PacifiCare Stock Falls on Profit Warning

PacifiCare Health Systems Inc. shares tumbled 14% after the No. 1 operator of Medicare health-maintenance organizations warned that its 1999 earnings could fall short of forecasts because growth could slow after the first quarter. PacifiCare’s Class B shares fell $11.63 to close at $74 on Nasdaq. It was its biggest one-day percentage decline since Nov. 25, 1997. The Santa Ana-based company expects to report second-quarter earnings of $1.45 to $1.50 a share, missing the $1.58 average estimate of analysts surveyed by First Call Corp., company spokesman David Erickson said.

The company disclosed that forecast to several analysts it contacted recently whose forecasts were too high, Erickson said. He declined to discuss the reason those forecasts were off, saying different analysts had different problems with their models of PacifiCare’s results. The move angered investors and analysts, who were unable to reach the company as PacifiCare shares tumbled.

Erickson added that the firm expects to report full-year earnings of $6.20 to $6.31 a share. The average forecast of analysts was $6.31, with estimates ranging from $5.95 to $6.55 a share. The company previously said it expected full-year earnings to grow 40% to 45% over 1998.