Revenue rose 23%, to $908.7 million from $739.3 million.