Improvement in Commercial First Quarter Performance and Full-Year
Outlook Drives Increase in 2013 Earnings Per Diluted Share Guidance to
$2.20 to $2.30
Company Website:
http://www.healthnet.com
LOS ANGELES -- (Business Wire)
Health Net, Inc. (NYSE:HNT) today announced 2013 first quarter GAAP net
income of approximately $50.1 million, or $0.62 per diluted share,
compared with GAAP net loss of $26.6 million, or a loss of $0.32 per
share, for the first quarter of 2012. Earnings in the first quarter of
2012 for the combined Western Region Operations (Western Region) and
Government Contracts segments were $8.2 million, or $0.10 per diluted
share.
The 2012 financial results included in this release and the attached
financial tables reflect the treatment of the company’s Medicare
stand-alone Part D (Medicare PDP) business that was sold on April 1,
2012, as discontinued operations.
“We are pleased with our 2013 first quarter results, especially the
improvement in our commercial performance,” said Jay Gellert, Health
Net’s chief executive officer. “As a result of our efforts to reposition
our large group commercial business going into 2013 and stronger overall
commercial performance driven by lower utilization, we are raising full
year 2013 earnings per diluted share guidance to a range of $2.20 to
$2.30.”
CONSOLIDATED RESULTS
Health Net’s total revenues decreased approximately 1.2 percent from the
first quarter of 2012 to approximately $2.8 billion in the first quarter
of 2013.
Health plan services premium revenues of approximately $2.6 billion in
the first quarter of 2013 were essentially flat compared with the first
quarter of 2012.
Health plan services expenses of approximately $2.3 billion in the first
quarter of 2013 decreased by 3.2 percent compared with the first quarter
of 2012.
WESTERN REGION OPERATIONS SEGMENT
Health Plan Membership
Total enrollment in the Western Region at March 31, 2013 was
approximately 2.5 million members, a decrease of 2.8 percent from
enrollment at March 31, 2012.
Total enrollment in the company’s California health plans at March 31,
2013 decreased approximately 1.5 percent compared with March 31, 2012.
Western Region commercial enrollment was approximately 1.1 million
members at March 31, 2013, a decrease of 11.2 percent compared with
enrollment of approximately 1.3 million members at March 31, 2012, and a
decrease of 7.1 percent from December 31, 2012.
Membership in tailored network products represented 37.1 percent of the
company’s Western Region commercial membership at March 31, 2013
compared with 35.0 percent at March 31, 2012. In California, enrollment
in small group tailored network products grew by 10.7 percent from March
31, 2012 to March 31, 2013.
“Total California small group and individual enrollment increased 7.6
percent from March 31, 2012 to March 31, 2013,” said Jim Woys, Health
Net’s chief operating officer. “This growth is further affirmation that
our commercial product and pricing strategies are driving improved
performance.”
Enrollment in Health Net’s Medicare Advantage (MA) plans was 233,000
members at March 31, 2013, which represents a 3.1 percent increase
compared with enrollment of 226,000 members at March 31, 2012.
Medicaid enrollment increased 6.4 percent to approximately 1.1 million
members at March 31, 2013 compared with more than 1.0 million members as
of March 31, 2012, primarily as a result of additional Seniors and
Persons with Disabilities members.
Revenues
Total revenues for the Western Region for the first quarter of 2013 were
essentially flat at approximately $2.7 billion compared with the first
quarter of 2012.
Net investment income for the Western Region was $29.6 million in the
first quarter of 2013 compared with $22.3 million in the first quarter
of 2012 and $19.1 million in the fourth quarter of 2012. The
quarter-over-quarter and sequential increases were primarily due to
higher gain on sales of investments. The company continues to expect
full year 2013 net investment income of approximately $80.0 million.
Health Plan Services Expenses
Health plan services expenses in the Western Region were approximately
$2.3 billion in the first quarter of 2013 and decreased by 3.4 percent
compared with the first quarter of 2012.
Commercial Premium Yields and Health Care Costs
In the Western Region, commercial premiums per member per month (PMPM)
increased by 2.9 percent to approximately $385 in the first quarter of
2013 compared with approximately $375 in the first quarter of 2012.
“The commercial premium PMPM increase was lower than expected due to a
more pronounced enrollment shift from large groups to small group and
individual than was originally anticipated,” said Woys.
Commercial health care costs PMPM in the Western Region decreased 3.3
percent to approximately $331 in the first quarter of 2013 compared with
approximately $342 in the first quarter of 2012.
“In addition to the effect of the enrollment mix shift, the decline in
the commercial health care cost PMPM is the result of no adverse prior
period development and lower utilization in the first quarter of 2013,”
said Woys. “Therefore, we expect the premium yield-to-health care cost
PMPM spread to be 110 basis points greater than our original full year
2013 guidance.”
Medical Care Ratios (MCR)
The health plan services MCR in the Western Region was 86.2 percent in
the first quarter of 2013 compared with 89.6 percent in the first
quarter of 2012.
The Western Region commercial MCR was 85.9 percent in the first quarter
of 2013 compared with 91.4 percent in the first quarter of 2012.
The MA MCR in the Western Region was 91.9 percent in the first quarter
of 2013 compared with 87.9 percent in the first quarter of 2012. This
increase was primarily the result of timing differences in the accrual
for risk adjuster revenues and was consistent with the company’s
expectations. “This is in line with our full year 2013 guidance which
includes the effect of sequestration,” said Woys.
The Medicaid MCR in the Western Region was 80.0 percent in the first
quarter of 2013 compared with 86.7 percent in the first quarter of 2012.
“The decrease in the Medicaid MCR was primarily the result of revenues
from favorable rate adjustments related to prior periods that were
recognized in the first quarter of 2013,” said Woys. “The effect of this
rate adjustment and certain other rate actions was anticipated in our
original full year 2013 guidance. A portion of this favorable rate
adjustment came earlier than expected. With this in mind, we expect the
quarterly Medicaid MCRs for the remainder of 2013 to be approximately 86
percent.”
The first quarter of 2013 Medicaid results reflect the impact of Health
Net’s agreement with California’s Department of Health Care Services
that went into effect on January 1, 2013.
G&A Expense
G&A expense in the Western Region was approximately $245.2 million in
the first quarter of 2013 compared with approximately $230.8 million in
the first quarter of 2012. The G&A expense ratio was 9.3 percent in the
first quarter of 2013 compared with 8.8 percent in the first quarter of
2012.
“The increase in the G&A expense ratio was primarily due to costs
related to the implementation of health care reform, addressing new
regulatory requirements and preparation for California’s Coordinated
Care Initiative that includes the dual-eligible demonstrations,”
commented Woys.
GOVERNMENT CONTRACTS SEGMENT
Government Contracts revenues were $134.5 million in the first quarter
of 2013 and $181.4 million in the first quarter of 2012.
Government Contracts expenses were approximately $125.5 million in the
first quarter of 2013 and $159.3 million in the first quarter of 2012.
“We currently expect Government Contracts’ full year 2013 pretax income
to be in the $60 million to $65 million range,” said Woys.
BALANCE SHEET
Cash and investments as of March 31, 2013 were approximately $2.0
billion compared with approximately $2.2 billion as of December 31, 2012
and $1.8 billion as of March 31, 2012.
Reserves for claims and other settlements as of March 31, 2013 were
approximately $1.1 billion compared with $958.1 million at March 31,
2012 and $1.0 billion at December 31, 2012.
Days claims payable (DCP) for the first quarter of 2013 was 43.5 days
compared with 37.2 days for the first quarter of 2012 and 40.9 days for
the fourth quarter of 2012.
On an adjusted1 basis, DCP for the first quarter of 2013 was
62.1 days compared with 53.0 days for the first quarter of 2012 and 58.3
days for the fourth quarter of 2012.
The company’s debt-to-total capital ratio was 24.6 percent as of March
31, 2013 compared with 26.4 percent as of March 31, 2012 and 24.3
percent as of December 31, 2012.
Interest expense was approximately $8.3 million in the first quarter of
2013 compared with $8.6 million in the first quarter of 2012.
CASH FLOWS FROM OPERATIONS
Operating cash flow was negative $28.2 million in the first quarter of
2013, primarily due to a $146.0 million sequential increase in premiums
receivable. This increase is related to the timing of certain Medicaid
payments and Medicare risk adjuster accruals and payments. The company
expects to receive payments related to these items later this year.
“We continue to expect full year 2013 operating cash flow to be at least
equal to our revised expectations for net income plus depreciation and
amortization,” said Joseph Capezza, Health Net’s chief financial
officer. “As in prior years, quarterly operating cash flow will be
influenced by the timing of government payments.”
The company noted that cash at the parent was approximately $38.0
million at March 31, 2013.
DIVESTED OPERATIONS AND SERVICES SEGMENT
The company’s Divested Operations and Services segment for prior periods
includes items related to the run-out of the Northeast business and
transition-related revenues and expenses related to the Medicare PDP
business that was sold on April 1, 2012.
SHARE REPURCHASE
In the first quarter of 2013, Health Net repurchased approximately 2.7
million shares of its common stock for approximately $70 million at an
average price of $26.34 per share. At March 31, 2013, approximately
$280 million of authorization under the company’s existing $400 million
share repurchase program remained.
2013 GUIDANCE
The following table has specific 2013 guidance metrics. This guidance
includes the impact of approximately $30 million of operating expenses
related to the implementation of health care reform, but excludes any
additional impact from the company’s expected participation in the state
of California’s Coordinated Care Initiative.
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Metric |
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| 2013 Guidance |
Year-end membership(a)(c) | | | | | | | | |
Commercial: -8% to -9%
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Medicaid: +4% to +6%
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Medicare Advantage: +1% to +2%
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Total health plan membership: -1% to -2%
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Consolidated revenues(b) |
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~$10.7 billion to $11.2 billion
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Commercial premium yields PMPM(a)(c) |
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~ +2.0%
(prior: ~ +3.6%)
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Commercial health care costs PMPM(a)(c) |
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~ 460 basis points < premium yields PMPM
(prior: ~350 basis points < premium yields PMPM)
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Selling cost ratio(a) | | | | | | | | |
~2.3% to 2.4%
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G&A expense ratio(a) |
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~9.0% to 9.4%
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Tax rate(b) |
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38.0% to 39.0%
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Weighted-average fully diluted shares outstanding
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~ 80.0 million
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Earnings per diluted share
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$2.20 to $2.30
(prior: $2.00 to $2.10)
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(a)
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For the company’s Western Region Operations segment
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(b)
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For the combined Western Region Operations and Government Contracts
segments
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(c)
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These estimates are in comparison to reported 2012 amounts.
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CONFERENCE CALL
As previously announced, Health Net will discuss the company’s first
quarter 2013 financial results during a conference call on Monday, April
29, 2013, 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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(866) 393-1637 (Domestic toll-free)
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(855) 859-2056 (Replay – Domestic toll-free)
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(706) 643-5711 (International)
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(404) 537-3406 (Replay – International)
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The access code for the live conference call and replay is 30900677. A
replay of the conference call will be available through May 4, 2013. 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
will be presumed to have read Health Net’s Annual Report on Form 10-K
for the year ended December 31, 2012, 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 5.4 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. Through its subsidiaries, 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
Health Net, Inc. 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, including the guidance for future periods and the
assumptions underlying such projections, 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, the guidance as to expected future period results and
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
regulation of health benefits and managed care operations, including the
ultimate impact of the Affordable Care Act, which could materially
adversely affect Health Net’s financial condition, results of operations
and cash flows through, among other things, reduced revenues, new taxes,
expanded liability, and increased costs (including medical,
administrative, technology or other costs), or require changes to the
ways in which Health Net does business; rising health care costs;
continued slow economic growth or a further decline in the economy;
negative prior period claims reserve developments; trends in medical
care ratios; membership declines; unexpected utilization patterns or
unexpectedly severe or widespread illnesses; rate cuts and other risks
and uncertainties affecting Health Net’s Medicare or Medicaid
businesses; Health Net’s ability to successfully participate in
California’s Coordinated Care Initiative or Arizona’s Medicaid program;
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; failure to
effectively oversee our third-party vendors; noncompliance by Health Net
or Health Net’s business associates with any privacy laws or any
security breach involving the misappropriation, loss or other
unauthorized use or disclosure of confidential information; liabilities
incurred in connection with Health Net’s divested operations; impairment
of Health Net’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 Health Net’s
most recent Annual Report on Form 10-K and the other risks discussed in
Health Net’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, Health Net undertakes no obligation to address or
publicly update any of its guidance, the assessment of underlying
assumptions or forward-looking statements to reflect events or
circumstances that arise after the date of this press 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 March 31,
2013.
1 See “Disclosures Regarding Non-GAAP Financial Information”
attached to this press release for a reconciliation of this information
to the comparable GAAP financial measure.
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Health Net, Inc. |
Enrollment Data - By State |
(In thousands) |
|
|
| |
|
| |
|
| |
|
| Change from |
| | | | | | | | | | | | December 31, 2012 |
|
| March 31, 2012 |
| | | March 31, | | | December 31, | | | March 31, | | | Increase/ |
|
| % | |
|
| Increase/ |
|
| % | |
| | | 2013 |
|
| 2012 |
|
| 2012 |
|
| (Decrease) |
|
| Change |
|
| (Decrease) |
|
| Change |
California
| | | | | | | | | | | | | | | | | | | | | |
|
Large Group
| | |
628
| | |
696
| | |
754
| | |
(68
|
)
| | |
(9.8
|
)%
| | |
(126
|
)
| | |
(16.7
|
)%
|
|
Small Group and Individual
| | |
325
|
|
|
313
|
|
|
302
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|
|
12
|
|
|
|
3.8
|
%
|
|
|
23
|
|
|
|
7.6
|
%
|
Commercial Risk
| | |
953
| | |
1,009
| | |
1,056
| | |
(56
|
)
| | |
(5.6
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)%
| | |
(103
|
)
| | |
(9.8
|
)%
|
|
Medicare Advantage
| | |
143
| | |
145
| | |
139
| | |
(2
|
)
| | |
(1.4
|
)%
| | |
4
| | | |
2.9
|
%
|
|
Medi-Cal
|
|
|
1,100
|
|
|
1,084
|
|
|
1,034
|
|
|
16
|
|
|
|
1.5
|
%
|
|
|
66
|
|
|
|
6.4
|
%
|
Total California
|
|
|
2,196
|
|
|
2,238
|
|
|
2,229
|
|
|
(42
|
)
|
|
|
(1.9
|
)%
|
|
|
(33
|
)
|
|
|
(1.5
|
)%
|
| | | | | | | | | | | | | | | | | | | | | |
Arizona
| | | | | | | | | | | | | | | | | | | | | |
|
Large Group
|
| |
69
| | |
82
| | |
82
| | |
(13
|
)
| | |
(15.9
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)%
| | |
(13
|
)
| | |
(15.9
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)%
|
|
Small Group and Individual
| | |
57
|
|
|
59
|
|
|
62
|
|
|
(2
|
)
|
|
|
(3.4
|
)%
|
|
|
(5
|
)
|
|
|
(8.1
|
)%
|
|
Commercial Risk
| | |
126
| | |
141
| | |
144
| | |
(15
|
)
| | |
(10.6
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)%
| | |
(18
|
)
| | |
(12.5
|
)%
|
|
Medicare Advantage
|
|
|
43
|
|
|
43
|
|
|
43
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0
|
|
|
|
0.0
|
%
|
Total Arizona
|
|
|
169
|
|
|
184
|
|
|
187
|
|
|
(15
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)
|
|
|
(8.2
|
)%
|
|
|
(18
|
)
|
|
|
(9.6
|
)%
|
| | | | | | | | | | | | | | | | | | | | | |
Oregon
| | | | | | | | | | | | | | | | | | | | | |
|
Large Group
| | |
21
| | |
26
| | |
35
| | |
(5
|
)
| | |
(19.2
|
)%
| | |
(14
|
)
| | |
(40.0
|
)%
|
|
Small Group and Individual
| | |
45
|
|
|
57
|
|
|
55
|
|
|
(12
|
)
|
|
|
(21.1
|
)%
|
|
|
(10
|
)
|
|
|
(18.2
|
)%
|
|
Commercial Risk
| | |
66
| | |
83
| | |
90
| | |
(17
|
)
| | |
(20.5
|
)%
| | |
(24
|
)
| | |
(26.7
|
)%
|
|
Medicare Advantage
|
|
|
47
|
|
|
46
|
|
|
44
|
|
|
1
|
|
|
|
2.2
|
%
|
|
|
3
|
|
|
|
6.8
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%
|
Total Oregon
|
|
|
113
|
|
|
129
|
|
|
134
|
|
|
(16
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)
|
|
|
(12.4
|
)%
|
|
|
(21
|
)
|
|
|
(15.7
|
)%
|
| | | | | | | | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Health Plan Enrollment | | | | | | | | | | | | | | | | | | | | | |
|
Large Group
| | |
718
| | |
804
| | |
871
| | |
(86
|
)
| | |
(10.7
|
)%
| | |
(153
|
)
| | |
(17.6
|
)%
|
|
Small Group and Individual
| | |
427
|
|
|
429
|
|
|
419
|
|
|
(2
|
)
|
|
|
(0.5
|
)%
|
|
|
8
|
|
|
|
1.9
|
%
|
|
Commercial Risk
| | |
1,145
| | |
1,233
| | |
1,290
| | |
(88
|
)
| | |
(7.1
|
)%
| | |
(145
|
)
| | |
(11.2
|
)%
|
|
Medicare Advantage
| | |
233
| | |
234
| | |
226
| | |
(1
|
)
| | |
(0.4
|
)%
| | |
7
| | | |
3.1
|
%
|
|
Medi-Cal/Medicaid
| | |
1,100
|
|
|
1,084
|
|
|
1,034
|
|
|
16
|
|
|
|
1.5
|
%
|
|
|
66
|
|
|
|
6.4
|
%
|
|
Western Region Operations
| | |
2,478
| | |
2,551
| | |
2,550
| | |
(73
|
)
| | |
(2.9
|
)%
| | |
(72
|
)
| | |
(2.8
|
)%
|
| | | | | | | | | | | | | | | | | | | | |
|
|
Medicare PDP (stand-alone)
| | |
0
| | |
0
| | |
424
| | |
0
| | | |
0.0
|
%
| | |
(424
|
)
| | |
(100.0
|
)%
|
| | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,478
|
|
|
2,551
|
|
|
2,974
|
|
|
(73
|
)
|
|
|
(2.9
|
)%
|
|
|
(496
|
)
|
|
|
(16.7
|
)%
|
| | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
|
TRICARE - North Contract Eligibles |
|
2,883
|
|
|
2,883
|
|
|
3,004
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
(121
|
)
|
|
|
(4.0
|
)%
|
|
|
Health Net, Inc. |
Enrollment Data - Line of Business |
(In thousands) |
|
|
| |
|
| |
|
| |
|
| Change from |
| | | | | | | | | | | | December 31, 2012 |
|
| March 31, 2012 |
| | | March 31, | | | December 31, | | | March 31, | | | Increase/ |
|
| % | |
|
| Increase/ |
|
| % | |
| | | 2013 |
|
| 2012 |
|
| 2012 |
|
| (Decrease) |
|
| Change |
|
| (Decrease) |
|
| Change |
| | | | | | | | | | | | | | | | | | | | |
|
Large Group
| | | | | | | | | | | | | | | | | | | | | |
|
California
| | |
628
| | |
696
| | |
754
| | |
(68
|
)
| | |
(9.8
|
)%
| | |
(126
|
)
| | |
(16.7
|
)%
|
|
Arizona
| | |
69
| | |
82
| | |
82
| | |
(13
|
)
| | |
(15.9
|
)%
| | |
(13
|
)
| | |
(15.9
|
)%
|
|
Oregon
| | |
21
|
|
|
26
|
|
|
35
|
|
|
(5
|
)
|
|
|
(19.2
|
)%
|
|
|
(14
|
)
|
|
|
(40.0
|
)%
|
| | |
718
|
|
|
804
|
|
|
871
|
|
|
(86
|
)
|
|
|
(10.7
|
)%
|
|
|
(153
|
)
|
|
|
(17.6
|
)%
|
| | | | | | | | | | | | | | | | | | | | |
|
Small Group and Individual
| | | | | | | | | | | | | | | | | | | | | |
|
California
| | |
325
| | |
313
| | |
302
| | |
12
| | | |
3.8
|
%
| | |
23
| | | |
7.6
|
%
|
|
Arizona
| | |
57
| | |
59
| | |
62
| | |
(2
|
)
| | |
(3.4
|
)%
| | |
(5
|
)
| | |
(8.1
|
)%
|
|
Oregon
| | |
45
|
|
|
57
|
|
|
55
|
|
|
(12
|
)
|
|
|
(21.1
|
)%
|
|
|
(10
|
)
|
|
|
(18.2
|
)%
|
| | |
427
|
|
|
429
|
|
|
419
|
|
|
(2
|
)
|
|
|
(0.5
|
)%
|
|
|
8
|
|
|
|
1.9
|
%
|
| | | | | | | | | | | | | | | | | | | | |
|
Commercial Risk
| | | | | | | | | | | | | | | | | | | | | |
California
| | |
953
| | |
1,009
| | |
1,056
| | |
(56
|
)
| | |
(5.6
|
)%
| | |
(103
|
)
| | |
(9.8
|
)%
|
|
Arizona
| | |
126
| | |
141
| | |
144
| | |
(15
|
)
| | |
(10.6
|
)%
| | |
(18
|
)
| | |
(12.5
|
)%
|
|
Oregon
| | |
66
|
|
|
83
|
|
|
90
|
|
|
(17
|
)
|
|
|
(20.5
|
)%
|
|
|
(24
|
)
|
|
|
(26.7
|
)%
|
| | |
1,145
|
|
|
1,233
|
|
|
1,290
|
|
|
(88
|
)
|
|
|
(7.1
|
)%
|
|
|
(145
|
)
|
|
|
(11.2
|
)%
|
| | | | | | | | | | | | | | | | | | | | |
|
Medicare Advantage
| | | | | | | | | | | | | | | | | | | | | |
|
California
| | |
143
| | |
145
| | |
139
| | |
(2
|
)
| | |
(1.4
|
)%
| | |
4
| | | |
2.9
|
%
|
|
Arizona
| | |
43
| | |
43
| | |
43
| | |
0
| | | |
0.0
|
%
| | |
0
| | | |
0.0
|
%
|
|
Oregon
| | |
47
|
|
|
46
|
|
|
44
|
|
|
1
|
|
|
|
2.2
|
%
|
|
|
3
|
|
|
|
6.8
|
%
|
| | |
233
| | |
234
| | |
226
| | |
(1
|
)
| | |
(0.4
|
)%
| | |
7
| | | |
3.1
|
%
|
| | | | | | | | | | | | | | | | | | | | | |
Medi-Cal/Medicaid
| | | | | | | | | | | | | | | | | | | | | |
|
California
| | |
1,100
| | |
1,084
| | |
1,034
| | |
16
| | | |
1.5
|
%
| | |
66
| | | |
6.4
|
%
|
| | | | | | | | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Health Plan Enrollment | | | | | | | | | | | | | | | | | | | | | |
|
Large Group
| | |
718
| | |
804
| | |
871
| | |
(86
|
)
| | |
(10.7
|
)%
| | |
(153
|
)
| | |
(17.6
|
)%
|
|
Small Group and Individual
| | |
427
|
|
|
429
|
|
|
419
|
|
|
(2
|
)
|
|
|
(0.5
|
)%
|
|
|
8
|
|
|
|
1.9
|
%
|
|
Commercial Risk
| | |
1,145
| | |
1,233
| | |
1,290
| | |
(88
|
)
| | |
(7.1
|
)%
| | |
(145
|
)
| | |
(11.2
|
)%
|
|
Medicare Advantage
| | |
233
| | |
234
| | |
226
| | |
(1
|
)
| | |
(0.4
|
)%
| | |
7
| | | |
3.1
|
%
|
|
Medi-Cal/Medicaid
| | |
1,100
|
|
|
1,084
|
|
|
1,034
|
|
|
16
|
|
|
|
1.5
|
%
|
|
|
66
|
|
|
|
6.4
|
%
|
|
Western Region Operations
| | |
2,478
| | |
2,551
| | |
2,550
| | |
(73
|
)
| | |
(2.9
|
)%
| | |
(72
|
)
| | |
(2.8
|
)%
|
| | | | | | | | | | | | | | | | | | | | |
|
|
Medicare PDP (stand-alone)
| | |
0
| | |
0
| | |
424
| | |
0
| | | |
0.0
|
%
| | |
(424
|
)
| | |
(100.0
|
)%
|
| | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,478
|
|
|
2,551
|
|
|
2,974
|
|
|
(73
|
)
|
|
|
(2.9
|
)%
|
|
|
(496
|
)
|
|
|
(16.7
|
)%
|
| | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
|
TRICARE - North Contract Eligibles |
|
|
2,883
|
|
|
2,883
|
|
|
3,004
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
(121
|
)
|
|
|
(4.0
|
)%
|
|
|
| |
|
| | |
| |
Health Net, Inc. |
Consolidated Statements of Operations |
($ in thousands, except per share data) |
| | | | | | | | |
|
| | |
Quarter Ended
| | |
Quarter Ended
| | |
Quarter Ended
|
| | |
March 31,
| | |
December 31,
| |
March 31,
|
| REVENUES: | | |
|
2013
| | |
|
2012
|
| | |
|
2012
|
|
|
Health plan services premiums
| | |
$
|
2,632,069
| | |
$
|
2,640,533
| | | |
$
|
2,620,949
| |
|
Government contracts
| | | |
134,512
| | | |
161,700
| | | | |
181,362
| |
|
Net investment income
| | | |
29,551
| | | |
19,078
| | | | |
22,304
| |
|
Administrative services fees and other income
| | | |
905
| | | |
1,668
| | | | |
5,784
| |
|
Divested operations and services revenue
| | |
|
-
| | |
|
14,803
|
| | |
|
-
|
|
|
Total revenues
| | |
|
2,797,037
| | |
|
2,837,782
|
| | |
|
2,830,399
|
|
| | | | | | | | |
|
| EXPENSES: | | | | | | | | | |
|
Health plan services
| | | |
2,268,736
| | | |
2,332,811
| | | | |
2,343,659
| |
|
Government contracts
| | | |
125,475
| | | |
137,543
| | | | |
162,310
| |
|
General and administrative
| | | |
245,235
| | | |
251,483
| | | | |
237,276
| |
|
Selling
| | | |
58,561
| | | |
64,921
| | | | |
61,561
| |
|
Depreciation and amortization
| | | |
9,439
| | | |
8,424
| | | | |
7,430
| |
|
Interest
| | | |
8,288
| | | |
8,325
| | | | |
8,628
| |
|
Divested operations and services expense
| | |
|
-
| | |
|
25,851
|
| | |
|
23,096
|
|
|
Total expenses
| | |
|
2,715,734
| | |
|
2,829,358
|
| | |
|
2,843,960
|
|
|
Income (loss) from continuing operations before income taxes
| | | |
81,303
| | | |
8,424
| | | | |
(13,561
|
)
|
|
Income tax provision (benefit)
| | |
|
31,253
| | |
|
257
|
| | |
|
(5,427
|
)
|
|
Income (loss) from continuing operations
| | |
|
50,050
| | |
|
8,167
|
| | |
|
(8,134
|
)
|
| | | | | | | | |
|
|
Discontinued operation:
| | | | | | | | | |
|
Loss from discontinued operation, net of tax
| | | |
-
| | | |
-
| | | | |
(18,452
|
)
|
|
Loss on sale of discontinued operation, net of tax
| | |
|
-
| | |
|
(2,156
|
)
| | |
|
-
|
|
|
Loss on discontinued operation, net of tax
| | |
|
-
| | |
|
(2,156
|
)
| | |
|
(18,452
|
)
|
| | | | | | | | |
|
|
Net income (loss)
| | |
$
|
50,050
| | |
$
|
6,011
|
| | |
$
|
(26,586
|
)
|
| | | | | | | | |
|
|
Net income per share-basic:
| | | | | | | | | |
|
Income (loss) from continuing operations
| | |
$
|
0.63
| | |
$
|
0.10
| | | |
$
|
(0.10
|
)
|
|
Loss on discontinued operation, net of tax
| | |
|
-
| | |
|
(0.03
|
)
| | |
|
(0.22
|
)
|
|
Net income (loss) per share-basic
| | |
$
|
0.63
| | |
$
|
0.07
|
| | |
$
|
(0.32
|
)
|
| | | | | | | | |
|
|
Net income per share-diluted:
| | | | | | | | | |
|
Income (loss) from continuing operations
| | |
$
|
0.62
| | |
$
|
0.10
| | | |
$
|
(0.10
|
)
|
|
Loss on discontinued operation, net of tax
| | |
|
-
| | |
|
(0.03
|
)
| | |
|
(0.22
|
)
|
|
Net income (loss) per share-diluted
| | |
$
|
0.62
| | |
$
|
0.07
|
| | |
$
|
(0.32
|
)
|
| | | | | | | | |
|
|
Weighted average shares outstanding:
| | | | | | | | | |
|
Basic
| | | |
79,508
| | | |
81,282
| | | | |
82,513
| |
|
Diluted
| | | |
80,489
| | | |
82,111
| | | | |
82,513
| |
|
|
| |
|
| |
|
| |
Health Net, Inc. |
Condensed Consolidated Balance Sheets |
(Amounts in thousands, except ratio data) |
| | | | | | | | |
|
| | |
March 31,
| | |
December 31,
| | |
March 31,
|
| | |
|
2013
|
| | |
|
2012
|
| | |
|
2012
|
|
| ASSETS | | | | | | | | | |
|
Current Assets
| | | | | | | | | |
|
Cash and cash equivalents
| | |
$
|
230,335
| | | |
$
|
340,110
| | | |
$
|
391,032
| |
|
Investments - available for sale
| | | |
1,767,156
| | | | |
1,812,512
| | | | |
1,447,630
| |
|
Premiums receivable, net
| | | |
519,287
| | | | |
373,269
| | | | |
462,965
| |
|
Amounts receivable under government contracts
| | | |
207,891
| | | | |
228,316
| | | | |
234,120
| |
|
Other receivables
| | | |
66,520
| | | | |
113,875
| | | | |
165,533
| |
|
Deferred taxes
| | | |
62,027
| | | | |
51,086
| | | | |
100,639
| |
|
Assets of discontinued operation held for sale
| | | |
-
| | | | |
-
| | | | |
145,240
| |
Other assets
| | |
|
120,233
|
| | |
|
130,796
|
| | |
|
177,337
|
|
|
Total current assets
| | | |
2,973,449
| | | | |
3,049,964
| | | | |
3,124,496
| |
|
Property and equipment, net
| | | |
188,038
| | | | |
183,793
| | | | |
152,524
| |
|
Goodwill
| | | |
565,886
| | | | |
565,886
| | | | |
565,886
| |
|
Other intangible assets, net
| | | |
16,414
| | | | |
17,271
| | | | |
19,842
| |
|
Deferred taxes
| | | |
8,006
| | | | |
13,583
| | | | |
-
| |
|
Other noncurrent assets
| | |
|
123,514
|
| | |
|
103,893
|
| | |
|
114,330
|
|
|
Total Assets
| | |
$
|
3,875,307
|
| | |
$
|
3,934,390
|
| | |
$
|
3,977,078
|
|
| | | | | | | | |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | |
|
Current Liabilities
| | | | | | | | | |
|
Reserves for claims and other settlements
| | |
$
|
1,097,744
| | | |
$
|
1,037,973
| | | |
$
|
958,124
| |
|
Health care and other costs payable under government contracts
| | | |
77,380
| | | | |
75,649
| | | | |
77,892
| |
|
Unearned premiums
| | | |
139,584
| | | | |
151,048
| | | | |
365,772
| |
|
Liabilities of discontinued operation held for sale
| | | |
-
| | | | |
-
| | | | |
41,823
| |
|
Accounts payable and other liabilities
| | |
|
302,171
|
| | |
|
373,426
|
| | |
|
355,743
|
|
|
Total current liabilities
| | | |
1,616,879
| | | | |
1,638,096
| | | | |
1,799,354
| |
|
Senior notes payable
| | | |
399,146
| | | | |
399,095
| | | | |
398,941
| |
|
Borrowings under revolving credit facility
| | | |
100,000
| | | | |
100,000
| | | | |
112,500
| |
|
Deferred taxes
| | | |
-
| | | | |
-
| | | | |
7,272
| |
|
Other noncurrent liabilities
| | |
|
230,666
|
| | |
|
240,169
|
| | |
|
234,698
|
|
|
Total Liabilities
| | |
|
2,346,691
|
| | |
|
2,377,360
|
| | |
|
2,552,765
|
|
| | | | | | | | |
|
|
Stockholders' Equity
| | | | | | | | | |
|
Common stock
| | | |
150
| | | | |
149
| | | | |
149
| |
|
Additional paid-in capital
| | | |
1,352,458
| | | | |
1,329,000
| | | | |
1,310,438
| |
|
Treasury common stock, at cost
| | | |
(2,177,840
|
)
| | | |
(2,092,625
|
)
| | | |
(2,042,367
|
)
|
|
Retained earnings
| | | |
2,343,572
| | | | |
2,293,522
| | | | |
2,144,873
| |
|
Accumulated other comprehensive income
| | |
|
10,276
|
| | |
|
26,984
|
| | |
|
11,220
|
|
|
Total Stockholders' Equity
| | |
|
1,528,616
|
| | |
|
1,557,030
|
| | |
|
1,424,313
|
|
|
Total Liabilities and Stockholders' Equity
| | |
$
|
3,875,307
|
| | |
$
|
3,934,390
|
| | |
$
|
3,977,078
|
|
| | | | | | | | |
|
|
Debt-to-Total Capital Ratio
| | | |
24.6
|
%
| | | |
24.3
|
%
| | | |
26.4
|
%
|
|
|
| |
|
| |
|
| |
Health Net, Inc. |
Condensed Consolidated Statements of Cash Flows |
(Amounts in thousands) |
| | | | | | | | |
|
| | |
Quarter Ended
| | |
Quarter Ended
| | |
Quarter Ended
|
| | |
March 31,
| | |
December 31,
| | |
March 31,
|
| | |
|
2013
|
| | |
|
2012
|
| | |
|
2012
|
|
| | | | | | | | |
|
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
|
Net income (loss)
| | |
$
|
50,050
| | | |
$
|
6,011
| | | |
$
|
(26,586
|
)
|
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
| | | | | | | | | |
|
Amortization and depreciation
| | | |
9,439
| | | | |
8,424
| | | | |
7,430
| |
|
Share-based compensation expense
| | | |
9,935
| | | | |
5,480
| | | | |
12,384
| |
|
Deferred income taxes
| | | |
3,579
| | | | |
(15,959
|
)
| | | |
2,977
| |
|
Excess tax benefits from share-based compensation
| | | |
(394
|
)
| | | |
(30
|
)
| | | |
(5,896
|
)
|
|
Gain on sale of discontinued operation
| | | |
-
| | | | |
2,156
| | | | |
-
| |
|
Net realized gain on sale on investments
| | | |
(17,289
|
)
| | | |
(7,019
|
)
| | | |
(12,958
|
)
|
|
Other changes
| | | |
8,679
| | | | |
8,326
| | | | |
6,163
| |
|
Changes in assets and liabilities:
| | | | | | | | | |
|
Premiums receivable and unearned premiums
| | | |
(157,482
|
)
| | | |
(39,611
|
)
| | | |
(87,970
|
)
|
|
Other current assets, receivables and noncurrent assets
| | | |
7,427
| | | | |
49,829
| | | | |
(25,684
|
)
|
|
Amounts receivable/payable under government contracts
| | | |
25,891
| | | | |
(12,207
|
)
| | | |
(14,725
|
)
|
|
Reserves for claims and other settlements
| | | |
59,771
| | | | |
5,725
| | | | |
84,457
| |
|
Accounts payable and other liabilities
| | |
|
(27,791
|
)
| | |
|
22,249
|
| | |
|
64,575
|
|
|
Net cash (used in) provided by operating activities
| | |
|
(28,185
|
)
| | |
|
33,374
|
| | |
|
4,167
|
|
| | | | | | | | |
|
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | |
|
Sales of investments
| | | |
354,813
| | | | |
217,167
| | | | |
650,832
| |
|
Maturities of investments
| | | |
30,068
| | | | |
37,579
| | | | |
38,958
| |
|
Purchases of investments
| | | |
(365,081
|
)
| | | |
(395,355
|
)
| | | |
(551,285
|
)
|
|
Proceeds from sale of property and equipment
| | | |
-
| | | | |
24
| | | | |
-
| |
|
Purchases of property and equipment
| | | |
(13,690
|
)
| | | |
(18,071
|
)
| | | |
(15,373
|
)
|
|
Sales and purchases of restricted investments and other
| | |
|
(1,171
|
)
| | |
|
(558
|
)
| | |
|
2,710
|
|
|
Net cash provided by (used in) investing activities
| | |
|
4,939
|
| | |
|
(159,214
|
)
| | |
|
125,842
|
|
| | | | | | | | |
|
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | |
|
Proceeds from exercise of stock options and employee stock purchases
| | | |
6,957
| | | | |
352
| | | | |
14,415
| |
|
Repurchases of common stock
| | | |
(77,394
|
)
| | | |
(166
|
)
| | | |
(19,238
|
)
|
|
Excess tax benefits from share-based compensation
| | | |
394
| | | | |
30
| | | | |
5,896
| |
|
Borrowings under financing arrangements
| | | |
90,000
| | | | |
-
| | | | |
100,000
| |
|
Repayment of borrowings under financing arrangements
| | | |
(90,000
|
)
| | | |
-
| | | | |
(100,000
|
)
|
|
Net (decrease) increase in checks outstanding, net of deposits
| | | |
(23,816
|
)
| | | |
23,808
| | | | |
-
| |
|
Customer funds administered
| | |
|
7,330
|
| | |
|
129,347
|
| | |
|
29,697
|
|
|
Net cash (used in) provided by financing activities
| | |
|
(86,529
|
)
| | |
|
153,371
|
| | |
|
30,770
|
|
| | | | | | | | |
|
|
Net (decrease) increase in cash and cash equivalents
| | | |
(109,775
|
)
| | | |
27,531
| | | | |
160,779
| |
|
Cash and cash equivalents, beginning of period
| | |
|
340,110
|
| | |
|
312,579
|
| | |
|
230,253
|
|
|
Cash and cash equivalents, end of period
| | |
$
|
230,335
|
| | |
$
|
340,110
|
| | |
$
|
391,032
|
|
|
|
| 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 March 31, 2013
| | |
Quarter Ended December 31, 2012
| | |
Quarter Ended March 31, 2012
|
| | | | | | | | |
Divested
| | | | | | | | | | | | | | |
Divested
| | | | | | | | | | | | | | |
Divested
| | | | | | |
| | |
Western Region
| | |
Government
| | |
Operations
| | |
Corporate/
| | | | | |
Western Region
| | |
Government
| | |
Operations
| | |
Corporate/
| | | | | |
Western Region
| | |
Government
| | |
Operations
| | |
Corporate/
| | | |
| | |
Operations1 |
|
|
Contracts2 |
|
|
and Services
|
|
|
Other
|
|
|
Consolidated
|
| |
Operations1 |
|
|
Contracts2 |
|
|
and Services3 |
|
|
Other 5, 6 |
|
|
Consolidated
|
| |
Operations1 |
|
|
Contracts7 |
|
|
and Services3 |
|
|
Other4, 5 |
|
|
Consolidated
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Health plan services premiums
| | |
$
|
2,632,069
| | | | | | | | | | | | |
$
|
2,632,069
| | |
$
|
2,640,533
| | | | | | | | | | | | |
$
|
2,640,533
| | |
$
|
2,620,949
| | | | | | | | | | | | |
$
|
2,620,949
| |
|
Government contracts
| | | | | | |
134,512
| | | | | | | | | |
134,512
| | | | | |
$
|
161,700
| | | | | | | | | |
161,700
| | | | | | |
181,362
| | | | | | | | | |
181,362
| |
|
Net investment income
| | | |
29,551
| | | | | | | | | | | | | |
29,551
| | | |
19,078
| | | | | | | | | | | | | |
19,078
| | | |
22,304
| | | | | | | | | | | | | |
22,304
| |
|
Administrative services fees and other income
| | | |
905
| | | | | | | | | | | | | |
905
| | | |
1,668
| | | | | | | | | | | | | |
1,668
| | | |
5,784
| | | | | | | | | | | | | |
5,784
| |
|
Divested operations and services revenue
| | |
|
|
|
|
|
|
|
|
|
|
|
|
|
-
| | |
|
|
|
|
|
|
$
|
14,803
|
|
|
|
|
|
|
|
14,803
| | |
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
Total revenues
| | | |
2,662,525
| | | | |
134,512
| | | | | | | | | |
2,797,037
| | | |
2,661,279
| | | | |
161,700
| | | |
14,803
| | | | | | | |
2,837,782
| | | |
2,649,037
| | | | |
181,362
| | | | | | | | | |
2,830,399
| |
|
Health plan services
| | | |
2,268,736
| | | | | | | | | | | | | |
2,268,736
| | | |
2,327,791
| | | | | | | | | | |
5,020
| | | | |
2,332,811
| | | |
2,349,377
| | | | | | | |
126
| | | | |
(5,844
|
)
| | | |
2,343,659
| |
|
Government contracts
| | | | | | |
125,475
| | | | | | | | | |
125,475
| | | | | | |
138,478
| | | | | | |
(935
|
)
| | | |
137,543
| | | | | | |
159,323
| | | | | | |
2,987
| | | | |
162,310
| |
|
G&A excluding insurance, taxes and fees
| | | |
230,137
| | | | | | | | | | | | | |
230,137
| | | |
220,116
| | | | | | | |
(304
|
)
| | | |
16,236
| | | | |
236,048
| | | |
209,780
| | | | | | | |
(456
|
)
| | | |
6,467
| | | | |
215,791
| |
|
Insurance, taxes and fees
| | |
|
15,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,098
| | |
|
15,133
|
|
|
|
|
|
|
|
302
|
|
|
|
|
-
|
|
|
|
|
15,435
| | |
|
21,024
|
|
|
|
|
|
|
|
461
|
|
|
|
|
|
|
|
21,485
|
|
|
G&A including insurance, taxes and fees
| | | |
245,235
| | | | | | | | | | | | | |
245,235
| | | |
235,249
| | | | | | | |
(2
|
)
| | | |
16,236
| | | | |
251,483
| | | |
230,804
| | | | | | | |
5
| | | | |
6,467
| | | | |
237,276
| |
|
Selling
| | | |
58,561
| | | | | | | | | | | | | |
58,561
| | | |
64,921
| | | | | | | | | | | | | |
64,921
| | | |
61,561
| | | | | | | | | | | | | |
61,561
| |
|
Depreciation and amortization
| | | |
9,439
| | | | | | | | | | | | | |
9,439
| | | |
8,424
| | | | | | | | | | | | | |
8,424
| | | |
7,429
| | | | | | | |
1
| | | | | | | |
7,430
| |
|
Interest
| | | |
8,288
| | | | | | | | | | | | | |
8,288
| | | |
8,325
| | | | | | | | | | | | | |
8,325
| | | |
8,628
| | | | | | | | | | | | | |
8,628
| |
|
Divested operations and services expense
| | |
|
|
|
|
|
|
|
|
|
|
|
|
|
-
| | |
|
|
|
|
|
|
|
25,851
|
|
|
|
|
|
|
|
25,851
| | |
|
|
|
|
|
|
|
23,096
|
|
|
|
|
|
|
|
23,096
|
|
|
Total expenses
| | |
|
2,590,259
|
|
|
|
|
125,475
|
|
|
|
|
|
|
|
|
|
2,715,734
| | |
|
2,644,710
|
|
|
|
|
138,478
|
|
|
|
25,849
|
|
|
|
|
20,321
|
|
|
|
|
2,829,358
| | |
|
2,657,799
|
|
|
|
|
159,323
|
|
|
|
23,228
|
|
|
|
|
3,610
|
|
|
|
|
2,843,960
|
|
|
Income (loss) from operations before income taxes
| | | |
72,266
| | | | |
9,037
| | | | | | | | | |
81,303
| | | |
16,569
| | | | |
23,222
| | | |
(11,046
|
)
| | | |
(20,321
|
)
| | | |
8,424
| | | |
(8,762
|
)
| | | |
22,039
| | | |
(23,228
|
)
| | | |
(3,610
|
)
| | | |
(13,561
|
)
|
|
Income tax provision (benefit)
| | |
|
27,629
|
|
|
|
|
3,624
|
|
|
|
|
|
|
|
|
|
31,253
| | |
|
1,463
|
|
|
|
|
9,324
|
|
|
|
(4,529
|
)
|
|
|
|
(6,001
|
)
|
|
|
|
257
| | |
|
(3,685
|
)
|
|
|
|
8,776
|
|
|
|
(8,846
|
)
|
|
|
|
(1,672
|
)
|
|
|
|
(5,427
|
)
|
|
Income (loss) from continuing operations
| | |
$
|
44,637
|
|
|
|
$
|
5,413
|
|
|
|
|
|
|
|
|
$
|
50,050
| | |
$
|
15,106
|
|
|
|
$
|
13,898
|
|
|
$
|
(6,517
|
)
|
|
|
$
|
(14,320
|
)
|
|
|
$
|
8,167
| | |
$
|
(5,077
|
)
|
|
|
$
|
13,263
|
|
|
$
|
(14,382
|
)
|
|
|
$
|
(1,938
|
)
|
|
|
$
|
(8,134
|
)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Basic earnings (loss) per share from continuing operations
| | |
$
|
0.56
| | | |
$
|
0.07
| | | | | | | | |
$
|
0.63
| | |
$
|
0.19
| | | |
$
|
0.17
| | |
$
|
(0.08
|
)
| | |
$
|
(0.18
|
)
| | |
$
|
0.10
| | |
$
|
(0.06
|
)
| | |
$
|
0.16
| | |
$
|
(0.17
|
)
| | |
$
|
(0.02
|
)
| | |
$
|
(0.10
|
)
|
|
Diluted earnings (loss) per share from continuing operations
| | |
$
|
0.55
| | | |
$
|
0.07
| | | | | | | | |
$
|
0.62
| | |
$
|
0.18
| | | |
$
|
0.17
| | |
$
|
(0.08
|
)
| | |
$
|
(0.18
|
)
| | |
$
|
0.10
| | |
$
|
(0.06
|
)
| | |
$
|
0.16
| | |
$
|
(0.17
|
)
| | |
$
|
(0.02
|
)
| | |
$
|
(0.10
|
)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Basic weighted average shares outstanding
| | | |
79,508
| | | | |
79,508
| | | | | | | | | |
79,508
| | | |
81,282
| | | | |
81,282
| | | |
81,282
| | | | |
81,282
| | | | |
81,282
| | | |
82,513
| | | | |
82,513
| | | |
82,513
| | | | |
82,513
| | | | |
82,513
| |
|
Diluted weighted average shares outstanding
| | | |
80,489
| | | | |
80,489
| | | | | | | | | |
80,489
| | | |
82,111
| | | | |
82,111
| | | |
81,282
| | | | |
81,282
| | | | |
82,111
| | | |
82,513
| | | | |
84,287
| | | |
82,513
| | | | |
82,513
| | | | |
82,513
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Pretax margin
| | | |
2.7
|
%
| | | | | | | | | | | | | | | |
0.6
|
%
| | | | | | | | | | | | | | | |
-0.3
|
%
| | | | | | | | | | | | |
|
Commercial premium yield
| | | |
2.9
|
%
| | | | | | | | | | | | | | | |
4.3
|
%
| | | | | | | | | | | | | | | |
5.3
|
%
| | | | | | | | | | | | |
|
Commercial premium PMPM
| | |
$
|
385.29
| | | | | | | | | | | | | | | |
$
|
375.65
| | | | | | | | | | | | | | | |
$
|
374.58
| | | | | | | | | | | | | |
|
Commercial health care cost trend
| | | |
-3.3
|
%
| | | | | | | | | | | | | | | |
8.9
|
%
| | | | | | | | | | | | | | | |
12.3
|
%
| | | | | | | | | | | | |
|
Commercial health care cost PMPM
| | |
$
|
331.13
| | | | | | | | | | | | | | | |
$
|
332.86
| | | | | | | | | | | | | | | |
$
|
342.29
| | | | | | | | | | | | | |
|
Commercial MCR
| | | |
85.9
|
%
| | | | | | | | | | | | | | | |
88.6
|
%
| | | | | | | | | | | | | | | |
91.4
|
%
| | | | | | | | | | | | |
|
Medicare Advantage MCR
| | | |
91.9
|
%
| | | | | | | | | | | | | | | |
87.4
|
%
| | | | | | | | | | | | | | | |
87.9
|
%
| | | | | | | | | | | | |
|
Medicaid MCR
| | | |
80.0
|
%
| | | | | | | | | | | | | | | |
87.9
|
%
| | | | | | | | | | | | | | | |
86.7
|
%
| | | | | | | | | | | | |
|
Health plan services MCR
| | | |
86.2
|
%
| | | | | | | | | | | | | | | |
88.2
|
%
| | | | | | | | | | | | | | | |
89.6
|
%
| | | | | | | | | | | | |
|
G&A expense ratio
| | | |
9.3
|
%
| | | | | | | | | | | | | | | |
8.9
|
%
| | | | | | | | | | | | | | | |
8.8
|
%
| | | | | | | | | | | | |
|
Selling costs ratio
| | | |
2.2
|
%
| | | | | | | | | | | | | | | |
2.5
|
%
| | | | | | | | | | | | | | | |
2.3
|
%
| | | | | | | | | | | | |
|
|
| |
| | |
|
|
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 items related to the run-out of the Northeast business
sold in 2009 and/or transition and run-out related expenses
related to the Medicare PDP business that was sold on April 1,
2012, including lease impairment in the fourth quarter 2012
related to the company’s divested Northeast business.
|
| | |
|
|
4
| | |
Includes litigation reserve true-ups related to previous accruals
for lawsuits and expenses primarily related to litigation.
|
| | |
|
|
5
| | |
Includes costs related to the company’s G&A cost reduction efforts
and/or operations strategy.
|
| | |
|
|
6
| | |
Includes expenses related to the termination of a medical
management contract, litigation-related expenses and severance.
|
| | |
|
|
7
| | |
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. Also includes amounts related to the
operations of government-sponsored managed care plans through our
prior TRICARE contract and amounts related to the completion of
the prior TRICARE contract.
|
|
|
|
| |
| |
|
| |
|
| |
|
| | |
Health Net, Inc. |
Disclosures Regarding Non-GAAP Financial Information |
($ in millions) |
| | | | | | | | | | | | | | |
|
Set forth below is a reconciliation of adjusted days claims
payable (DCP), a non-GAAP financial measure, to the comparable
GAAP financial measure, DCP. DCP is calculated by dividing the
amount of reserve for claims and other settlements (claims
reserve) by health plan services cost (health plan costs) during
the quarter and multiplying that amount by the number of days in
the quarter. In this press release, management presents an
adjusted DCP metric which subtracts capitation, provider and other
claims settlements and Medicare Advantage-Prescription Drug (MAPD)
payables/costs from the claims reserve and health plan costs.
|
| | | | | | | | | | | | | | |
|
Management believes that adjusted DCP provides useful information
to investors because the adjusted DCP calculation excludes from
both claims reserve and health plan costs amounts related to
health care costs for which no or minimal reserves are maintained.
Therefore, management believes that adjusted DCP may present a
more accurate reflection of DCP than does GAAP DCP, which includes
such amounts. This non-GAAP financial information should be
considered in addition to, not as a substitute for, financial
information prepared in accordance with GAAP.
|
| | | | | | | | | | | | | | |
|
You are encouraged to evaluate these adjustments and the reasons
we consider them appropriate for supplemental analysis. In
evaluating the adjusted amounts, you should be aware that we have
incurred expenses that are the same as or similar to some of the
adjustments in the current presentation and we may incur them
again in the future.
|
| | | | | | | | | | | | | | |
|
Our presentation of the adjusted amounts should not be construed
as an inference that our future results will be unaffected by
unusual or nonrecurring items.
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
Reconciliation of Days Claims Payable: | | |
Q1 2013
| | |
Q4 2012
| | |
Q1 2012
| |
| | |
(1)
|
|
Reserve for Claims and Other Settlements - GAAP
| | |
$
|
1,097.7
| | | |
$
|
1,038.0
| | | |
$
|
958.1
| | a |
| | | | |
Less: Capitation, Provider and Other Claim Settlements, and MAPD
Payables
| | |
|
(132.9
|
)
| | |
|
(105.0
|
)
| | |
|
(85.6
|
)
| |
| | |
(2)
|
|
Reserve for Claims and Other Settlements - Adjusted
| | |
$
|
964.8
| | | |
$
|
933.0
| | | |
$
|
872.5
| | |
| | | | | | | | | | | | | | |
|
| | |
(3)
|
|
Health Plan Services Cost - GAAP
| | |
$
|
2,268.7
| | | |
$
|
2,332.8
| | | |
$
|
2,343.7
| | |
| | | | |
Less: Capitation, Provider and Other Claim Settlements, and MAPD
Costs
| | |
|
(869.8
|
)
| | |
|
(861.0
|
)
| | |
|
(846.5
|
)
| |
| | |
(4)
|
|
Health Plan Services Cost - Adjusted
| | |
$
|
1,398.9
| | | |
$
|
1,471.8
| | | |
$
|
1,497.2
| | |
| | | | | | | | | | | | | | |
|
| | |
(5)
|
|
Number of Days in Period
| | | |
90
| | | | |
92
| | | | |
91
| | |
| | | | | | | | | | | | | | |
|
= (1) / (3) * (5) Days Claims Payable - GAAP Basis (using end of
period reserve amount)
| | | |
43.5
| | | | |
40.9
| | | | |
37.2
| | |
= (2) / (4) * (5) Days Claims Payable - Adjusted Basis (using end
of period reserve amount)
| | | |
62.1
| | | | |
58.3
| | | | |
53.0
| | |
| | | | | | | | | | | | | | |
|
a Excludes $38.5 million of Medicare PDP related
reserves for claims and other settlements.
|
|
|
| Health Net, Inc. |
| Reconciliation of Reserves for Claims and Other Settlements |
| ($ in millions) |
|
|
| |
|
| |
|
| |
| | | Health Plan Services |
| | |
YTD 3/2013
|
|
|
FY 2012
|
|
|
FY 2011
|
| | | | | | | | |
|
|
Reserve for claims (a), beginning of period
| | |
$
|
808.7
| | | |
$
|
720.8
| | |
$
|
727.5
| |
|
Incurred claims related to:
| | | | | | | | | |
Current Year
| |
| |
1,228.2
| | | | |
4,950.9
| | | |
4,733.0
| |
Prior Years (c)
| |
|
|
(51.5
|
)
|
|
|
|
34.5
|
|
|
|
(96.5
|
)
|
|
Total Incurred (b)
| | | |
1,176.7
| | | | |
4,985.4
| | | |
4,636.5
| |
| | | | | | | | |
|
|
Paid claims related to:
| | | | | | | | | |
Current Year
| |
| |
524.6
| | | | |
4,156.6
| | | |
4,024.4
| |
Prior Years
| |
|
|
621.0
|
|
|
|
|
740.9
|
|
|
|
618.8
|
|
|
Total Paid (b)
| | |
|
1,145.6
|
|
|
|
|
4,897.5
|
|
|
|
4,643.2
|
|
| | | | | | | | |
|
| | | | | | | | |
|
|
Reserve for claims (a), end of period
| | | |
839.8
| | | | |
808.7
| | | |
720.8
| |
|
Add:
| | | | | | | | | |
|
Claims Payable (d)
| | | |
79.1
| | | | |
91.6
| | | |
111.0
| |
|
Other (e)
| | | |
178.8
| | | | |
137.7
| | | |
80.3
| |
| | |
|
|
|
|
|
|
|
| | | | | | | | |
|
|
Reserves for claims and other settlements, end of period
| | |
$
|
1,097.7
|
|
|
|
$
|
1,038.0
|
|
|
$
|
912.1
|
|
|
|
| |
| | |
|
|
(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. In developing the revised
estimate, there have been no changes in the approach used to
determine the key actuarial assumptions, which are the completion
factor and medical cost trend. Claims liabilities are estimated
under actuarial standards of practice and generally accepted
accounting principles. The majority of the reserve balance held at
each period-end is associated with the most recent months’ incurred
services because these are the services for which the fewest claims
have been paid. The majority of the adjustments to reserves relate
to variables and uncertainties associated with actuarial
assumptions. The degree of uncertainty in the estimates of incurred
claims is greater for the most recent months’ incurred services.
Revised estimates for prior years are determined in each quarter
based on the most recent updates of paid claims for prior years.
|
| | |
|
|
(d)
| | |
Includes amount accrued for litigation and regulatory-related
expenses.
|
| | |
|
|
(e)
| | |
Includes accrued capitation, shared risk settlements, provider
incentives and other reserve items.
|
Contacts:
Health Net, Inc.
Investor Contact:
Angie McCabe
(818)
676-8692
angie.mccabe@healthnet.com
or
Media
Contact:
Brad Kieffer
(818) 676-6833
brad.kieffer@healthnet.com
Source: Health Net, Inc.
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