Foundation Health to Buy Physicians

Foundation Health Systems Inc., the country’s fourth-biggest managed-care company, said it agreed to buy Physicians Health Services Inc. for about $280 million in cash. Foundation, based in Rancho Cordova, said the purchase will extend its reach into the Northeast by 440,000 members, particularly the valuable New York City region--one of the slowest in the country to adopt managed care. Physicians Health reported a first-quarter profit of $646,000, or 7 cents a share, far surpassing the consensus analyst forecast for a loss of 7 cents a share posted by First Call. It compared with a profit of $866,000, or 9 cents a share, in the first quarter of 1996. Trumbull, Conn.-based Physicians Health’s stock gained 70 cents to close at $27.64 on Nasdaq, while Foundation Health dipped 25 cents to close at $26.75 on the New York Stock Exchange. Foundation Health also announced that Malik M. Hasan was named chairman and chief executive.