For Immediate Release (2005)Full Document 

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5995 Plaza Drive

For Immediate Release  

Cypress, California 90630


Tel. (800) 631-0969


News Release



  Tyler Mason   Dan Yarbrough
    Media Relations  

Investor Relations

    (714) 226-3530  

(714) 226-3540


PacifiCare Health Systems Announces 4th Quarter

and Full Year 2004 Results


    Reported Q4 EPS was $0.76 per diluted share


    Full-year net income was $303 million, or $3.20 per diluted share


    Q4 total operating revenue up 13% from prior year


    Year-end commercial membership up 18% from 2003


    Total senior membership up 5% year-over-year


CYPRESS, Calif., February 3, 2005 — PacifiCare Health Systems, Inc. (NYSE: PHS), today announced that reported net income for the fourth quarter ended December 31, 2004 was $72 million, or $0.76 per diluted share. This compares with reported net income of $31.5 million, or $0.36 per diluted share, for the fourth quarter of the prior year. Results in the fourth quarter of 2004 included $4.2 million ($2.6 million, net of tax, or $0.03 per diluted share) in costs related to refinancing the company’s credit facility in connection with the acquisition of American Medical Security Group (AMS). Results in the fourth quarter of 2003 included $28 million ($17.5 million net of tax, or $0.19 per diluted share) in costs related to the redemption of $175 million of debt. For the full year 2004, reported net income was $303 million, or $3.20 per diluted share, compared with $243 million, or $2.89 per diluted share in 2003. All EPS and share numbers in this release reflect the 2-for-1 stock split that was effective January 20, 2004.


“We are pleased to report full-year 2004 EPS at the high end of our guidance, even after including over four million dollars in fourth quarter expenses, or about three cents per diluted share, related to the refinancing of our credit facility,” said Chairman and Chief Executive Officer Howard Phanstiel. “During the year we re-established Medicare Advantage membership growth as well as annual commercial membership growth for the first time since 2000, and we’re very excited about the two acquisitions we’ve announced that will further expand our membership, geographic presence, and product distribution capabilities.”


Revenue and Membership


Fourth quarter 2004 total operating revenue of $3.2 billion was 13% higher than the same quarter a year ago. Commercial revenue rose 12%, driven by a combination of premium increases and organic membership growth, as well as the inclusion of AMS membership and revenues for 19 days in the quarter. Senior revenue grew 11% over the fourth quarter of last year, primarily as the result of a Medicare Advantage premium increase and a 5% rise in membership. For the full-year 2004, total operating revenue rose 12% year-over-year.


Specialty and Other revenue grew 41% over the fourth quarter last year, primarily due to increased revenue at the company’s pharmacy benefit management (PBM) subsidiary, Prescription Solutions. This revenue growth was driven by an increase in total membership of 605,000, or 12%, year-over-year. Additionally, a focused marketing initiative resulted in 32% year-over-year growth in mail order revenue and an increase in the mail order fulfillment rate to 26%. On a full-year basis, both mail order revenue at Prescription Solutions and total Specialty and Other revenue increased 39% from 2003.

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