PacifiCare’s Income Slides 4.9% for the First Quarter

PacifiCare Health Systems Inc. said first-quarter earnings fell 4.9%, less than expected, as it worked to integrate an acquired business and get a handle on rising medical costs.

The Santa Ana-based provider of managed-care services said net income fell to $41.3 million, or 90 cents a share, from $43.4 million, or $1.12, a year earlier. Analysts had estimated the company’s earnings at 73 cents a share, according to a survey by IBES International Inc.

PacifiCare has been struggling to keep premiums in line with rising medical costs as it digests its $2.2-billion acquisition of FHP International Inc. PacifiCare said it has increased the number of contracts in which doctors get paid a flat fee per patient rather than a fee for each procedure, and that has helped hold down costs in commercial medical plans.

“After a disappointing 1997, we are pleased to begin 1998 with such a solid start,” said Alan Hoops, president and chief executive. “Our efforts to integrate the FHP operations are proceeding smoothly and on schedule.”

Revenue climbed 29% to $2.38 billion from $1.84 billion.

The company’s class B stock rose $5.63 to $77.50 a share Tuesday in Nasdaq trading.

Last year, the company’s 1997 profit fell 22%, before charges, to $107 million, or $2.43 a share, from $138 million, or $4.36, in 1996. PacifiCare said it failed to raise commercial premiums enough to counter increasing costs.