PacifiCare Stock Down 11 Percent


Fri Jul 30, 2004

CHICAGO (Reuters) - Shares of PacifiCare Health Systems Inc. (PHS.N: Quote, Profile, Research) sank as much as 11 percent on Friday, a day after the health insurer posted earnings that fell short of investor expectations.

The Californian health management organization beat earnings-per-share estimates, but results on cash flow, management of medical costs and enrollment estimates were disappointing, analysts said.

PacifiCare, one of the biggest private players in the federal health insurance program for the elderly, trimmed its forecast for membership growth in Medicare HMOs by several percentage points. A big part of its business, Medicare is risky because it depends in part on government payments.

A key gauge of how well the company manages medical costs also worsened.

Separately, PacifiCare was named as one of the HMOs involved in a Schering-Plough Corp. (SGP.N: Quote, Profile, Research) settlement with the federal government on Friday. Under that deal, Schering-Plough will plead guilty to a charge it paid kickbacks to two HMOs and pay a $52.5 million fine.

A spokesman for PacifiCare said it has been working with prosecutors for several years and notes it is not a target nor under investigation but merely a witness.

PacifiCare shares were down $3.16, or 9.3 percent, to $30.77 on the New York Stock Exchange, after sinking as much as 11.6 percent.

 

 

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