FHP Posts Modest Gains, but Performance Lags Behind Competitors

FHP International Corp. posted modest gains in enrollment and revenue in the three months after announcing a corporate restructuring.

The health maintenance company reported Thursday that the number of people enrolled in its plans grew 4.5% from enrollment a year ago, but analysts said FHP’s competitors racked up increases that were two to four times higher.

FHP’s stodgy showing in enrollment comes as the company is trying to reshape itself from an HMO, which runs its own hospitals and employs its own doctors, to one that solely contracts with providers. Ed Keaney, an analyst at Volpe, Welty & Co. in San Francisco, attributed FHP’s continuing problem attracting members to the declining popularity of HMOs with captive staff and facilities, particularly in Southern California.

FHP’s revenue grew a sluggish 5% to $1 billion in the fiscal first quarter ended Sept. 30 from $954 million during the comparable period last year. Earnings fell 33% to $13.9 million, or 18 cents a share, from $20.7 million, or 37 cents a share, a year ago. Earnings for the recent period reflected a $5.8-million charge from the restructuring.

The company continues with its restructuring program, including plans to make its medical group into a separate company in January and sell hospitals in Fountain Valley and Salt Lake City. It expects the hospitals will be sold by the end of March.