PacifiCare Says Profit More Than Tripled
PacifiCare Health Systems Inc., the No. 1 operator of Medicare health maintenance organizations, said Tuesday that fourth-quarter profit more than tripled as it left some markets and cut costs.
Profit from operations rose to $55 million, or $1.18 a share, from $15 million, or 30 cents a share, a year earlier. Results were in line with the $1.17 average estimateof analysts polled by First Call Corp.
PacifiCare was able to keep earnings growing last year even as the government trimmed payments to operators of HMOs for patients on Medicare, the government’s health insurance program for the elderly. That’s partly because the bulk of PacifiCare’s patients are cared for by physicians who share some costs of patient care in exchange for fixed monthly payments.
Shares in the Santa Ana-based managed-care company rose $4.63 to close at $73.69 on Nasdaq.
PacifiCare’s profit soared from the year-earlier period, when it took charges related to its troubled 1997 acquisition of health insurer FHP International Inc. After PacifiCare agreed to buy the insurer, it discovered that FHP had failed to raise premiums in line with growing medical costs, especially in Utah. It responded by exiting the Utah market.
Membership fell 7% to 3.53 million, from 3.79 million a year earlier. The company, which markets its Medicare HMOs under the Secure Horizons brand, attributed the decline to its departure from unprofitable markets.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* Metro-Goldwyn-Mayer Inc., owner of the world’s largest film library, said its fourth-quarter loss narrowed because of higher home video sales and increased pay and network television revenue.
The Hollywood studio, controlled by billionaire Kirk Kerkorian, said its loss narrowed to $43.7 million, or 41 cents a share, from $82.5 million, or $1.64, in the year-earlier period. The average number of shares outstanding more than doubled to 105.6 million from 50.26 million. Revenue rose 48% to $383.4 million, from $259.2 million. It benefited from better video sales overseas.
MGM’s cash flow narrowed to a loss of $15.6 million, from $56.9 million a year ago.
* Jakks Pacific Inc., the Malibu-based maker and distributor of action figure dolls, reported record fourth-quarter net income of $1.5 million, or 21 cents per share, for the period ended Dec. 31, compared with $671,000, or 11 cents, a year ago. Revenue rose 88% to $23.9 million, from $12.7 million a year ago.
