Foundation Health Takes $406-Million Charge

Foundation Health Systems Inc. said it will post a second-quarter loss after taking a pretax charge of $405.9 million, more than expected, to cover costs from the April merger that formed the company. The nation’s fourth-largest managed-care company was created through the $1.34-billion merger of Foundation Health and Health Systems International. The firms originally estimated charges of $175 million to $225 million, which cover severance and employee benefit payments; real estate lease buyouts; legal, accounting and investment banking costs; and other expenses. Excluding the effect of the charges, Woodland Hills-based Foundation Health said it expects to report earnings Tuesday of 49 to 51 cents a share. The company’s shares rose 19 cents to close at $30.50 on the New York Stock Exchange.