Western Region Operations and Government Contracts Segments Produce
Combined Net Income of $0.62 Per Diluted Share in Second Quarter 2014
Year-over-Year, Health Plan Services Premium Revenues Grew
26.5 Percent
Health Plan Enrollment Climbs 17.4 Percent Year-over-Year, Driven by
Continued Commercial Growth from Exchanges and Medicaid Growth from
Expansion
Company Announces Letter of Intent for Comprehensive Services
Agreement in Collaboration with Cognizant Technology Solutions: Health
Net Expects $150 to $200 Million in Annual G&A and Depreciation Expense
Savings by 2017
Company Website:
http://www.healthnet.com
LOS ANGELES -- (Business Wire)
Health Net, Inc. (NYSE: HNT) today announced 2014 second quarter GAAP
net income of $120.9 million, or $1.49 per diluted share, compared with
GAAP net income of $33.5 million, or $0.42 per diluted share, for the
second quarter of 2013.
The company’s Western Region Operations (Western Region) and Government
Contracts segments produced combined net income of $50.3 million, or
$0.62 per diluted share, in the second quarter of 2014 compared with
$41.4 million, or $0.52 per diluted share, in the second quarter of 2013.
The second quarter 2014 results include approximately $3.3 million in
pretax expenses, primarily related to severance costs, and a
$72.6 million income tax benefit resulting from a loss on the stock of
our subsidiary, Health Net of the Northeast.
Highlights from the second quarter of 2014 include:
-
Health Net’s total revenues climbed 24.9 percent in the second quarter
of 2014 compared with the second quarter of 2013, and health plan
services premiums revenues grew 26.5 percent over the same period;
-
The company achieved 17.4 percent enrollment growth in its Western
Region health plans in the second quarter of 2014 compared with the
second quarter of 2013;
-
Individual enrollment increased by 260,000 members, or 226.1 percent,
in the second quarter of 2014 compared with the second quarter of 2013
and increased by 168,000 members, or 81.2 percent, compared with the
first quarter of 2014. This sequential growth was primarily driven by
the enrollment of new individual members through the Affordable Care
Act (ACA) exchanges;
-
Medicaid enrollment increased by 286,000 members, or 25.6 percent, in
the second quarter of 2014 compared with the second quarter of 2013
and by more than 8 percent sequentially. This was primarily the result
of new members added in Arizona and California from the expansion of
Medicaid eligibility under the ACA; and
-
The company’s Western Region commercial Medical Care Ratio (MCR)
improved by 260 basis points year-over-year, as health care cost
trends remained moderate, the product mix improved and the company’s
premiums reflect the new Health Insurer Fee (HIF).
“We are very encouraged by our results so far in 2014. Our focused and
deliberate strategic approaches to the new opportunities in the
exchanges and Medicaid expansion are driving substantial enrollment and
revenue growth and higher income,” said Jay Gellert, Health Net’s chief
executive officer.
“We expect further growth in the second half of 2014 from the dual
eligible demonstrations in Los Angeles and San Diego counties and
continued enrollment growth from Medicaid expansion,” he added.
The company also announced it has signed a Letter of Intent with
Cognizant Technology Solutions (Cognizant), a leading provider of
information technology, consulting and business process services, as
part of its commitment to address its scale issue. The company expects
to execute a definitive services agreement with Cognizant before the end
of the third quarter of 2014, which will be subject to required
regulatory approval. The services agreement is currently expected to
generate approximately $150 to $200 million in annual General and
Administrative (G&A) and depreciation expense savings by 2017.
“Our decision to move forward with the services agreement was the result
of many months of careful consideration. We believe that our expanded
relationship with Cognizant will enhance our capabilities, enable
greater innovation and ensure that we will maintain the high service
levels our members and providers have come to expect from Health Net,”
noted Gellert. “We will begin preparing for the transition immediately
upon signing. We will then submit our plan for the required regulatory
approval. We expect to receive approval in the first half of 2015.”
CONSOLIDATED RESULTS
Health Net’s total revenues increased 24.9 percent in the second quarter
of 2014 to $3.4 billion from $2.7 billion in the second quarter of 2013.
Health plan services premium revenues of approximately $3.3 billion in
the second quarter of 2014 increased by 26.5 percent compared with the
second quarter of 2013.
Health plan services expenses of approximately $2.8 billion in the
second quarter of 2014 increased by 26.1 percent compared with the
second quarter of 2013.
WESTERN REGION OPERATIONS SEGMENT
Health Plan Membership
Total enrollment in the Western Region at June 30, 2014 was
approximately 2.9 million members, an increase of 17.4 percent from
enrollment at June 30, 2013.
Total enrollment in the company’s California health plans at June 30,
2014 was approximately 2.5 million members, an increase of 14.3 percent
from enrollment at June 30, 2013.
Western Region commercial enrollment at June 30, 2014 was approximately
1.3 million members, an increase of 10.4 percent compared with
enrollment at June 30, 2013.
Membership in tailored network products represented 52.5 percent of the
company’s Western Region commercial membership at June 30, 2014 compared
with 37.3 percent at June 30, 2013.
“Our historical success with tailored network products provided the
basis for our product strategy in the exchanges where most of our
enrollment is in tailored network products,” said Jim Woys, Health Net’s
chief operating officer. “As a result of the exchange growth, we expect
the percentage of commercial enrollment in tailored network products to
remain at greater than 50 percent through 2014,” explained Woys.
Enrollment in the company’s Medicare Advantage (MA) plans was 262,000
members at June 30, 2014, which represents an 11.0 percent increase
compared with enrollment of 236,000 members at June 30, 2013.
Medicaid enrollment increased 25.6 percent to 1.4 million members at
June 30, 2014 compared with approximately 1.1 million members as of
June 30, 2013, primarily due to Medicaid expansion under the ACA.
Dual eligibles enrollment was 2,000 members at June 30, 2014.
“We expect duals enrollment to accelerate in the second half of 2014,
primarily due to the start of passive enrollment in Los Angeles County
on July 1, 2014,” Woys added.
Revenues
Total revenues for the Western Region for the second quarter of 2014
were approximately $3.3 billion compared with approximately $2.6 billion
in the second quarter of 2013.
Net investment income in the Western Region was $12.0 million in the
second quarter of 2014 compared with $17.1 million in the second quarter
of 2013 and $11.1 million in the first quarter of 2014.
Health Plan Services Expenses
Health plan services expenses in the Western Region were approximately
$2.8 billion in the second quarter of 2014 compared with approximately
$2.2 billion in the second quarter of 2013.
Commercial Premium Yields and Health Care Cost
Trends
In the Western Region, commercial premiums per member per month (PMPM)
decreased by 0.4 percent to approximately $379 in the second quarter of
2014 compared with approximately $380 in the second quarter of 2013.
Commercial health care costs PMPM in the Western Region decreased by
3.4 percent to approximately $312 in the second quarter of 2014 compared
with approximately $323 in the second quarter of 2013.
“Health care cost trends remain moderate by historical standards for
physician, inpatient and outpatient services,” said Woys. “We also
benefit from the improving mix of our commercial business as large group
enrollment has declined and individual enrollment, largely in our
tailored network products, has increased significantly due to our
success with the exchanges.”
Medical Care Ratios
The health plan services MCR in the Western Region was 84.7 percent in
the second quarter of 2014 compared with 85.0 percent in the second
quarter of 2013.
The Western Region commercial MCR was 82.3 percent in the second quarter
of 2014 compared with 84.9 percent in the second quarter of 2013 due to
continued moderation in cost trends, an improved product mix and premium
increases to reflect the new HIF.
The MA MCR in the Western Region was 90.9 percent in the second quarter
of 2014 compared with 89.9 percent in the second quarter of 2013.
The Medicaid MCR was 83.6 percent in the second quarter of 2014 compared
with 79.5 percent in the second quarter of 2013. Retroactive
reinstatement of premium taxes in the second quarter of 2013 benefited
the Medicaid MCR in the second quarter of 2013 by 400 basis points.
G&A Expenses
G&A expenses in the Western Region were $342.0 million in the second
quarter of 2014 compared with $284.1 million in the second quarter of
2013 and $357.9 million in the first quarter of 2014. The G&A expense
ratio was 10.5 percent in the second quarter of 2014 compared with
11.0 percent in the second quarter of 2013 and 12.4 percent in the first
quarter of 2014.
“The administrative expense ratio, which excludes premium taxes and
ACA-related fees, also declined sequentially and year-over-year in the
second quarter of 2014,” said Woys. “We are very focused on continued
improvement in our administrative efficiency while preparing for the
transition with Cognizant.”
GOVERNMENT CONTRACTS SEGMENT
Government Contracts revenues were $154.1 million in the second quarter
of 2014 compared with $139.9 million in the second quarter of 2013.
Government Contracts expenses were $132.6 million in the second quarter
of 2014 compared with $121.8 million in the second quarter of 2013.
BALANCE SHEET
Cash and investments as of June 30, 2014 were $2.3 billion compared with
$1.9 billion as of June 30, 2013.
Reserves for claims and other settlements were $1.5 billion as of
June 30, 2014 compared with $1.0 billion as of June 30, 2013 and
$1.2 billion as of March 31, 2014.
Days claims payable (DCP) for the second quarter of 2014 was 49.0 days
compared with 42.1 days in the second quarter of 2013 and 43.2 days in
the first quarter of 2014.
On an adjusted1 basis, DCP for the second quarter of 2014 was
64.4 days compared with 58.4 days in the second quarter of 2013 and
63.1 days in the first quarter of 2014.
The company’s debt-to-total capital ratio was 21.5 percent as of
June 30, 2014 compared with 22.9 percent as of March 31, 2014 and
25.6 percent as of June 30, 2013.
CASH FLOW FROM OPERATIONS
Operating cash flow was negative $13.8 million in the second quarter of
2014 because the company did not receive approximately $300 million of
expected Medicaid payments in the second quarter.
“We received approximately $262 million in June Medi-Cal payments on
July 28, 2014,” said Joseph Capezza, Health Net’s chief financial
officer. “We now have received all June payments.”
The company noted that cash at the parent was approximately
$200.4 million at June 30, 2014.
STOCK REPURCHASE UPDATE
Health Net did not repurchase any shares of its common stock in the
second quarter of 2014 as it was evaluating its scale issues. At
June 30, 2014, approximately $280 million of authorization under the
company’s existing $400 million stock repurchase program remained.
“We intend to resume repurchases in the third quarter of 2014 through
privately negotiated transactions, accelerated share repurchase
programs, open market transactions, or by any combination of such
methods,” Capezza explained.
“We are increasing our guidance for weighted-average fully diluted
shares outstanding in 2014 to approximately 80 million shares from our
prior guidance of 77 million shares,” he added.
2014 GUIDANCE
The company is maintaining GAAP earnings per diluted share of at least
$3.00 for the full year 2014.
The table included in this release provides specific 2014 guidance
metrics, including updates to expectations for Medicaid and total health
plan membership, state health plans revenues, the Medicaid MCR, tax
rates and weighted-average fully diluted shares outstanding.
“We are maintaining our diluted EPS guidance for the combined Western
Region and Government Contracts segments of at least $2.22 despite the
higher share count. In effect, we are increasing our pretax income
guidance for the combined segments by approximately $12 million for the
full year,” Capezza noted.
CONFERENCE CALL
As previously announced, Health Net will discuss the company’s second
quarter 2014 financial results during a conference call on Wednesday,
August 6, 2014, beginning at approximately 11:00 a.m. Eastern time. The
conference call should be accessed at least 15 minutes prior to its
start with the following numbers:
|
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(877) 407-4019 (Domestic)
|
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(877) 660-6853 (Replay – Domestic)
|
| | | | |
(201) 689-8337 (International)
| | | | | |
(201) 612-7415 (Replay – International)
|
An access code is not required for the live conference call on August 6,
2014. The access code for the replay is 13585376. The replay of the
conference call will be available through August 11, 2014. A live
webcast and replay of the conference call also will be available at www.healthnet.com
under “Investor Relations.” The conference call webcast is open to all
interested parties. Anyone listening to the company’s conference call or
webcast will be presumed to have read Health Net’s Annual Report on Form
10-K for the year ended December 31, 2013, Quarterly Report on Form 10-Q
for the quarter ended March 31, 2014, and other reports filed by the
company from time to time with the Securities and Exchange Commission.
ABOUT HEALTH NET
Health Net, Inc. is a publicly traded managed care organization that
delivers managed health care services through health plans and
government-sponsored managed care plans. Its mission is to help people
be healthy, secure and comfortable. Health Net provides and administers
health benefits to approximately 5.8 million individuals across the
country through group, individual, Medicare (including the Medicare
prescription drug benefit commonly referred to as “Part D”), Medicaid,
U.S. Department of Defense, including TRICARE, and Veterans Affairs
programs. Health Net also offers behavioral health, substance abuse and
employee assistance programs, managed health care products related to
prescription drugs, managed health care product coordination for
multi-region employers, and administrative services for medical groups
and self-funded benefits programs.
For more information on Health Net, Inc., please visit the company’s
website at www.healthnet.com.
CAUTIONARY STATEMENTS
The company and its representatives may from time to time make written
and oral forward-looking statements within the meaning of the Private
Securities Litigation Reform Act (“PSLRA”) of 1995, including statements
in this and other press releases, in presentations, filings with the
Securities and Exchange Commission (“SEC”), reports to stockholders and
in meetings with investors and analysts. All statements in this press
release, other than statements of historical information provided
herein, may be deemed to be forward-looking statements and as such are
intended to be covered by the safe harbor for “forward-looking
statements” provided by PSLRA. These statements are based on
management’s analysis, judgment, belief and expectation only as of the
date hereof, and are subject to changes in circumstances and a number of
risks and uncertainties. Without limiting the foregoing, statements
including the words “believes,” “anticipates,” “plans,” “expects,”
“may,” “should,” “could,” “estimate,” “intend,” “feels,” “will,”
“projects” and other similar expressions are intended to identify
forward-looking statements. Actual results could differ materially from
those expressed in, or implied or projected by the forward-looking
information and statements due to, among other things, health care
reform and other increased government participation in and taxation or
regulation of health benefits and managed care operations, including but
not limited to the implementation of the Patient Protection and
Affordable Care Act and the Health Care and Education Reconciliation Act
of 2010 (collectively, the "ACA") and related fees, assessments and
taxes; the company’s ability to successfully participate in California’s
Coordinated Care Initiative, which is subject to a number of risks
inherent in untested health care initiatives and requires the company to
adequately predict the costs of providing benefits to individuals that
are generally among the most chronically ill within each of Medicare and
Medi-Cal and implement delivery systems for benefits with which the
company has limited operating experience; the company’s ability to
successfully participate in the federal and state health insurance
exchanges under the ACA, which have experienced technical challenges in
implementation and which involve uncertainties related to the mix and
volume of business that could negatively impact the adequacy of our
premium rates and may not be sufficiently offset by the risk
apportionment provisions of the ACA; increasing health care costs,
including but not limited to costs associated with the introduction of
new treatments or therapies; our ability to reduce administrative
expenses while maintaining targeted levels of service and operating
performance which could be significantly impacted if we are unable to
reach a final agreement with Cognizant or do not receive applicable
regulatory approval of any final services agreement; negative prior
period claims reserve developments; rate cuts and other risks and
uncertainties affecting the company’s Medicare or Medicaid businesses;
the company’s ability to successfully participate in Arizona’s Medicaid
program; trends in medical care ratios; membership declines or negative
changes in our health care product mix; unexpected utilization patterns
or unexpectedly severe or widespread illnesses; the timing of
collections on amounts receivable from state and federal governments and
agencies, including collections of amounts owed under the T-3 contract;
litigation costs; regulatory issues with federal and state agencies
including, but not limited to, the California Department of Managed
Health Care, the Centers for Medicare & Medicaid Services, the Office of
Civil Rights of the U.S. Department of Health and Human Services and
state departments of insurance; operational issues; changes in economic
or market conditions; failure to effectively oversee our third-party
vendors; noncompliance by the company or the company’s business
associates with any privacy laws or any security breach involving the
misappropriation, loss or other unauthorized use or disclosure of
confidential information; impairment of the company’s goodwill or other
intangible assets; investment portfolio impairment charges; volatility
in the financial markets; and general business and market conditions.
Additional factors that could cause actual results to differ materially
from those reflected in the forward-looking statements include, but are
not limited to, the risks discussed in the “Risk Factors” section
included within the company’s most recent Annual Report on Form 10-K and
subsequent Quarterly Report on Form 10-Q filed with the SEC and the
other risks discussed in the company’s filings with the SEC. Readers are
cautioned not to place undue reliance on these forward-looking
statements. Except as may be required by law, the company undertakes no
obligation to address or publicly update any forward-looking statements
to reflect events or circumstances that arise after the date of this
release.
The financial information presented in this press release is unaudited
and is subject to change as a result of subsequent events or
adjustments, if any, arising prior to the filing of the company’s
Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2014.
1 For a reconciliation of adjusted days claims payable to the
comparable GAAP financial measure, see “Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Results of
Operations – Days Claims Payable” in the company’s Form 10-Q for the
quarter ended June 30, 2014, and Item 2.02 in the company’s Form 8-K
filed with the Securities and Exchange Commission on August 6, 2014.
| Health Net, Inc. | |
| |
| 2014 GAAP Guidance (1) | | | |
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| | | | |
|
| MEMBERSHIP | Current | | Previous |
|
|
|
| (updated 8/6/14) |
| (as of 5/7/14) |
| | | | |
|
| | | Enrollment | | Enrollment |
| | | at 12/31/2014 |
| at 12/31/2014 |
| Commercial | | | |
|
Large Group
|
560,000
| |
560,000
|
|
Small Group
|
280,000
| |
280,000
|
|
Individual
|
380,000
| |
380,000
|
| | | | |
|
|
Total Commercial
|
1,220,000
| |
1,220,000
|
| | | | |
|
| Medicare Advantage |
260,000
| |
260,000
|
| | | | |
|
| Medicaid |
1,585,000
| |
1,535,000
|
| | | | |
|
| Dual Eligibles |
38,000
| |
38,000
|
| | | | |
|
| Total Health Plan Membership |
3,103,000
| |
3,053,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | |
|
| Premium Revenues | FY2014 |
| FY2014 |
| | | | |
|
|
Commercial
|
$5.6 billion
| |
$5.6 billion
|
|
Medicare Advantage
|
$3.0 billion
| |
$3.0 billion
|
|
State Health Plans
|
$4.5 billion
| |
$4.4 billion
|
|
Dual Eligibles
|
$342 million
| |
$342 million
|
|
Total Health Plans
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$13.4 billion
| |
$13.3 billion
|
| | | | |
|
| | | | |
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| Total Consolidated Revenues | $14.0 billion | | $14.0 billion |
| | | | |
|
| | | | |
|
| Medical Care Ratios (MCR) | FY2014 |
| FY2014 |
| | | | |
|
|
Commercial
|
83.0%
| |
83.0%
|
|
Medicare Advantage
|
90.9%
| |
90.9%
|
|
Medicaid
|
83.6%
| |
83.9%
|
|
Dual Eligibles
|
86.5%
| |
86.5%
|
| | | | |
|
| | | | |
|
| G&A Expense Ratio |
10.8%
| |
10.8%
|
| | | | |
|
| | | | |
|
| Tax Rate(2) |
31.1%
| |
34.6%
|
| | | | |
|
| Western Region and Government Contracts Tax Rate(3) |
51.5%
| |
52.2%
|
| | | | |
|
| | | | |
|
| Weighted-average fully | | | |
| diluted shares outstanding |
80 million
| |
77 million
|
| | | | |
|
| | | | |
|
| GAAP Earnings per Diluted Share (EPS)(2) |
At least $3.00
| |
At least $3.00
|
| | | | |
|
| Western Region and Government Contracts EPS(3) |
At least $2.22
| |
At least $2.22
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| | | | |
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| (1) All guidance metrics are approximations
|
| (2) Includes a $72.6 million tax benefit
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| (3) Excludes the $72.6 million tax benefit
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| Health Net, Inc. | | |
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| Enrollment Data - By State | | | | | | | | | | | | | | | |
| (In thousands) | | | | | | | | | | | | | | | |
|
|
| | | | | | | | | | Change from |
| | | | | | | | | | | March 31, 2014 | | June 30, 2013 |
| | | | June 30, | | March 31, | | June 30, | | | Increase/ | | % | | Increase/ | | % |
| | | | 2014 |
| 2014 |
| 2013 |
|
| (Decrease) |
| Change |
| (Decrease) |
| Change |
|
California
| | | | | | | | | | | | | | | |
|
Large Group
| |
492
| |
499
| |
608
| | |
(7)
| |
(1.4)%
| |
(116)
| |
(19.1)%
|
|
Small Group
| |
240
| |
239
| |
241
| | |
1
| |
0.4%
| |
(1)
| |
(0.4)%
|
|
Individual
| |
272
|
|
158
|
|
98
|
|
|
114
|
|
72.2%
|
|
174
|
|
177.6%
|
|
Commercial Risk
| |
1,004
| |
896
| |
947
| | |
108
| |
12.1%
| |
57
| |
6.0%
|
|
Medicare Advantage
| |
162
| |
156
| |
146
| | |
6
| |
3.8%
| |
16
| |
11.0%
|
|
Medi-Cal
| |
1,359
| |
1,279
| |
1,118
| | |
80
| |
6.3%
| |
241
| |
21.6%
|
|
Dual Eligibles
|
|
2
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
| |
Total California
|
|
2,527
|
|
2,331
|
|
2,211
|
|
|
196
|
|
8.4%
|
|
316
|
|
14.3%
|
| | | | | | | | | | | | | | | | |
|
|
Arizona
| | | | | | | | | | | | | | | |
|
Large Group
| |
48
| |
50
| |
64
| | |
(2)
| |
(4.0)%
| |
(16)
| |
(25.0)%
|
|
Small Group
| |
43
| |
40
| |
42
| | |
3
| |
7.5%
| |
1
| |
2.4%
|
|
Individual
| |
99
|
|
47
|
|
14
|
|
|
52
|
|
110.6%
|
|
85
|
|
607.1%
|
|
Commercial Risk
| |
190
| |
137
| |
120
| | |
53
| |
38.7%
| |
70
| |
58.3%
|
|
Medicare Advantage
| |
46
| |
46
| |
43
| | |
0
| |
0.0%
| |
3
| |
7.0%
|
|
Medicaid
|
|
45
|
|
18
|
|
|
|
|
27
|
|
150.0%
|
|
45
|
|
|
| |
Total Arizona
|
|
281
|
|
201
|
|
163
|
|
|
80
|
|
39.8%
|
|
118
|
|
72.4%
|
| | | | | | | | | | | | | | | | |
|
|
Northwest
| | | | | | | | | | | | | | | |
|
Large Group
| |
28
| |
29
| |
23
| | |
(1)
| |
(3.4)%
| |
5
| |
21.7%
|
|
Small Group
| |
25
| |
27
| |
40
| | |
(2)
| |
(7.4)%
| |
(15)
| |
(37.5)%
|
|
Individual
| |
4
|
|
2
|
|
3
|
|
|
2
|
|
100.0%
|
|
1
|
|
33.3%
|
|
Commercial Risk
| |
57
| |
58
| |
66
| | |
(1)
| |
(1.7)%
| |
(9)
| |
(13.6)%
|
|
Medicare Advantage
|
|
54
|
|
53
|
|
47
|
|
|
1
|
|
1.9%
|
|
7
|
|
14.9%
|
| |
Total Northwest
|
|
111
|
|
111
|
|
113
|
|
|
0
|
|
0.0%
|
|
(2)
|
|
(1.8)%
|
| | | | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Health Plan Enrollment | | | | | | | | | | | | | | | |
|
Large Group
| |
568
| |
578
| |
695
| | |
(10)
| |
(1.7)%
| |
(127)
| |
(18.3)%
|
|
Small Group
| |
308
| |
306
| |
323
| | |
2
| |
0.7%
| |
(15)
| |
(4.6)%
|
|
Individual
| |
375
|
|
207
|
|
115
|
|
|
168
|
|
81.2%
|
|
260
|
|
226.1%
|
|
Commercial Risk
| |
1,251
| |
1,091
| |
1,133
| | |
160
| |
14.7%
| |
118
| |
10.4%
|
|
Medicare Advantage
| |
262
| |
255
| |
236
| | |
7
| |
2.7%
| |
26
| |
11.0%
|
|
Medi-Cal/Medicaid
| |
1,404
| |
1,297
| |
1,118
| | |
107
| |
8.2%
| |
286
| |
25.6%
|
|
Dual Eligibles
| |
2
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
| Western Region Operations |
|
2,919
|
|
2,643
|
|
2,487
|
|
|
276
|
|
10.4%
|
|
432
|
|
17.4%
|
| | | | | | | | | | | | | | | | |
|
| | | | | |
| | | | | | | | | | | |
| TRICARE - North Contract Eligibles |
2,849
|
|
2,851
|
|
2,865
|
|
|
(2)
|
|
(0.1)%
|
|
(16)
|
|
(0.6)%
|
| Health Net, Inc. | | |
| |
| |
|
| |
| |
| |
| |
| Enrollment Data - Line of Business | | | | | | | | | | | | | |
| (In thousands) | | | | | | | | | | | | | | | |
|
|
| | | | | | | | | | Change from |
| | | | | | | | | | | March 31, 2014 | | June 30, 2013 |
| | | | June 30, | | March 31, | | June 30, | | | Increase/ | | % | | Increase/ | | % |
| | | | 2014 |
| 2014 |
| 2013 |
|
| (Decrease) |
| Change |
| (Decrease) |
| Change |
| | | | | | | | | | | | | | | | |
|
|
Large Group
| | | | | | | | | | | | | | | |
|
California
| |
492
| |
499
| |
608
| | |
(7)
| |
(1.4)%
| |
(116)
| |
(19.1)%
|
|
Arizona
| |
48
| |
50
| |
64
| | |
(2)
| |
(4.0)%
| |
(16)
| |
(25.0)%
|
|
Northwest
| |
28
|
|
29
|
|
23
|
|
|
(1)
|
|
(3.4)%
|
|
5
|
|
21.7%
|
| | | |
568
|
|
578
|
|
695
|
|
|
(10)
|
|
(1.7)%
|
|
(127)
|
|
(18.3)%
|
| | | | | | | | | | | | | | | | |
|
|
Small Group
| | | | | | | | | | | | | | | |
|
California
| |
240
| |
239
| |
241
| | |
1
| |
0.4%
| |
(1)
| |
(0.4)%
|
|
Arizona
| |
43
| |
40
| |
42
| | |
3
| |
7.5%
| |
1
| |
2.4%
|
|
Northwest
| |
25
|
|
27
|
|
40
|
|
|
(2)
|
|
(7.4)%
|
|
(15)
|
|
(37.5)%
|
| | | |
308
|
|
306
|
|
323
|
|
|
2
|
|
0.7%
|
|
(15)
|
|
(4.6)%
|
| | | | | | | | | | | | | | | | |
|
|
Individual
| | | | | | | | | | | | | | | |
|
California
| |
272
| |
158
| |
98
| | |
114
| |
72.2%
| |
174
| |
177.6%
|
|
Arizona
| |
99
| |
47
| |
14
| | |
52
| |
110.6%
| |
85
| |
607.1%
|
|
Northwest
| |
4
|
|
2
|
|
3
|
|
|
2
|
|
100.0%
|
|
1
|
|
33.3%
|
| | | |
375
|
|
207
|
|
115
|
|
|
168
|
|
81.2%
|
|
260
|
|
226.1%
|
| | | | | | | | | | | | | | | | |
|
|
Commercial Risk
| | | | | | | | | | | | | | | |
|
California
| |
1,004
| |
896
| |
947
| | |
108
| |
12.1%
| |
57
| |
6.0%
|
|
Arizona
| |
190
| |
137
| |
120
| | |
53
| |
38.7%
| |
70
| |
58.3%
|
|
Northwest
| |
57
|
|
58
|
|
66
|
|
|
(1)
|
|
(1.7)%
|
|
(9)
|
|
(13.6)%
|
| | | |
1,251
|
|
1,091
|
|
1,133
|
|
|
160
|
|
14.7%
|
|
118
|
|
10.4%
|
| | | | | | | | | | | | | | | | |
|
|
Medicare Advantage
| | | | | | | | | | | | | | | |
|
California
| |
162
| |
156
| |
146
| | |
6
| |
3.8%
| |
16
| |
11.0%
|
|
Arizona
| |
46
| |
46
| |
43
| | |
0
| |
0.0%
| |
3
| |
7.0%
|
|
Northwest
| |
54
|
|
53
|
|
47
|
|
|
1
|
|
1.9%
|
|
7
|
|
14.9%
|
| | | |
262
|
|
255
|
|
236
|
|
|
7
|
|
2.7%
|
|
26
|
|
11.0%
|
| | | | | | | | | | | | | | | | |
|
|
Medi-Cal/Medicaid
| | | | | | | | | | | | | | | |
|
California
| |
1,359
| |
1,279
| |
1,118
| | |
80
| |
6.3%
| |
241
| |
21.6%
|
|
Arizona
| |
45
|
|
18
|
|
|
|
|
27
|
|
150.0%
|
|
45
|
|
|
| | | |
1,404
|
|
1,297
|
|
1,118
|
|
|
107
|
|
8.2%
|
|
286
|
|
25.6%
|
| | | | | | | | | | | | | | | | |
|
|
Dual Eligibles
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California
| |
2
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Health Plan Enrollment | | | | | | | | | | | | | | | |
|
Large Group
| |
568
| |
578
| |
695
| | |
(10)
| |
(1.7)%
| |
(127)
| |
(18.3)%
|
|
Small Group
| |
308
| |
306
| |
323
| | |
2
| |
0.7%
| |
(15)
| |
(4.6)%
|
|
Individual
| |
375
|
|
207
|
|
115
|
|
|
168
|
|
81.2%
|
|
260
|
|
226.1%
|
|
Commercial Risk
| |
1,251
| |
1,091
| |
1,133
| | |
160
| |
14.7%
| |
118
| |
10.4%
|
|
Medicare Advantage
| |
262
| |
255
| |
236
| | |
7
| |
2.7%
| |
26
| |
11.0%
|
|
Medi-Cal/Medicaid
| |
1,404
| |
1,297
| |
1,118
| | |
107
| |
8.2%
| |
286
| |
25.6%
|
|
Dual Eligibles
| |
2
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
| Western Region Operations |
|
2,919
|
|
2,643
|
|
2,487
|
|
|
276
|
|
10.4%
|
|
432
|
|
17.4%
|
| | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | |
|
| TRICARE - North Contract Eligibles |
2,849
|
|
2,851
|
|
2,865
|
|
|
(2)
|
|
(0.1)%
|
|
(16)
|
|
(0.6)%
|
|
|
|
| | | |
| | |
| |
| |
Health Net, Inc. |
Consolidated Statements of Operations |
($ in thousands, except per share data) |
|
|
| | | | | | | | | | | |
|
| | | | | | | | | | | |
|
| | | | | | | |
Quarter Ended
| |
Quarter Ended
| |
Quarter Ended
|
| | | | | | | |
June 30,
| |
March 31,
| |
June 30,
|
| REVENUES: | | | | |
|
2014
|
| | |
|
2014
| | |
|
2013
|
|
Health plan services premiums
|
$
|
3,261,878
| | | |
$
|
2,881,345
| | |
$
|
2,578,874
|
|
Government contracts
| | | |
154,083
| | | | |
144,090
| | | |
139,942
|
|
Net investment income
| | | |
12,043
| | | | |
11,102
| | | |
17,143
|
|
Administrative services fees and other income
|
|
(6,612
|
)
| | |
|
2,398
| | |
|
2,472
|
| | |
Total revenues
| | | |
|
3,421,392
|
| | |
|
3,038,935
| | |
|
2,738,431
|
| | | | | | | | | | | | | |
|
| EXPENSES: | | | | | | | | | | | |
|
Health plan services
| | | |
2,763,179
| | | | |
2,402,342
| | | |
2,191,918
|
|
Government contracts
| | | |
133,208
| | | | |
131,974
| | | |
127,400
|
|
General and administrative
| |
344,734
| | | | |
361,023
| | | |
291,437
|
|
Selling
| | | | | |
64,002
| | | | |
64,152
| | | |
57,769
|
|
Depreciation and amortization
| |
9,641
| | | | |
9,663
| | | |
9,514
|
|
Interest
| | | | |
|
7,826
|
| | |
|
7,821
| | |
|
8,365
|
| | |
Total expenses
| | | |
|
3,322,590
|
| | |
|
2,976,975
| | |
|
2,686,403
|
|
Income from operations before income taxes
| |
98,802
| | | | |
61,960
| | | |
52,028
|
|
Income tax (benefit) provision
|
|
(22,065
|
)
| | |
|
33,173
| | |
|
18,545
|
|
Net income
| | | | |
$
|
120,867
|
| | |
$
|
28,787
| | |
$
|
33,483
|
| | | | | | | | | | | | | |
|
|
Net income per share:
| | | | | | | | | |
|
Basic
| | | | |
$
|
1.51
| | | |
$
|
0.36
| | |
$
|
0.42
|
|
Diluted
| | | | |
$
|
1.49
| | | |
$
|
0.36
| | |
$
|
0.42
|
| | | | | | | | | | | | | |
|
|
Weighted average shares outstanding:
| | | | | | |
|
Basic
| | | | | |
80,250
| | | | |
79,802
| | | |
79,367
|
|
Diluted
| | | | | |
81,218
| | | | |
80,922
| | | |
80,085
|
|
| | | |
| |
| |
| |
Health Net, Inc. |
Condensed Consolidated Balance Sheets |
(Amounts in thousands, except ratio data) |
| | | | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
|
| | | | |
June 30,
| |
March 31,
| |
June 30,
|
| | | | |
|
2014
|
| |
|
2014
|
| |
|
2013
|
|
| ASSETS | | | | | | |
|
Current Assets
| | | | | | |
|
Cash and cash equivalents
| |
$
|
603,097
| | |
$
|
737,024
| | |
$
|
279,618
| |
|
Investments - available for sale
| | |
1,668,943
| | | |
1,685,009
| | | |
1,632,466
| |
|
Premiums receivable, net
| | |
849,089
| | | |
450,224
| | | |
579,206
| |
|
Amounts receivable under government contracts
| | |
193,043
| | | |
188,843
| | | |
205,168
| |
|
Other receivables
| | |
183,795
| | | |
54,251
| | | |
52,283
| |
|
Deferred taxes
| | |
81,293
| | | |
75,321
| | | |
80,382
| |
|
Other assets
| |
|
259,878
|
| |
|
254,702
|
| |
|
119,015
|
|
|
Total current assets
| | |
3,839,138
| | | |
3,445,374
| | | |
2,948,138
| |
|
Property and equipment, net
| | |
209,385
| | | |
206,410
| | | |
190,394
| |
|
Goodwill
| | |
565,886
| | | |
565,886
| | | |
565,886
| |
|
Other intangible assets, net
| | |
13,229
| | | |
13,949
| | | |
15,556
| |
|
Deferred taxes
| | |
9,530
| | | |
4,195
| | | |
5,503
| |
|
Investments - available for sale - noncurrent
| | |
652
| | | |
4,255
| | | |
18,332
| |
|
Other noncurrent assets
| |
|
139,205
|
| |
|
190,550
|
| |
|
137,644
|
|
|
Total Assets
| | | |
$
|
4,777,025
|
| |
$
|
4,430,619
|
| |
$
|
3,881,453
|
|
| | | | | | | | |
|
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | |
|
Current Liabilities
| | | | | | |
|
Reserves for claims and other settlements
| |
$
|
1,488,322
| | |
$
|
1,151,958
| | |
$
|
1,013,086
| |
|
Health care and other costs payable under government contracts
| | |
94,195
| | | |
80,232
| | | |
76,231
| |
|
Unearned premiums
| | |
130,905
| | | |
127,593
| | | |
124,205
| |
|
Accounts payable and other liabilities
| |
|
496,349
|
| |
|
669,406
|
| |
|
392,647
|
|
|
Total current liabilities
| | | |
2,209,771
| | | |
2,029,189
| | | |
1,606,169
| |
|
Senior notes payable
| | | |
399,402
| | | |
399,351
| | | |
399,197
| |
|
Deferred taxes
| | | | |
22,376
| | | |
18,057
| | | |
-
| |
|
Borrowings under revolving credit facility
| | |
100,000
| | | |
100,000
| | | |
125,000
| |
|
Other noncurrent liabilities
| |
|
223,595
|
| |
|
205,521
|
| |
|
226,863
|
|
|
Total Liabilities
| | |
|
2,955,144
|
| |
|
2,752,118
|
| |
|
2,357,229
|
|
| | | | | | | | |
|
|
Stockholders' Equity
| | | | | | | |
|
Common stock
| | | |
152
| | | |
152
| | | |
150
| |
|
Additional paid-in capital
| | |
1,406,768
| | | |
1,397,962
| | | |
1,360,749
| |
|
Treasury common stock, at cost
| | |
(2,197,890
|
)
| | |
(2,197,538
|
)
| | |
(2,178,121
|
)
|
|
Retained earnings
| | | |
2,613,302
| | | |
2,492,435
| | | |
2,377,055
| |
|
Accumulated other comprehensive (loss) income
| |
|
(451
|
)
| |
|
(14,510
|
)
| |
|
(35,609
|
)
|
|
Total Stockholders' Equity
| |
|
1,821,881
|
| |
|
1,678,501
|
| |
|
1,524,224
|
|
|
Total Liabilities and Stockholders' Equity
| |
$
|
4,777,025
|
| |
$
|
4,430,619
|
| |
$
|
3,881,453
|
|
| | | | | | | | |
|
|
Debt-to-Total Capital Ratio
| | |
21.5
|
%
| | |
22.9
|
%
| | |
25.6
|
%
|
|
|
|
| | | |
| |
| |
Health Net, Inc. |
Condensed Consolidated Statements of Cash Flows |
(Amounts in thousands) |
| | | | | | | | |
|
| | | | |
Quarter Ended
| |
Quarter Ended
| |
Quarter Ended
|
| | | | |
June 30,
| |
March 31,
| |
June 30,
|
| | | | |
|
2014
|
| |
|
2014
|
| |
|
2013
|
|
| | | |
| | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
|
Net income
| |
$
|
120,867
| | |
$
|
28,787
| | |
$
|
33,483
| |
|
Adjustments to reconcile net income to net cash
| | | | | |
|
(used in) provided by operating activities:
| | | | | |
|
Amortization and depreciation
| |
9,641
| | | |
9,663
| | | |
9,514
| |
|
Share-based compensation expense
| |
6,536
| | | |
9,164
| | | |
6,942
| |
|
Deferred income taxes
| |
(14,653
|
)
| | |
18,129
| | | |
9,169
| |
|
Excess tax benefits from share-based compensation
| |
(357
|
)
| | |
(997
|
)
| | |
(36
|
)
|
|
Net realized gain on sale on investments
| |
(1,928
|
)
| | |
(308
|
)
| | |
(5,647
|
)
|
|
Other changes
| |
6,364
| | | |
9,562
| | | |
6,845
| |
|
Changes in assets and liabilities:
| | | | | |
|
Premiums receivable and unearned premiums
| |
(395,553
|
)
| | |
(16,588
|
)
| | |
(75,298
|
)
|
|
Other current assets, receivables and noncurrent assets
| |
(69,421
|
)
| | |
(147,387
|
)
| | |
20,054
| |
|
Amounts receivable/payable under government contracts
| |
(492
|
)
| | |
34,089
| | | |
3,160
| |
|
Reserves for claims and other settlements
| |
336,364
| | | |
167,883
| | | |
(84,658
|
)
|
|
Accounts payable and other liabilities
|
|
(11,118
|
)
| |
|
199,461
|
| |
|
(29,813
|
)
|
|
Net cash (used in) provided by operating activities
|
|
(13,750
|
)
| |
|
311,458
|
| |
|
(106,285
|
)
|
| | | | | | | | |
|
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | |
|
Sales of investments
| | |
125,751
| | | |
66,499
| | | |
218,593
| |
|
Maturities of investments
| |
19,210
| | | |
24,469
| | | |
21,346
| |
|
Purchases of investments
| |
(102,873
|
)
| | |
(125,564
|
)
| | |
(194,361
|
)
|
|
Purchases of property and equipment
| |
(12,519
|
)
| | |
(17,437
|
)
| | |
(13,075
|
)
|
|
Sales and purchases of restricted investments and other
|
|
(2,777
|
)
| |
|
3,537
|
| |
|
(1,418
|
)
|
|
Net cash provided by (used in) investing activities
|
|
26,792
|
| |
|
(48,496
|
)
| |
|
31,085
|
|
| | | | | | | | |
|
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | |
|
Proceeds from exercise of stock options and employee stock purchases
| |
2,726
| | | |
3,746
| | | |
1,216
| |
|
Repurchases of common stock
| |
(1,226
|
)
| | |
(11,292
|
)
| | |
(70
|
)
|
|
Excess tax benefits from share-based compensation
| |
357
| | | |
997
| | | |
36
| |
|
Borrowings under financing arrangements
| |
-
| | | |
-
| | | |
233,000
| |
|
Repayment of borrowings under financing arrangements
| |
-
| | | |
-
| | | |
(208,000
|
)
|
|
Net increase (decrease) in checks outstanding, net of deposits
| |
(713
|
)
| | |
713
| | | |
99,368
| |
|
Customer funds administered
|
|
(148,113
|
)
| |
|
46,743
|
| |
|
(1,067
|
)
|
|
Net cash (used in) provided by financing activities
|
|
(146,969
|
)
| |
|
40,907
|
| |
|
124,483
|
|
| | | | | | | | |
|
|
Net (decrease) increase in cash and cash equivalents
| |
(133,927
|
)
| | |
303,869
| | | |
49,283
| |
|
Cash and cash equivalents, beginning of period
|
|
737,024
|
| |
|
433,155
|
| |
|
230,335
|
|
|
Cash and cash equivalents, end of period
|
$
|
603,097
|
| |
$
|
737,024
|
| |
$
|
279,618
|
|
| | | | | | | | | | |
|
| Health Net, Inc. |
| SEGMENT INFORMATION |
| ($ in thousands, except per share and PMPM data) |
|
|
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
The following table presents Health Net's operating segment
information.
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | |
|
|
Quarter Ended June 30, 2014
|
|
| |
|
|
Quarter Ended March 31, 2014
|
|
| |
Quarter Ended June 30, 2013
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | |
Western Region
Operations1 | |
Government
Contracts2 | |
Corporate/
Other5 | | | |
Western Region
Operations1 | |
Government
Contracts2 | |
Corporate/
Other3 | |
Consolidated
| |
Western Region
Operations1 | |
Government
Contracts2 | |
Corporate/
Other4 | |
Consolidated
|
| | | | | |
|
|
|
Consolidated
| |
|
|
| |
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Commercial premiums
| |
$
|
1,377,460
| | | | | | |
$
|
1,377,460
| | |
$
|
1,264,177
| | | | | | |
$
|
1,264,177
| |
$
|
1,298,569
| | | | | | |
$
|
1,298,569
|
|
Medicare premiums
| | |
757,194
| | | | | | | |
757,194
| | | |
755,158
| | | | | | | |
755,158
| | |
688,579
| | | | | | | |
688,579
|
|
Medicaid premiums
| | |
1,121,912
| | | | | | | |
1,121,912
| | | |
862,010
| | | | | | | |
862,010
| | |
591,726
| | | | | | | |
591,726
|
|
Dual Eligibles premiums
| |
|
5,312
|
|
|
|
|
|
|
|
5,312
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Health plan services premiums
| | |
3,261,878
| | | | | | | |
3,261,878
| | | |
2,881,345
| | | | | | | |
2,881,345
| | |
2,578,874
| | | | | | | |
2,578,874
|
|
Government contracts
| | | | |
154,083
| | | | |
154,083
| | | | | |
144,090
| | | | |
144,090
| | | | |
139,942
| | | | |
139,942
|
|
Net investment income
| | |
12,043
| | | | | | | |
12,043
| | | |
11,102
| | | | | | | |
11,102
| | |
17,143
| | | | | | | |
17,143
|
|
Administrative services fees and other income
| |
|
(6,612
|
)
|
|
|
|
|
|
|
(6,612
|
)
|
|
|
2,398
|
|
|
|
|
|
|
|
2,398
|
|
|
2,472
|
|
|
|
|
|
|
|
2,472
|
|
Total revenues
| | |
3,267,309
| | | |
154,083
| | | | |
3,421,392
| | | |
2,894,845
| | | |
144,090
| | | | |
3,038,935
| | |
2,598,489
| | | |
139,942
| | | | |
2,738,431
|
|
Health plan services
| | |
2,763,179
| | | | | | | |
2,763,179
| | | |
2,402,342
| | | | | | | |
2,402,342
| | |
2,191,918
| | | | | | | |
2,191,918
|
|
Government contracts
| | | | |
132,634
| | |
574
| | | |
133,208
| | | | | |
131,070
| | |
904
| | | |
131,974
| | | | |
121,826
| | |
5,574
| | | |
127,400
|
| |
Premium tax
| | | |
31,930
| | | | | | | |
31,930
| | | |
42,458
| | | | | | | |
42,458
| | |
51,167
| | | | | | | |
51,167
|
| |
Health insurer fee
| | |
37,844
| | | | | | | |
37,844
| | | |
36,293
| | | | | | | |
36,293
| | |
-
| | | | | | | |
-
|
| |
Other ACA fees
| | |
22,546
| | | | | | | |
22,546
| | | |
22,527
| | | | | | | |
22,527
| | |
569
| | | | | | | |
569
|
| |
Administrative expenses
| |
|
249,665
|
|
|
|
|
|
2,749
|
|
|
|
252,414
|
|
|
|
256,594
|
|
|
|
|
|
3,151
|
|
|
|
259,745
|
|
|
232,377
|
|
|
|
|
|
7,324
|
|
|
|
239,701
|
|
Total general and administrative
| | |
341,985
| | | | | |
2,749
| | | |
344,734
| | | |
357,872
| | | | | |
3,151
| | | |
361,023
| | |
284,113
| | | | | |
7,324
| | | |
291,437
|
|
Selling
| | | |
64,002
| | | | | | | |
64,002
| | | |
64,152
| | | | | | | |
64,152
| | |
57,769
| | | | | | | |
57,769
|
|
Depreciation and amortization
| | |
9,641
| | | | | | | |
9,641
| | | |
9,663
| | | | | | | |
9,663
| | |
9,514
| | | | | | | |
9,514
|
|
Interest
| | |
|
7,826
|
|
|
|
|
|
|
|
7,826
|
|
|
|
7,821
|
|
|
|
|
|
|
|
7,821
|
|
|
8,365
|
|
|
|
|
|
|
|
8,365
|
|
Total expenses
| | |
|
3,186,633
|
|
|
|
132,634
|
|
|
3,323
|
|
|
|
3,322,590
|
|
|
|
2,841,850
|
|
|
|
131,070
|
|
|
4,055
|
|
|
|
2,976,975
|
|
|
2,551,679
|
|
|
|
121,826
|
|
|
12,898
|
|
|
|
2,686,403
|
|
Income (loss) from continuing operations before income taxes
| | |
80,676
| | | |
21,449
| | |
(3,323
|
)
| | |
98,802
| | | |
52,995
| | | |
13,020
| | |
(4,055
|
)
| | |
61,960
| | |
46,810
| | | |
18,116
| | |
(12,898
|
)
| | |
52,028
|
|
Income tax provision (benefit)
| |
|
42,874
|
|
|
|
8,942
|
|
|
(73,881
|
)
|
|
|
(22,065
|
)
|
|
|
29,371
|
|
|
|
5,386
|
|
|
(1,584
|
)
|
|
|
33,173
|
|
|
16,023
|
|
|
|
7,537
|
|
|
(5,015
|
)
|
|
|
18,545
|
|
Income (loss) from continuing operations
| |
$
|
37,802
|
|
|
$
|
12,507
|
|
$
|
70,558
|
|
|
$
|
120,867
|
|
|
$
|
23,624
|
|
|
$
|
7,634
|
|
$
|
(2,471
|
)
|
|
$
|
28,787
|
|
$
|
30,787
|
|
|
$
|
10,579
|
|
$
|
(7,883
|
)
|
|
$
|
33,483
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Basic earnings (loss) per share from continuing operations
| |
$
|
0.47
| | |
$
|
0.16
| |
$
|
0.88
| | |
$
|
1.51
| | |
$
|
0.30
| | |
$
|
0.10
| |
$
|
(0.03
|
)
| |
$
|
0.36
| |
$
|
0.39
| | |
$
|
0.13
| |
$
|
(0.10
|
)
| |
$
|
0.42
|
|
Diluted earnings (loss) per share from continuing operations
| |
$
|
0.47
| | |
$
|
0.15
| |
$
|
0.87
| | |
$
|
1.49
| | |
$
|
0.29
| | |
$
|
0.10
| |
$
|
(0.03
|
)
| |
$
|
0.36
| |
$
|
0.39
| | |
$
|
0.13
| |
$
|
(0.10
|
)
| |
$
|
0.42
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Basic weighted average shares outstanding
| | |
80,250
| | | |
80,250
| | |
80,250
| | | |
80,250
| | | |
79,802
| | | |
79,802
| | |
79,802
| | | |
79,802
| | |
79,367
| | | |
79,367
| | |
79,367
| | | |
79,367
|
|
Diluted weighted average shares outstanding
| | |
81,218
| | | |
81,218
| | |
81,218
| | | |
81,218
| | | |
80,922
| | | |
80,922
| | |
79,802
| | | |
80,922
| | |
80,085
| | | |
80,085
| | |
79,367
| | | |
80,085
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Pretax margin
| | | |
2.5
|
%
| | | | | | | | |
1.8
|
%
| | | | | | | | |
1.8
|
%
| | | | | | |
|
Commercial premium yield
| | |
-0.4
|
%
| | | | | | | | |
3.9
|
%
| | | | | | | | |
2.0
|
%
| | | | | | |
|
Commercial premium PMPM
| |
$
|
378.91
| | | | | | | | |
$
|
400.34
| | | | | | | | |
$
|
380.30
| | | | | | | |
|
Commercial health care cost trend
| | |
-3.4
|
%
| | | | | | | | |
-2.2
|
%
| | | | | | | | |
-2.3
|
%
| | | | | | |
|
Commercial health care cost PMPM
| |
$
|
311.85
| | | | | | | | |
$
|
323.92
| | | | | | | | |
$
|
322.98
| | | | | | | |
|
Commercial MCR
| | |
82.3
|
%
| | | | | | | | |
80.9
|
%
| | | | | | | | |
84.9
|
%
| | | | | | |
|
Medicare Advantage MCR
| | |
90.9
|
%
| | | | | | | | |
91.8
|
%
| | | | | | | | |
89.9
|
%
| | | | | | |
|
Medicaid MCR
| | | |
83.6
|
%
| | | | | | | | |
79.8
|
%
| | | | | | | | |
79.5
|
%
| | | | | | |
|
Dual Eligibles MCR
| | |
60.0
|
%
| | | | | | | | |
-
| | | | | | | | | |
-
| | | | | | | |
|
Health plan services MCR
| | |
84.7
|
%
| | | | | | | | |
83.4
|
%
| | | | | | | | |
85.0
|
%
| | | | | | |
|
Administrative expense ratio
| | |
7.7
|
%
| | | | | | | | |
8.9
|
%
| | | | | | | | |
9.0
|
%
| | | | | | |
|
Total G&A expense ratio
| | |
10.5
|
%
| | | | | | | | |
12.4
|
%
| | | | | | | | |
11.0
|
%
| | | | | | |
|
Selling costs ratio
| | |
2.0
|
%
| | | | | | | | |
2.2
|
%
| | | | | | | | |
2.2
|
%
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
1
| |
Includes the operations of the company's commercial, Medicare and
Medicaid health plans in California, Arizona, Oregon and
Washington, as well as the operations of the company's health and
life insurance companies, primarily in Arizona, California, Oregon
and Washington, and the operations of the company's behavioral
health and pharmaceutical services subsidiaries in several states
including California, Arizona and Oregon.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
2
| |
Includes administrative services provided under the T-3 Managed Care
Support Contract for the TRICARE North Region and other health
care-related Department of Defense and Veterans Affairs government
contracts.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
3
| |
Includes litigation reserve true-up related to previous accrual for
lawsuit and related legal expenses. Also includes severance expense.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
4
| |
Primarily severance expense.
|
| |
|
|
5
| |
Includes $72.6 million income tax benefit. Also includes severance
expense.
|
| Health Net, Inc. |
| Reconciliation of Reserves for Claims and Other Settlements |
| ($ in millions) |
| | | |
|
| | Health Plan Services |
| |
YTD 6/2014
|
FY 2013
|
FY 2012
|
| | | |
|
|
Reserve for claims (a), beginning of period
|
$
|
807.4
| |
$
|
808.7
| |
$
|
720.8
|
|
Incurred claims related to:
| | | |
|
Current Year (f)
| |
2,627.3
| | |
4,666.0
| | |
4,950.9
|
|
Prior Years (c)
|
|
(26.6
|
)
|
|
(56.2
|
)
|
|
34.5
|
|
Total Incurred (b)
| |
2,600.7
| | |
4,609.8
| | |
4,985.4
|
| | | |
|
|
Paid claims related to:
| | | |
|
Current Year
| |
1,665.3
| | |
3,872.5
| | |
4,156.6
|
|
Prior Years
|
|
731.6
|
|
|
738.6
|
|
|
740.9
|
|
Total Paid (b)
|
|
2,396.9
|
|
|
4,611.1
|
|
|
4,897.5
|
| | | |
|
| | | |
|
|
Reserve for claims (a), end of period
| |
1,011.2
| | |
807.4
| | |
808.7
|
|
Add:
| | | | |
|
Claims Payable (d)
| |
116.6
| | |
67.0
| | |
91.6
|
|
Other (e)
| |
360.5
| | |
109.7
| | |
137.7
|
| |
|
|
|
| | | |
|
|
Reserves for claims and other settlements, end of period
|
$
|
1,488.3
|
|
$
|
984.1
|
|
$
|
1,038.0
|
| | | |
|
| | | |
|
| | | |
|
|
(a)
|
Consists of incurred but not reported claims and received but
unprocessed claims and reserves for loss adjustment expenses.
|
|
|
|
(b)
|
Includes medical claims only. Capitation, pharmacy and other
payments including provider settlements are not included.
|
|
|
|
(c)
|
This line represents the change in reserves attributable to the
difference between the original estimate of incurred claims for
prior years and the revised estimate. Negative amounts in this line
represent favorable development in estimated prior years' health
care costs. Positive amounts in this line represent unfavorable
development in estimated prior years' health care costs. For a
detailed description of reserve development for the six months ended
June 30, 2014, see Note 2 to the Consolidated Financial Statements
in the company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2014. For a detailed description of reserve development for
fiscal years 2013 and 2012, see Note 2 to the Consolidated Financial
Statements in the company's Annual Report on Form 10-K for the year
ended December 31, 2013.
|
| | | |
|
|
(d)
|
Includes amount accrued for litigation and regulatory-related
expenses.
|
|
|
|
(e)
|
Includes accrued capitation, shared risk settlements, provider
incentives and other reserve items.
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|
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(f)
|
Our IBNR estimate also includes a provision for adverse deviation,
which is an estimate for known environmental factors that are
reasonably likely to affect the required level of IBNR reserves.
Such amounts were $67 million, $53 million and $53 million as of
June 30, 2014, December 31, 2013, and December 31, 2012,
respectively.
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|
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Contacts:
Investor Contact:
The Abernathy MacGregor Group
David Olson
818-917-1469
dwo@abmac.com
or
Media
Contact:
Health Net, Inc.
Brad Kieffer
818-676-6833
brad.kieffer@healthnet.com
Source: Health Net, Inc.
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