Kaiser Reports $111-Million Loss for the Third Quarter
Kaiser Permanente Group, the nonprofit operator of the nation’s largest health-maintenance organization, reported a third-quarter loss from operations of $111 million as premium revenue failed to meet rising medical costs.
Kaiser has lost money in California paying for patients to be treated outside its network because the HMO’s medical centers couldn’t handle demand from new customers. California is Kaiser’s largest market.
Given the size of Kaiser’s loss from operations so far this year--$240 million--the HMO may need to raise premiums more than expected in 1999 and 2000, giving competitors such as WellPoint Health Networks Inc., Foundation Health Systems Inc. and PacifiCare Health Systems Inc. room to raise rates.
Oakland-based Kaiser said it expects to conclude a strategic review of its operations within the next month that could result in the sale of unprofitable businesses outside of California and cost-reduction measures such as job cuts.
Kaiser said its net loss in the quarter was $102 million, on revenue of $3.9 billion. The bulk of the difference between the net and operating loss was because of income from the HMO’s investment portfolio. Results for the year-earlier quarter weren’t immediately available.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* Kellogg Co. said its third-quarter earnings fell 34% to $141.9 million, or 35 cents a share, matching analyst estimates, as competition from low-priced brands cut into its margins. Revenue edged up 0.6% to $1.81 billion.
* Loral Space & Communications Ltd. said its third-quarter loss widened to $57 million, or 20 cents a share, from $16 million, or 6 cents, a year ago, because of investments in the Globalstar Telecommunications Ltd. satellite-based phone network and CyberStar Internet and data system. The results matched analyst estimates. Revenue fell 22% to $290 million after work on three satellites was suspended by two Asian customers last year.
* Oxford Health Plans Inc. reported a narrower third-quarter loss of $47 million, or 58 cents, compared with a loss of $78.2 million, or 99 cents, a year earlier. Analysts were expecting a loss of 88 cents. Revenue rose 10% to $1.17 billion. The HMO benefited from restructuring its contracts with doctors and hospitals and quitting several Medicaid and Medicare markets that proved money losers.
* AMF Bowling Inc., the world’s largest operator of bowling centers, said its third-quarter net loss more than tripled to $35.7 million, or 60 cents a share, from a loss of $10.3 million, or 24 cents, because of lower sales brought on by economic woes in Asia. Sales plunged 32% to $505.6 million. Wall Street expected a much smaller loss of 50 cents.
