FHS EARNINGS EXPECTED TO RISE FROM A YEAR AGO.

Byline: Chris Sieroty Staff Writer

WOODLAND HILLS - Foundation Health Systems Inc. is expected to report second-quarter earnings today that are 16 percent higher than the same period last year.

Analysts surveyed by First Call/Thomson Financial predict the Woodland Hills-based managed care company will report earnings of 31 cents per share for second-quarter 2000, compared with 26 cents for the same period a year ago.

``There is going to be some growth reported because they have implemented price increases, between 6 (percent) and 8 percent, on their California plans,'' said William McKeever, an analyst with Paine Webber in New York.

``However, they have to improve their Florida and Arizona businesses,'' McKeever said. ``They have to focus on premiums and utilization costs.''

Earlier this year, Foundation Health said it was ending its Medicare-plus-Choice HMO coverage for 19,000 members in six states, blaming the federal government's policies on reimbursements.

In California, FHS subsidiary Health Net will cease offering its Medicare HMO product in Fresno and Sonoma counties, but will continue to provide coverage in 20 other counties, including Los Angeles, Ventura, San Bernardino and Riverside.

McKeever described the decision to exit Medicare as a benefit for the managed care company. ``Medicare is not a viable program because of its reimbursement rates,'' he said.

Effective Jan. 1, FHS will have ceased offering its HMO product in 82 counties, affecting 57,000 Medicare enrollees.

FHS serves 5.2 million members nationwide, with 2.2 million of those members in California, said company spokeswoman Lisa Haines.

Shares of Foundation Health Systems gained 0.125, or 0.86 percent, to close Monday at $14.625 on moderate volume of 158,600 shares traded on the New York Stock Exchange.