PacifiCare CFO Resigns Due to Differing Vision

By JIM FINKLE

Sept. 16, 1999 12 AM PT

BLOOMBERG NEWS

PacifiCare Health Systems Inc. said that Chief Financial Officer Robert Stearns resigned over differences with other executives that emerged as the health insurer mapped out new plans for the company’s future.

PacifiCare, the No. 1 operator of Medicare health maintenance organizations, said that Stearns, 47, left the Santa Ana company 14 months after he was hired. Senior Vice President Mary C. Langsdorf, 39, has taken over CFO duties until a permanent replacement can be found.

Stearns left because his vision for PacifiCare’s future wasn’t the same as that of the rest of the management team, which is headed by PacifiCare Chairman and Chief Executive Alan Hoops, company spokeswoman Lisa Boyette said.

“There was a difference of where he wanted the company to grow versus where we think our best growth opportunities are,” Boyette said. She declined to elaborate.

The company disclosed the conflict as its executives draw up a new strategic plan.

“This plan will allow us to create an environment that can help us evolve and become a more successful health care company in the future,” Hoops said in a statement.

Stearns wasn’t immediately available to comment.

PacifiCare’s stock, which hit a record $100.38 on May 5, has declined 43% in the past four months amid concern about PacifiCare’s earnings outlook. On Wednesday, the stock hit a 52-week low of $56.75 before closing at $56.94, down $2.03 a share. The resignation was announced after the close of U.S. markets.

PacifiCare shares plunged in June after the company told some analysts that second-quarter earnings would fall short of forecasts. The company was criticized by investors and analysts unhappy with the way the information was disclosed.

Now the company says it still expects to meet previously stated earnings-growth projections for the rest of the year.

Stearns joined PacifiCare when the company was struggling to rebound from its $2.2-billion purchase of FHP International Corp., which turned out to be in worse condition than PacifiCare believed when it agreed to the acquisition two years ago. Before PacifiCare, he was chief financial officer of Columbia/HCA Healthcare Corp., a job he held for slightly more than a month.

Before working for Columbia/HCA, he served as CFO of Dial Corp.

Langsdorf has been at PacifiCare since 1988 and is responsible for accounting and tax reporting.

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Needing Care

PacifiCare Health Systems Inc.’s stock hit a 52-week low of $56.75 Wednesday before closing slightly higher. The shares have been sliding since reaching as high as $100.38 during May 5 trading. Weekly closing prices:

May 7 $88.13

May 14 81.88

May 21 86.50

May 28 86.38

June 4 91.50

June 11 90.63

June 18 88.50

June 25 71.88

July 2 69.50

July 9 65.25

July 16 63.31

July 23 64.56