PacifiCare Health Systems, Cypress, Calif., reported a 6% decline in first-quarter net profits partly because of higher medical costs, but the company boosted its full-year earnings estimate amid continued membership growth. Net income for the three months ended March 31 was $67 million, or 71 cents per share, down from $71 million, or 96 cents per share, in the year-ago period. Revenue increased 8% to $3 billion. Medical costs consumed 85.1% of premium revenue, up from 83.6% in the prior quarter and 84.8% in the year-ago quarter. But total enrollment rose 2% year over year to nearly 3 million members. "This is the third consecutive quarter of profitable commercial membership growth, and the first sequential increase in our Medicare+Choice membership in three years," PacifiCare Chairman and Chief Executive Officer Howard Phanstiel said in a news release. The company raised its 2004, per-share earnings outlook to between $3.07 and $3.17, up from its previous forecast of $2.95 to $3.05, representing a 33% increase over 2003 earnings. -- by Laura B. Benko
PacifiCare optimistic despite higher medical costs
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