PacifiCare says it isn’t necessarily for sale, but won’t rule one out, either, as it examines “value-increasing strategies.” PacifiCare’s soul-searching, prompted by a 43-percent decline in its stock price this year, officially began on a November day when it shook up management and formed an executive committee to sift the company’s options.
PacifiCare President Jeffrey Folick resigned, and CEO Alan Hoops was replaced as chairman of the board and then appointed president — in essence, a demotion, in that Hoops was left off the new executive committee.
PacifiCare will repurchase up to a quarter of its stock, whose fall has grown steeper in the wake of concerns that Medicare won’t carry the HMO as it had. PacifiCare, the country’s top Medicare carrier with 1 of every 6 Medicare+ Choice enrollees, has announced plans for an aggressive 5-year expansion of commercial business, but no similar treatment for its Medicare line.
PacifiCare, meanwhile, is buying Harris Methodist Health Plan. By absorbing the Texas HMO, which has 300,000 members, PacifiCare becomes the dominant player in the Dallas area. Harris Methodist had been seeking a buyer for two years; several months ago, its long-stalled agreement to be acquired by Blue Cross and Blue Shield of Texas fell apart. Harris Methodist sold for about $100 million.
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