PacifiCare Health Systems, Cypress, Calif., saw its third-quarter profits rise 54% as it continued to trim membership in low-margin HMOs. Net income for the quarter climbed to $67.5 million, or $1.72 per share, from $43.8 million, or $1.20 per share, in the year-ago quarter. Revenue dipped 1% to $2.7 billion, reflecting a 10% decline in total enrollment to 2.9 million members. Medical costs consumed 83.6% of premium revenue, down from 85.5% in the year-ago quarter. PacifiCare raised its full-year, per-share earnings outlook to between $6.52 and $6.57, from a prior estimate of $6.45 to $6.55. Earlier this year, the company had predicted per-share earnings of $4.25 to $4.35 for 2003.
Meanwhile, Health Net, Woodland Hills, Calif., swung to a third-quarter loss because of charges for a previously announced legal settlement. The company posted a net loss of $2.4 million, or 2 cents per share, compared with net income of $69 million, or 55 cents per share, in the year-ago quarter. The latest results include an $89 million charge for the settlement of a lawsuit related to the company's 1998 sale of its workers' compensation business. Excluding charges, earnings for the quarter would have been 62 cents per share. Revenue rose 9.3% to $2.8 billion, even as total enrollment remained virtually unchanged at 5.3 million members. Health Net raised its full-year, per-share earnings guidance to between $2.68 and $2.70, from an August estimate of $2.63 to $2.67. -- by Laura B. Benko