PacifiCare profit up 21.8%

Michelle Swafford

Thursday, July 28, 2005 | 11:14 a.m.

PacifiCare Health Systems Inc. today reported that an increase in Medicare and commercial membership raised its profit by 21.8 percent in the second quarter.

The Cypress, Calif.-based company said its net income increased to $92.6 million, or 96 cents a share, in the second quarter from $76 million, or 80 cents a share, in the year-ago quarter.

Thomson Financial Network surveyed 11 analysts who said they had expected PacifiCare to earn 95 cents per share.

PacifiCare's revenue increased 17.5 percent to $3.58 billion in the second quarter from $3.05 billion a year ago.

The number of Americans insured by PacifiCare's commercial plans increased 6 percent to 2.6 million, which includes people insured by American Medical Security Group and Pacific Life Insurance Co. PacifiCare acquired both of those firms' health plan members.

Commercial membership revenue increased 19 percent in the second quarter, which was a result of a 6 percent increase in premiums per member and an increase in the number of policyholders.

In Nevada, the number of people insured by a PacifiCare commercial health plan increased 24 percent to 44,768 people at the end of the second quarter from 35,966 in the year-ago quarter, said Mike Clark, vice president of sales and marketing for Arizona and Nevada.

He attributes the growth to a combination of new accounts and an increase in policyholders on existing accounts.

"It's primarily new accounts," he said. "Most of the growth has come from our small group and individual accounts."

Point of service plans are the most common with new policyholders, he said.

PacifiCare also is gaining business from Nevada companies who employ between 51 and 150 employees, Clark said.

Since January, the number of Nevadans insured by PacifiCare has increased 10 percent, which is on track for a 20 percent increase by December, Clark said.

This fall PacifiCare will launch a managed-care plan that does not require primary-care provider referrals to see specialists, he said.

Premiums in Nevada have been averaging 11 percent per member, which is in line with cost trends, Clark said.

The number of people insured by PacifiCare's private Medicare plan, Secure Horizons, increased to 721,700 Americans in the second quarter from 689,600 a year ago.

The number of Nevadans insured through Secure Horizon rose to 26,300 people in the second quarter from 25,200 a year ago.

Private Medicare revenue increased 14 percent in the quarter to $1.64 billion from $1.41 a year ago. Medicare revenue was driven by a 7 percent increase in premiums per member.

UnitedHealth Group announced earlier this month that it planned to acquire PacifiCare in an $8.1 billion deal, plus $1.1 billion in debt. The deal is subject to regulatory approvals including the Nevada insurance commissioner.