UniHealth Uses Option to Sell Shares Back to PacifiCare

PacifiCare Health Systems Inc. said Friday that its largest investor is selling 750,000 shares back to the company, the biggest U.S. operator of Medicare managed-care plans. UniHealth Foundation, a nonprofit California corporation, will sell the shares under the terms of a May 1999 agreement with the Santa Ana company, said Dan Yarbrough, a PacifiCare spokesman. UniHealth, which would own about 4.7 million shares, or a 14% stake in the company, exercised its option to sell the stock Nov. 15 for $15.41 a share, PacifiCare said. PacifiCare said it will use cash on hand to fund the transaction. PacifiCare is authorized to repurchase up to 12 million of its shares and has bought back 10.3 million shares since the program began a year ago. UniHealth sold another block of 750,000 shares to PacifiCare in August, according to a filing with the Securities and Exchange Commission. UniHealth also has an option to sell 909,000 shares of PacifiCare stock on Feb. 15. Shares of PacifiCare rose 13 cents to $12.19. They have fallen 77% this year as the company battles rising medical costs for its employer health plans and its Medicare health maintenance organizations. PacifiCare has about 4 million customers, including 1 million in Medicare HMOs.