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PacifiCare passes target
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February 6, 2001: 5:34 p.m. ET
Profit falls from year ago, but company more than doubles forecast, guidance
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NEW YORK (CNNfn) - Beleaguered HMO PacifiCare Health Systems Inc. more than doubled analysts' expectations and its own earnings guidance with its fourth-quarter results Tuesday.
 The Santa Ana, Calif.-based health insurer still saw earnings fall sharply in the quarter as it struggled with rising health care costs, but a large share repurchase during the quarter helped improve earnings per share.
The company said it earned 52 cents a share, excluding special items. Analysts surveyed by earnings tracker First Call lowered EPS forecasts to 20 cents after the company said it would see EPS of 20-to-30 cents in the period at the time of its third quarter earnings release. The company earned $66.4 million, or $1.59 a diluted share, during the same period a year earlier.
Including a restructuring charge and a one-time gain from a contract termination buy-out, the company posted net income of $12.0 million, or 35 cents a share, in the quarter.
PacifiCare said first-quarter net income will be below fourth-quarter results, but that EPS should come in around 35 cents. That is well above the current First Call forecast of 9 cents a share, although it is well off the $1.94 a share it earned in the first quarter of 2000.
Analysts' EPS estimates have fallen in an unusually wide range for the company, indicating a lack of confidence in information from the company. For the fourth quarter the range of forecasts ran from 32 cents to 2 cents. For the first quarter the range is currently 26 cents to a loss of 60 cents.
The company said during the quarter it repurchased 750,000 shares for $12 million, in accordance with a 1999 stock purchase agreement between PacifiCare and its largest shareholder, UniHealth Foundation. The company said it used existing cash balances to fund the repurchase.
The repurchased lowered shares outstanding to 34.0 million from 41.7 million shares a year earlier, and it increased EPS excluding special items about 10 cents a share for the most recent quarter.
Revenue for the company gained 15 percent to $2.9 billion from $2.6 billion a year earlier. Commercial premiums rose 22 percent, while Medicare premiums gained just less than 10 percent.
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The results were released after Tuesday's market close. PacifiCare (PHSY: Research, Estimates) shares shot up $4.25, or 17 percent, to $29.50 in after-hours trading, after slipping 75 cents to $24.75 in regular-hours trading on Nasdaq. 
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