1. Merrill Lynch Health Services Investor Conference The Waldorf Astoria, New York City December 3, 2003 Gregory W. Scott Executive Vice President and CFO PacifiCare Health Systems

2. The statements made during this presentation 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 company's most recent filings with the SEC, including the Form 10Q as of September 30, 2003, and the Form 10K as of December 31, 2002. Cautionary Statement

3. Medicare Supplement PBM Behavioral Health 2003 Market Expansion 2002 Health Plan + Specialty Companies 2002 Specialty Companies only 2003 Market Expansion A Fortune 200 company with $11 billion in revenue 2.2 million commercial lives 686K Medicare+Choice HMO lives 9 million specialty lives Largest purchaser of health care services in the Western U.S.

4. Third Quarter Performance and FY 2003 Guidance

5. 2003 Membership & Pricing Guidance  Membership  Commercial up 1%-2%, ex-CalPERS  M+C down to 680,000  Medicare Supplement doubles from 17,000 to ~35,000  Pricing  Commercial pricing up 17% after buydowns ~250 bp  M+C premium yield up ~4%  Specialty & Other up ~20%

6. Membership & Pricing Trends Commercial membership up sequentially despite modest declines in national accounts tied to slow economyCommercial membership up sequentially despite modest declines in national accounts tied to slow economy gross new small group sales in Q303 up 100% y-o-ygross new small group sales in Q303 up 100% y-o-y retention rate higher than expectedretention rate higher than expected Expect moderate single digit commercial membership increase in 2004Expect moderate single digit commercial membership increase in 2004 Pricing for Jan ‘04 renewals up mid-teens before buydowns ~400 bpPricing for Jan ‘04 renewals up mid-teens before buydowns ~400 bp

7. Issuance of 3.8 Million Shares of Common Stock Approximately $200 Million net proceeds Use of proceeds –$175M redemption of 10 3/4% Senior Notes –accrued interest, redemption premium, other transaction costs. Benefits: –Improve cash flow –Improve balance sheet platform for Medicare diversification –Promote credit rating increase  Decrease cost of debt EPS effect: –Q4’03 guidance lowered to $0.59-$0.64 due to $17.3 million one- time expenses and 1.9 million weighted share increase –2003: Full-year guidance lowered by $0.52 to $6.00-$6.05 –2004: Net Income increases $12 million net of tax; modestly dilutive to EPS

8. Issuance of 3.8 Million Shares of Common Stock Why Equity? Why Now? Credit Ratios –Debt / book cap (9/30/03)  From 33.3% to 25.7% –Debt / EBITDA (LTM 9/30/03)  From 1.5x to 1.1x

9. Free Cash Flow Growth Before Note Redemption Free cash flow is defined as net income plus depreciation and amortization, less capital expenditures Best measure of resources available at Parent to pay down debt, build statutory capital, pursue opportunistic acquisitions * Excluding non-recurring items

10. Excess Statutory Capital Weighted average company total > 300% RBC

11. Expanding Commercial Insured Gross Margin $16.37 $22.81 $33.10 2001-2003 Improvement = $335 million or 65% Health Care Costs Premium

12. Growing Commercial Business New product introductions Diversify to Individual/ Small/ Mid-sized groups Advertising/Branding Campaign Build Senior Solutions Products/ Distribution Medicare Supplement Disease Management Caregiver Expanded Specialty Company Membership Organic growth Small acquisitions 2003 - 2004 Product Leadership Strategy

13. Recently Launched Products and Services PPO PPO Self Directed Health Plan Self Directed Health Plan Medicare Supplement Medicare Supplement Self-Funded PPO Self-Funded PPO Tiered HMO Hospital Product Tiered HMO Hospital Product Value Plan Value Plan Senior Rx Card- complement to Med Supp Senior Rx Card- complement to Med Supp PPO Dental PPO Dental Medicare PPO (pilot) Medicare PPO (pilot)

14. Recently Launched Products and Services A Solution for Caregivers A Solution for Caregivers Healthy Renewal Pass Healthy Renewal Pass Hospital Quality Index Hospital Quality Index Latino Health Solutions Latino Health Solutions Women’s Health Solutions Women’s Health Solutions African American Health Solutions African American Health Solutions Private Label Life & Disability Insurance Private Label Life & Disability Insurance Flexible Spending Account Debit Card Flexible Spending Account Debit Card Premier Pass (physician concierge service- pilot) Premier Pass (physician concierge service- pilot) Extended customer service hours Extended customer service hours

15. Building Our Brands Relative Ad Spending Results Source: BrandEconomics®

16. New Forecasted Gross Profit Goal (after Q203)

17. Managing Medicare+Choice * Before Medicare reform bill; revisions in progress

18. Medicare Reform Summary Key Benefits to PHS areKey Benefits to PHS are ‘ 04 and ‘05 M + C reimbursement increase‘ 04 and ‘05 M + C reimbursement increase ’04 prescription drug benefit for low income M + C enrollees’04 prescription drug benefit for low income M + C enrollees ‘06 prescription drug benefit also conferred to M + C enrollees‘06 prescription drug benefit also conferred to M + C enrollees PBM participation in management of Rx Discount Card & drug benefitPBM participation in management of Rx Discount Card & drug benefit Medicare Supplement plans without Prescription benefit not affectedMedicare Supplement plans without Prescription benefit not affected

19. Medicare Strategy 2004 and Beyond Before Reform Before Reform Maximize Cash Flow Current Strategy Growth New life for strengthened Medicare+Choice program

20. Medicare+Choice After Reform Focus on growth from membership expansion rather than margin expansion: 2004-- modest net income growth (~ 5%-5.5% premium increase ) 2005-- keep pace with cost trend ( high single digit increase ) 2006-- substantial new reimbursement with Rx benefit

21. Medicare Reform Bill Passed by Congress 11/25/03 Passed by Congress 11/25/03 Will be signed by Bush in Dec. ‘03 Will be signed by Bush in Dec. ‘03 CMS county calculations CMS county calculations Revised ACRs Revised ACRs Increased reimbursements to begin ~3/04 Increased reimbursements to begin ~3/04 Drug card to start ~4/04 Drug card to start ~4/04 PPO/PDP regions announced by 1/1/05 PPO/PDP regions announced by 1/1/05 PDP/MA regulations in early ‘05 PDP/MA regulations in early ‘05 Drug benefit & new private plan options start 1/1/06 Drug benefit & new private plan options start 1/1/06

22. Medicare Disease Management Pilot Program HeartPartners- collaboration of PHS, Prescription Solutions, QMED, Alere Medical, Inc.HeartPartners- collaboration of PHS, Prescription Solutions, QMED, Alere Medical, Inc. Enroll up to 15,000 members w/ heart condition starting 1/04Enroll up to 15,000 members w/ heart condition starting 1/04 Estimated revenue = $120 million in 2004; up to $1 billion over 3 yearsEstimated revenue = $120 million in 2004; up to $1 billion over 3 years

23. Disease Management Savings > $117 million over last 12 months

24. Equity & Debt Value Appreciation Stock appreciation since 12/31/01 ~ 300% 10 ¾ % High Yield Note appreciation since issuance:   issued at 99.4%   recently indicated at ~116%   total return since issuance ~30%