FHP Reports Quarter Profit of $14.4 Million
FHP International Corp., a network of health maintenance organizations in the Southwest, said Thursday that its third-quarter profit rose to $14.4 million, or 43 cents a share, from $10.4 million, or 32 cents a share, last year.
Revenue for the quarter ended March 31 rose to $536 million from $419 million in the same period last year. That was on track with the expectations of stock analysts and the company.
The results exclude a one-time award to the company of $6.9 million from arbitration. FHP received the money from its insurer after paying out a like amount last year in a malpractice suit.
FHP credited the gains in revenue to more people enrolling in its HMOs--it has 820,000 members now--and an annual rate increase in government Medicare payments of an average 12% that took effect Jan. 1. FHP operates in California, Utah, Arizona, New Mexico, Nevada and Guam.
The health-care company also completed the purchase of Great States Financial Corp. in Anaheim during the quarter for an undisclosed sum. Great States is a workers’ compensation insurer.
Meanwhile, a unit of PacifiCare Health Systems Inc. in Cypress--an FHP competitor--said Thursday that it was buying the business of a small HMO that operates in Santa Barbara, San Luis Obispo and Ventura counties.
PacifiCare of California won’t disclose what it is paying for the 13,000 members of Santa Barbara-based Freedom Plan. Freedom Plan is owned mostly by its doctors, who will continue to provide health care to members.
The deal still needs approval from the California Department of Corporations. PacifiCare has more than 1 million members.
PacifiCare, which operates in California, Oklahoma, Oregon, Texas and Washington, recently reported strong results for its second quarter ended March 31. PacifiCare had net income of $15.2 million, or 54 cents a share, on revenue of $555 million. This was up from $10.2 million, 42 cents a share, on revenue of $425 million.
The company’s stock closed Thursday at $40 a share, down 25 cents, in NASDAQ trading while FHP shares closed at $24.50 a share, down $1.
