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Health Net Inc. Reports Operating Results (10-Q)

November 06, 2012 | About:
10qk

10qk

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Health Net Inc. (HNT) filed Quarterly Report for the period ended 2012-09-30.

Health Net Inc has a market cap of $1.77 billion; its shares were traded at around $25.89 with a P/E ratio of 7.9 and P/S ratio of 0.2.

Highlight of Business Operations:

Our total revenues increased 3.3 percent for the three months ended September 30, 2012 to $2.8 billion from $2.7 billion for the same period in 2011 and decreased 2.9 percent for the nine months ended September 30, 2012 to $8.5 billion from $8.7 billion in the same period in 2011. The increase for the three months ended September 30, 2012 was primarily due to an increase in health plan services premiums. The decrease for the nine months ended September 30, 2012 was primarily driven by the decline in our Government Contracts revenue due to the impact of the change to the T-3 contract as described below.

Our Government Contracts revenues decreased by 3.4 percent for the three months ended September 30, 2012 to $169.8 million from $175.8 million in the same period in 2011, and decreased by 56.8 percent for the nine months ended September 30, 2012 to $527.4 million from $1,222.0 million in the same period in 2011. Our Government Contracts costs increased by 18.7 percent for the three months ended September 30, 2012 to $151.8 million from $127.9 million in the same period in 2011, and decreased by 56.7 percent for the nine months ended September 30, 2012 to $467.5 million from $1,080.9 million in the same period in 2011. The declines in our Government Contracts revenues and costs for the nine months ended September 30, 2012 were primarily due to the change from our prior contract for the TRICARE North Region, which was a risk-based contract, to the new T-3 contract, which is a cost reimbursement plus fixed fee contract. As a result of this change, health care costs and related reimbursements that were included in our consolidated statements of operations under the prior contract were subsequently excluded under the T-3 contract. For additional information on our T-3 contract, see “—Government Contracts Reportable Segment” and Note 2 to our consolidated financial statements.

Health plan services premium revenues increased by 3.7 percent to $2.6 billion for the three months ended September 30, 2012, compared with $2.5 billion for the same period in 2011, and by 5.9 percent to $7.8 billion for the nine months ended September 30, 2012, compared with $7.4 billion for the same period in 2011. Health plan services expenses increased by 6.1 percent from $2.1 billion for the three months ended September 30, 2011 to $2.3 billion for the three months ended September 30, 2012, and increased by 9.3 percent from $6.4 billion for the nine months ended September 30, 2011 to $7.0 billion for the nine months ended September 30, 2012. Investment income increased to $16.4 million for the three months ended September 30, 2012 and decreased to $63.4 million for the nine months ended September 30, 2012, respectively, compared with $15.2 million and $64.1 million for the three and nine months ended September 30, 2011, respectively.

Total revenues in our Western Region Operations segment increased 3.7 percent to $2.6 billion for the three months ended September 30, 2012 and increased 6.0 percent to $7.9 billion for the nine months ended September 30, 2012 compared to the same periods in 2011, primarily due to increases in premium revenues. Health plan services premium revenues in our Western Region Operations segment increased 3.7 percent to $2.6 billion for the three months ended September 30, 2012 and increased 6.0 percent to $7.8 billion for the nine months ended September 30, 2012, compared to the same periods in 2011, primarily due to increases in Medicaid premium revenues.

Net cash provided by investing activities increased by $68.8 million during the nine months ended September 30, 2012 as compared to the same period in 2011. This increase is primarily due to $248.2 million received for the sale of our Medicare PDP business during 2012, partially offset by a $90.2 million decrease in net sales and maturities of available-for-sale securities and $82.1 million received from United for additional consideration related to the Northeast sale during the first nine months of 2011.

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