PacifiCare Says Second-Quarter Profit Up 2.7%
PacifiCare Health Systems Inc., the No. 1 operator of Medicare health maintenance organizations, said Wednesday that second-quarter profit rose 2.7% as medical costs partly undercut the effect of higher premiums.
Profit from operations rose to $70.8 million, or $2.01 per share, from $68.9 million, or $1.49, a year earlier. Revenue rose 16% to $2.85 billion from $2.46 billion.
Santa Ana-based PacifiCare, which covers about 1 million Medicare beneficiaries, said medical costs rose faster than payments under the federal health-care program for the elderly. About 60% of PacifiCare sales come from its Medicare HMO plans. PacifiCare had about 4 million customers when the quarter ended, an 11% increase, compared with the previous year.
Earnings beat the average estimate of $1.90 a share from analysts surveyed by First Call/Thomson Financial.
In the quarter, PacifiCare bought back 400,000 shares of its stock for $23 million.
The company had 24% fewer outstanding shares over the last year’s second quarter, increasing its per-share profit.
Results were released after U.S. markets closed. PacifiCare’s shares rose $1.06 to close at $67.19 on Nasdaq.
PacifiCare said it raised premiums 8% as its medical loss ratio--the percentage of premiums that pay for medical costs--rose to 85.8% from 85% a year earlier.
The company said the ratio for its commercial plans rose to 82.9% from 81.4%, while the company had higher premiums and 15% growth in the number of customers in those plans.
The company said it added customers in California and gained 238,000 customers Feb. 1 when it acquired Dallas-based Harris Methodist Health Plan.
In July, PacifiCare said it would end Medicare HMO coverage in 15 U.S. counties on Jan. 1, affecting more than 26,600 enrollees, or less than 3% of its Medicare customers.
At a Glance
Other California company earnings, excluding one-time gains or charges unless noted:
* El Segundo-based Bell Industries Inc. reported second-quarter net income of $958,000, or 11 cents per share, compared with $2.1 million, or 22 cents, a year ago. Revenue rose to $61.1 million from $61.0 million. The company said the results reflected continued softness in demand for certain technology services.
* Go.com Inc., the Internet unit of Burbank-based Walt Disney Co., said its loss widened in the fiscal third quarter as the company spent heavily to refocus its business on entertainment. Go.com, which includes the Go Network group of Internet sites and ABCNews.com, reported a net loss of $272.2 million, or $1.75 a share, including amortization of intangible assets. A year ago, it lost $251.5 million, or $1.64. Adjusted revenue rose 10% to $86.3 million from $78.2 million. Disney has been trying to revamp Go from a general-interest Web portal to one focused on entertainment and leisure after struggling to compete with larger rivals such as Yahoo Inc. As part of that effort, the company said it will rename itself the Walt Disney Internet Group with a new ticker symbol, “DIG,” effective Monday.
