PacifiCare, WellPoint Gain in 3rd Quarter
PacifiCare Health Systems Inc. and WellPoint Health Networks Inc., two of the nation’s largest health maintenance organizations, on Wednesday reported higher third-quarter earnings as health plan premiums rose.
PacifiCare’s profit from operations rose 12% to $71 million, or $1.58 a share, from $63.4 million, or $1.38, a year ago, the Santa Ana-based company said. WellPoint’s net income rose 14% to $76.2 million, or $1.11 a share, from profit from operations of $66.7 million, or 95 cents, a year earlier, the Thousand Oaks-based company said.
PacifiCare, the nation’s biggest HMO, beat the average estimate of $1.55 by analysts surveyed by First Call Corp. WellPoint’s results were in line with the average estimate of $1.10.
PacifiCare shares rose $1.50 to close at $35.31 on Nasdaq, and WellPoint fell 75 cents to close at $52.63 on the New York Stock Exchange. The earnings results were released after the close of trading in U.S. markets.
Shares of U.S. health insurers have plummeted during the last two months as investors worried about the prospects of class-action lawsuits and new government restrictions on managed health-care plans. WellPoint’s and PacifiCare’s results, though, are a sign that, for now, major health insurers are managing to raise premiums faster than medical costs increase and to focus on more profitable customers.
PacifiCare’s revenue rose 4.9% to $2.52 billion from $2.4 billion as it charged employers more to provide health insurance coverage to employees.
WellPoint’s revenue rose 16% to $1.89 billion from $1.63 billion.
Although WellPoint, the parent of Blue Cross of California, doesn’t operate any HMOs serving customers on Medicare--the government health plan for the elderly--PacifiCare is the largest operator of such programs. Those plans became less profitable for insurers after the 1997 federal balanced-budget law cut the expected growth in government fees to shore up Medicare’s finances.
PacifiCare left markets serving about 26,000 Medicare HMO customers at the beginning of this year and plans to leave more next year.
PacifiCare also sold its money-losing Utah health plan for an undisclosed price to an investment group in October 1998 and raised the fees it charges employers for health plans.
At a Glance
OTHER INDUSTRIES:
* Carlsbad-based golf club maker Callaway Golf Co. reported sharply higher third-quarter earnings of $17.6 million, or 25 cents per share, compared with $5.8 million, or 8 cents, a year ago. Analysts’ consensus was 22 cents, according to First Call/Thomson Financial. Sales rose 6% to $183.3 million from $172.9 million.
The company said U.S. sales fell 7% to $103.6 million and international sales climbed 30% to $79.7 million, with sales in Japan exceeding expectations. Callaway said it remained on track to introduce its golf ball into the market during the first quarter of next year. The company has said it intends to introduce the ball at the giant PGA Merchandise Show in January.
Company Chairman and Chief Executive Ely Callaway, 80, is expected to step down next year. Company President Chuck Yash has been tapped to succeed him.
* Torrance-based Imperial Credit Industries Inc. reported a third-quarter net income from continuing operations of $5.3 million, or 16 cents per share, contrasted with a loss of $96.7 million, or $2.50, a year ago.
* Ontario-based Kaiser Ventures Inc., which invests in land redevelopment projects, reported third-quarter net income of $29.3 million, or $2.77 per share, which included a gain from the merger between Penske Motorsports Inc. and International Speedway Corp. That compares with net income of $189,000, or 2 cents, a year ago. Revenue rose to $40.9 million from $2.4 million.
* Woodland Hills-based auto insurer 20th Century Industries reported third-quarter net income of $18.4 million, or 21 cents per share, on revenue of $198.7 million, compared with $38.2 million, or 44 cents, on revenue of $219.6 million a year ago.
