PacifiCare, Molina Post Higher Earnings
Two Southern California HMOs posted higher third-quarter earnings Wednesday, which PacifiCare Health Systems Inc. and Molina Healthcare Inc. separately credited in part to a flood of new members.
Shares of PacifiCare, the biggest manager of U.S. Medicare health plans, rose 19% after third-quarter earnings beat analysts’ estimates and the company raised its 2004 forecast.
Shares of most healthcare companies rallied Wednesday because of President Bush’s reelection. Bush has supported the expansion of private sector participation in Medicare, the government healthcare plan for the elderly and disabled.
PacifiCare reported net income of $88.2 million, or 94 cents a share, for the three months ended Sept. 30, beating the 88-cent average estimate of 12 analysts surveyed by Thomson First Call. The quarter included a pre-tax charge of $10 million from the elimination of 241 jobs.
A year earlier, the Cypress-based health maintenance organization earned $67.5 million, or 86 cents.
Third-quarter revenue rose 13% to $3.11 billion.
PacifiCare said it boosted its financial results by controlling rising medical costs, adding members and raising premiums.
PacifiCare raised its 2004 earnings estimate to $3.15 to $3.20 a share from $3.07 to $3.17 because it is buying back stock.
PacifiCare shares rose $6.56 to $41.20 on the New York Stock Exchange.
Molina Healthcare said third-quarter net income rose 40% to $16.4 million, or 59 cents a share, from $11.7 million, or 46 cents, in the same quarter last year.
Earnings in this year’s third quarter were helped by a previously disclosed per-share tax benefit of 2 cents. During last year’s third quarter, the Long Beach company had 2.1 million fewer shares outstanding.
Analysts had expected earnings of 56 cents a share. Revenue rose to $330.8 million, up 67% from $197.5 million a year earlier, reflecting acquisitions.
Molina’s shares rose 10 cents to $37.70 on the NYSE. The company’s earnings were released after trading had ended.
Bloomberg News, Reuters and Associated Press were used in compiling this report.
