Western Health Plans to Release Report

SAN DIEGO —  After a delay sparked by a Securities and Exchange Commission review of its financial statements, shareholders of Western Health Plans this week will receive the San Diego health-care company’s annual report and proxy--less than three weeks before the Dec. 16 annual shareholders meeting.

Meanwhile, the company’s stock inexplicably continues to drop, closing Tuesday at $13.125, down from $14 Monday.

The SEC’s review of the company’s proxy and financial records resulted in a change of Western Health’s treatment of a tax-loss carryforward for prior years, according to a company spokeswoman.

Western Health Plans, whose main subsidiary is the Greater San Diego Health Plan, last week reported a 36% increase in revenues to $20.5 million and net income of $782,000 for the fiscal first quarter ended Sept. 30.

Before the carryforward was added to last year’s first-quarter figures, net income was $650,000. After the extraordinary item, pro-forma earnings for the first quarter last year were $1.2 million.

Roger Gordon, an analyst with Dean Witter Reynolds in New York, said that health maintenance organizations generally have “taken a battering the last few months.”

Western Health Plans, he said, has suffered from higher than expected hospital costs, delays in its expansion into Riverside County and projected start-up costs for its expansion into Reno.

Western Health Plans said Tuesday that it has received Nevada State Board of Health approval to form a subsidiary in that state; the unit has about 125 physicians already committed for participation.

The company’s stock has dropped from $17.875 on Nov. 18 to $13.125 Tuesday, although trading Tuesday plunged even lower, to $12.50.

Prior to the earnings release, rumors had the company reporting a multimillion-dollar loss, according to sources who follow the company.

Company officials said they have no explanation for the stock’s drop in price.