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PacifiCare earnings bleed
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November 25, 1997: 1:06 p.m. ET
Managed care firm cites losses from Utah operations for profit hemorrhage
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NEW YORK (CNNfn) - PacifiCare Health Systems Inc. said Tuesday that its fourth- quarter earnings will take a hit due to unexpected losses in its Utah operations.
The managed health-care company said the unexpectedly higher Utah losses were discovered after various contract and systems changes were made earlier in the year.
As a result of the losses, the company said it will sell off PacifiCare of Utah after buying it just last February. The Utah operations include about 186,000 members.
"The Utah market is dominated by a single, large competitor, and recent marketplace changes have made doing business there increasingly difficult," said PacifiCare CEO Alan Hoops.
Investors began selling the stock (PHSYB) soon after the news was released, and by early afternoon PacifiCare shares had plunged 10-3/8 to 55-1/8.
The Utah losses will hack approximately 20-25 cents per share off of earnings results for the quarter ending Dec. 31, bringing total projected earnings for that quarter down to 30-40 cents per share.
Analysts had been expecting PacifiCare to turn in quarterly results of 69 cents per share.
The company also said that the Utah operations will continue to cut 8-10 cents per share off of earnings until the unit is sold..
Santa Ana, Calif.-based PacifiCare has about 3.8 million members in its HMO systems in 11 states and Guam.
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PacifiCare
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