.

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.a health and consumer services company making
peoples lives better
2
Safe Harbor Statement The statements made during
these presentations that are not historical facts
are forward-looking statements within the meaning
of the Federal securities laws, and may involve a
number of risks and uncertainties. Factors
that could cause actual results to differ
materially from expectations include, but are not
limited to, the risks discussed in the companys
most recent filings with the SEC, including Form
10Q as of March 31, 2002, and Form 10K as of
December 31, 2000.
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PacifiCare largest purchaser of health care
services in the western U.S.

• A Fortune 200 company with
• 11 billion in revenue
• 2.4 million commercial lives
• 835 thousand MedicareChoice lives
• 9 million specialty lives

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Crises of 2000-2001

• Executive Leadership
• Capital Structure
• Business Model/Mix Strategically Threatened
• Operations Under Siege
• Regulatory Challenges
• Network Instability
• Legal Uncertainties
• Stakeholder Confidence

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Crises of 2000-2001

• Executive Leadership

• Capital Structure
• UniHealth overhang
• Share repurchase program
• Maturity concentration of bank debt
• FAS 142 goodwill exposure

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Crises of 2000-2001

• Business Model/Mix Strategically Threatened
• Dependency on MC/ ACRs locked in
• Poor commercial business performance
• Conversion to risk model

• Operations Under Siege
• Retroactive CA provider contracts
• Harris integration challenges
• Claims inventory build-up

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Crises of 2000-2001

• Regulatory Challenges

• Network Instability

• Legal Uncertainties
• Class actions
• OPM

• Stakeholder Confidence
• Shareholders
• Creditors
• Providers
• Employees
• Members

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Brand New Day at PacifiCare in 2002
Progress Report

• Leadership
• Strategically focused
• Shareholder-aligned
• Committed

• Capital Structure
• Issues largely resolved
• Diversified access to working capital

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Brand New Day at PacifiCare in 2002
Progress Report

• Product Strategies
• Reduced MC dependency
• Enhanced commercial profitability
• Retention growth

• Operations
• Rapidly becoming industry leader
• Full service systems platform supports all
  funding solutions

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Brand New Day at PacifiCare in 2002
Progress Report

• Networks
• More stable
• Require vigilant monitoring

• Legal/Regulatory
• Suits/settlements going our way
• Positive collaborative regulatory
  relationships
• TX AG suit remains to be resolved

• Technology
• Investments in Future State underway
• Outsourcing generates operational savings
  significant flexibility

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Brand New Day at PacifiCare in 2002
Progress Report

• Brand
• Advertising/repositioning campaign launched

• Quality
• Programs advanced- can they catch us?

• Earnings
• Visibility improved
• Increased diversification
• Rebuilding investor/creditor confidence

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Top-Level Strategy
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Brand New Day at PacifiCare in 2002
Detailed Strategies

• Senior Business
• Exit unprofitable/unsustainable markets
• Harvest until visible reimbursement improvement
• Leverage gross margin for debt repayment
• Convert to Senior Solutions business

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Brand New Day at PacifiCare in 2002
Detailed Strategies

• Commercial
• Exit unprofitable/unsustainable markets
• Implement experience-rated underwriting
• Price for margin, not market share
• Leverage Western U.S. purchasing power
• Implement seamless, full service solutions
• Expand product offerings
• Cross-sell specialty businesses

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Brand New Day at PacifiCare in 2002
Detailed Strategies

• Specialty Businesses
• Increase PHSY member penetration cross-sell
• Increase unaffiliated membership
• Expand product/service offerings
• Extend integration with core business
• Implement leading edge technology
• Improve shareholder value recognition

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Brand New Day at PacifiCare in 2002
Consumer Aligned Business Strategy

• Reposition leverage PHSY and Secure Horizons
  brands with disruptive unique advertising
• Leverage leading position as womens health
  solutions company
• Leverage leading position in quality measurement,
  NCQA ratings, and customer satisfaction

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Brand New Day at PacifiCare in 2002
Consumer Aligned Business Strategy

• Offer new products not covered under traditional
  definition of medical necessity
• Provide consumer/employers with more informed
  choices
• Become the Southwest Airlines of our industry,
  with leading back-office technologies and
  business processes
• Roll out hassle-free e-scribing solutions

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Brand New Day at PacifiCare in 2002
Cost Reduction Detailed Strategy

• Complete medical management build-up to support
  full risk
• Leverage disease management programs
• Implement optional tighter network solutions
  channel membership through cost quality
  measurements
• Complete implementation of 300M IT Future State
  with standardization of common, best practices
• Continue to leverage other outsourced solutions
  for non-core functions

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Brand New Day at PacifiCare in 2002
CONCLUSION 2002 Means EBITDA
Earnings Brand Investment Texas Debt Achievement
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.a health and consumer services company making
peoples lives better