Health Firm’s Profit Soars
PacifiCare Health Systems Inc. said Thursday that its fourth-quarter profit more than doubled on the strength of membership growth and on premium hikes that exceeded the increase in the cost of medical care.
For the quarter ended Dec. 31, PacifiCare reported net income of $72 million, or 76 cents a share, matching analysts’ expectations, compared with net income of $31.5 million, or 35 cents a share, for the same quarter a year earlier.
The Cypress-based medical insurance company held to its previous guidance for earnings this year of $3.64 to $3.80 a share.
In the fourth quarter PacifiCare’s revenue rose 13% to $3.2 billion, up from $2.8 billion in the same quarter a year earlier.
More than 40% of the company’s new sales were in its Signature Freedom plans. PacifiCare rolled out these low-cost, high-deductible health plans aimed at small groups and individuals in eight states, including California; it plans to expand them to five more states this year.
“Our hottest-selling products continue to be our Signature Freedom plans, in which membership increased by over 63,000 during the year to almost 78,000 at year end,” Chief Executive Howard Phanstiel told analysts in a conference call. “As of Feb. 1, this number increased to 85,000.”
Financial analysts were also encouraged by the company’s goal to expand its membership in various Medicare plans by about 6%, or 743,000 people, this year.
Overall, PacifiCare has about 13 million members in its medical plans.
PacifiCare shares closed at $61.85, down $1.07 on the New York Stock Exchange.
