PacifiCare to Sell Utah Operations

PacifiCare Health Systems Inc., one of the largest U.S. managed-care companies, said Wednesday it plans to sell its money-losing Utah operations to a Utah-based investment group.

The group of investors is led by Val H. Christensen, a health care executive, and Kurt Larsen, PacifiCare said. Company spokesman Ben Singer said he couldn’t further identify the investors or disclose the proposed terms of the sales. A spokesman for the group wasn’t immediately available to comment.

Santa Ana-based PacifiCare acquired the troubled Utah unit in February 1997 as part of its $2.2-billion purchase of FHP International Inc. Following the acquisition, PacifiCare discovered the Utah operations were in worse shape than they had believed because FHP’s premiums were too low to cover medical costs.

“The challenges of integrating FHP have been more pronounced in Utah than in our other locations,” PacifiCare Chief Executive and President Alan Hoops said in a statement.

It’s too early to say what impact the sale will have on PacifiCare’s 1998 earnings, though it’s likely to push up results once the troubled unit is sold, Singer said.

In December, PacifiCare said losses from the Utah business would trim 8 cents to 10 cents a share from earnings each quarter until it was sold.

The group of investors will acquire the plan’s 115,000 commercial members, who will continue to receive care from their current network of providers, PacifiCare said.

The sale is expected to close within 75 days, subject to approval of the Utah Department of Insurance and other conditions, Singer said.

PacifiCare’s Utah unit lost about $58 million in 1997, excluding the impairment of goodwill, Singer said. The company also took a fourth-quarter charge of $129 million, mostly related to losses in Utah.

PacifiCare’s Class B shares of common stock closed at $90.63, off 13 cents