PacifiCare May Sell Units Inherited in FHP Acquisition

CYPRESS —  PacifiCare Health Systems Inc. said it is considering shedding some health-care plans inherited through its $2.1-billion acquisition of Orange County competitor FHP International Inc.

PacifiCare, the nation’s fifth-largest managed-care company, is considering selling former FHP businesses in areas outside its core markets of California and Texas. Decisions have yet to be made on divestitures in those areas, which include New Mexico, Nevada, Ohio, Tennessee, Illinois, Colorado, Utah, Arizona and Guam, spokeswoman Cheryl Brady said.

PacifiCare also announced that net income climbed 36% in the first quarter, exceeding some analysts’ expectations. But the company’s shares fell after executives said during a conference call that enrollment growth this year will likely be lower than anticipated as the company extricates itself from the unprofitable plans.

PacifiCare Class B shares fell $3.375 to $74.875, while Class A shares dropped $3.875 to $71.25.

PacifiCare officials anticipate 1997 enrollment growth in the low- to mid-single digits, compared with earlier expectations of growth of 8% to 10%, Bear Stearns & Co. analyst Gary Frazier said.

The company posted first-quarter net income of $43.5 million, or $1.12 a share, up from $31.9 million, or $1.01, a year ago. Revenue climbed 59% to $1.84 billion from $1.16 billion.

The company said its prescription drug costs rose during the quarter because of increased drug benefits for members covered by Medicare, the federal health-care plan for the elderly.