Tuesday, April 27, 2004 | 10:39 a.m.
Las Vegas-based Sierra Health Services Inc., the largest health insurer in Southern Nevada, said Monday it beat financial expectations for the first quarter as it operated more efficiently and grew its local business in tandem with the booming Las Vegas economy.
Sierra said Monday its profit from continuing operations for the quarter ended March 31 was $26.3 million, or 75 cents per share, up from $15.4 million, or 50 cents, for the same period in 2003.
Net income for the quarters, after losses from discontinued operations, totaled $25.8 million, or 74 cents per share, in 2004, up from $15 million, or 49 cents, in the year-ago quarter.
Analysts polled by First Call had expected Sierra to post an average first quarter 2004 earnings per share of 67 cents and annual earnings per share of $2.72.
The company had previously announced it expected to earn between $2.65 and $2.75 per share for the year 2004. Sierra now expects to earn between $2.90 and $3.00 per share for 2004.
Sierra shares rose 1.6 percent to $39.15 per share in mid-morning trading today.
Revenue from continuing operations for the quarter were $408.2 million, compared with $352.3 million for the same period in 2003.
During the quarter, Sierra repurchased 980,000 shares of its common stock for $31.9 million. Since January 2003, the inception of the board-authorized share repurchase program, the company has repurchased 6.3 million shares of its common stock for $132 million.
Sierra said it cut general and administrative expenses during the quarter and speeded up payments to doctors and hospitals in order to "improve customer satisfaction among providers."
Sierra said it continues to see growth in its mid-size employer group business and in its penetration of the larger self-funded employer group market, especially its traditional health maintenance organizations plans.
In the first quarter of 2004, "same store" commercial membership in the company's core Las Vegas market grew by 4.9 percent to 212,000 people.
"We are seeing the effect of the rapid and continued growth of Las Vegas," Sierra spokesman Peter O'Neill said. "We have been very successful in capturing the business migrating here from California."
Also, longstanding Las Vegas companies are giving Sierra a shot at providing insurance benefits. Station Casinos Inc. will offer Sierra's health maintenance organization plans along with its self-funded plans.
Enrollment in Sierra's Medicare + Choice plans, which are called Senior Dimensions and are private Medicare plans that offer additional plan benefits over traditional Medicare, rose 1 percent during the first quarter to 51,700 people.
Sierra and other insurers that offer private Medicare plans received an increased reimbursement from the Centers for Medicare and Medicaid in March to expand benefits and lower premiums and co-payments. Sierra said it anticipates increased membership growth as a result of the increased reimbursement.
In the coming quarters, Sierra will continue to focus on its commercial and Medicare + Choice business, both of which could see as much as a 10 percent increase in membership.
O'Neill said health insurance competition is increasing in Las Vegas and some of Sierra's customers could be lured away by other insurers pricing their benefits below market prices.
"We will not price a product below its cost," he said.
In April, Sierra sold its workers compensation subsidiary, California Indemnity Insurance Co., to Folksamerica Holding Co. Inc. for $79.5 million and access to its physicians' network and customer service centers for military personnel to Health Net Inc. for $4 million.
Sierra Health was listed this month by Forbes and Business Week magazines as a health care company worth investing in, O'Neill said.
"Wall Street still looks at Las Vegas as a gaming town," he said. "We've been educating them that there are non-gaming public companies that are doing very well and are benefitting from the rich growth here."
archive
