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PACIFICARE HEALTH SYSTEMS ANNOUNCES THIRD QUARTER RESULTS

 PACIFICARE HEALTH SYSTEMS ANNOUNCES THIRD QUARTER RESULTS
 CYPRESS, Calif., July 29 /PRNewswire/ -- PacifiCare Health Systems Inc. (NASDAQ: PHSYA, PHSYB) announced today that operating revenue for the third quarter ended June 30, 1992, increased 40 percent to $447,100,000 compared to $318,815,000 for the same quarter last year. Approximately one-third of the increase in revenue resulted from the acquisition of The Health Plan of America (HPA) in December 1991. Earnings for the third quarter were $14,625,000, or $0.60 per share, vs. $8,223,000, or $0.34 per share a year ago. All earnings per share amounts have been adjusted to reflect the June 1992 stock dividend, which had the same effect on the total number of outstanding shares as a 2-for-1 stock split. Total membership increased 30 percent over the prior year to 925,452, which includes the gain of approximately 130,000 members from HPA.
 "Medicare membership growth and lower than average commercial hospital utilization are the highlights of an exceptional third quarter," said Terry Hartshorn, president and chief executive officer. "For the last four quarters, membership growth rates in our Secure Horizons Medicare program have been 25 percent or better when compared to the prior year. The growth in this important segment of our business is the result of investments we have made in our marketing efforts.
 "Increased premium rates, operational efficiencies and lower than average commercial hospital utilization have helped reduce the ratio of total health care expenses to premium revenue," said Hartshorn. "Also helping to lower this ratio were lower physician and hospital costs driven primarily by positive reserve adjustments of approximately $0.14 per share. These adjustments are a result of the periodic reconciliation of amounts reserved for physician incentive programs.
 "An increase in prescription drug benefit costs, reflecting the introduction of this benefit to additional geographic areas last year, offset some of this quarter's improvement," Hartshorn continued. "Marketing, general and administrative expenses were also higher in the quarter due to increased staffing and administration in our specialty managed care products and services, and increased expenses related to the previously mentioned Secure Horizons marketing investments."
 Hartshorn also noted that the company's recapitalization and recently completed public offering, which raised approximately $38 million (including the underwriters' over-allotment option scheduled to close today), place it in "a more favorable position to capitalize on increasing opportunities in the managed-care industry."
 For the first nine months of fiscal 1992, operating revenue was $1,231,745,000, an increase of 37 percent over the same period last year. The HPA acquisition contributed $98,696,000 to operating revenue in this period. Net income for the same nine-month period was $31,450,000, or $1.31 per share, compared to $17,758,000, or $0.75 per share a year earlier.
 PacifiCare Health Systems owns and operates HMOs in California, Oklahoma, Oregon, Texas and Washington. The company also operates Secure Horizons, one of the nation's largest and fastest growing Medicare risk programs. Other operations include Columbia General, an insurance subsidiary licensed in 34 states; Pacific Review Services, an independent medical utilization review and case management company; and LifeLink, a behavioral health managed care company.
 PACIFICARE HEALTH SYSTEMS INC.
 (In thousands except per share data)
 (Unaudited)
 Three months ended
 June 30,
 Income Statement 1992 1991
 Premiums $444,485 $316,550
 Other income 2,615 2,265
 Total operating revenue 447,100 318,815
 Health care services
 Medical services 177,658 131,905
 Hospital services 147,159 111,700
 Other services 41,215 26,602
 Total health care services 366,032 270,207
 Marketing, general &
 administrative expenses 58,829 38,624
 Amortization of intangibles 619 105
 Operating income 21,620 9,879
 Interest income 4,398 3,722
 Interest expense (891) (40)
 Income before income taxes 25,127 13,561
 Provision for income taxes 10,502 5,338
 Net income $14,625 $8,223
 Earnings per share $0.60 $0.34
 Weighted average number of
 shares outstanding 24,552 23,954
 Operating Statistics:
 Medical loss ratio (health care
 services as a percentage of
 premium revenue):
 Consolidated 82.3 pct 85.4 pct
 Commercial 80.5 pct 83.3 pct
 Secure Horizons Medicare 84.5 pct 87.7 pct
 Marketing, general &
 administrative expenses
 as a percentage of
 operating revenue 13.2 pct 12.1 pct
 Operating income as a
 percentage of operating
 revenue 4.8 pct 3.1 pct
 Nine months ended
 June 30,
 Income Statement 1992 1991
 Premiums $1,223,682 $893,869
 Other income 8,063 6,236
 Total operating revenue 1,231,745 900,105
 Health care services
 Medical services 486,852 369,834
 Hospital services 415,176 323,044
 Other services 117,299 76,478
 Total health care services 1,019,327 769,356
 Marketing, general &
 administrative expenses 166,813 111,609
 Amortization of intangibles 1,581 340
 Operating income 44,024 18,800
 Interest income 12,904 10,774
 Interest expense (2,792) (129)
 Income before income taxes 54,136 29,445
 Provision for income taxes 22,686 11,687
 Net income $31,450 $17,758
 Earnings per share $1.31 $0.75
 Weighted average number of
 shares outstanding 24,062 23,715
 Operating Statistics:
 Medical loss ratio (health care
 services as a percentage of
 premium revenue):
 Consolidated 83.3 pct 86.1 pct
 Commercial 80.5 pct 84.9 pct
 Secure Horizons Medicare 86.5 pct 87.5 pct
 Marketing, general &
 administrative expenses as a
 percentage of
 operating revenue 13.5 pct 12.4 pct
 Operating income as a percentage of
 operating revenue 3.6 pct 2.1 pct
 At June 30, 1992
 Secure
 Membership Data Comm'l Horizons Total
 PacifiCare of California 528,610 155,414 684,024
 PacifiCare of Oklahoma 99,834 5,760 105,594
 PacifiCare of Oregon 56,098 23,348 79,446
 PacifiCare of Texas 43,181 13,207 56,388
 Total membership 727,723 197,729 925,452
 At June 30, 1991
 Secure
 Membership Data Comm'l Horizons Total
 PacifiCare of California 379,890 120,056 499,946
 PacifiCare of Oklahoma 97,295 1,042 98,337
 PacifiCare of Oregon 50,739 19,224 69,963
 PacifiCare of Texas 34,208 8,292 42,500
 Total membership 562,132 148,614 710,746
 At At
 Balance Sheet Data June 30, Sept. 30,
 1992 1991
 Cash & equiv. and
 marketable securities $226,893 $205,846
 Medical claims and benefits
 payable $190,900 $175,700
 Total assets $446,542 $322,328
 Long-term debt $28,504 $2,280
 Total shareholders' equity $147,966 $99,678
 -0- 7/29/92
 /CONTACT: David K. Erickson (investor), 714-229-2636; or Debby Iacunato (media), 714-220-3745, both of PacifiCare Health Systems/
 (PHSYA PHSYB) CO: PacifiCare Health Systems Inc. ST: California IN: HEA SU: ERN


EH-JL -- LA008 -- 4389 07/29/92 07:01 EDT
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Date:Jul 29, 1992
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