Health Net Inc. (HNT, Financial) filed Quarterly Report for the period ended 2009-06-30.
Health Net Inc. is an integrated managed care organization which administers the delivery of managed health care services. The company\'s health maintenance organizations insured preferred provider organizations and government contracts subsidiaries provide health benefits to individuals through group individual Medicare risk Medicaid and TRICARE programs. Health Net Inc. has a market cap of $1.44 billion; its shares were traded at around $13.86 with a P/E ratio of 7.45 and P/S ratio of 0.09. Health Net Inc. had an annual average earning growth of 6.6% over the past 5 years.
Total revenues increased by $172.2 million, or 4%, for the three months ended June 30, 2009 and by $268.2 million, or 3%, for the six months ended June 30, 2009 as compared to the same periods in 2008. Health plan services premium revenues increased 1% for the three months ended June 30, 2009 and by 1% for the six months ended June 30, 2009 as compared to the same periods in 2008. The health plan services medical care ratio (MCR) was 86.2% and 86.5% for the three and six months ended June 30, 2009, respectively, compared to 85.3% and 87.3% for the three and six months ended June 30, 2008, respectively. Our Government contracts revenues increased 20% and 17% for the three and six months ended June 30, 2009, respectively, as compared to the same periods in 2008.
Our cash flows used in operations decreased to $(60.0) million for the six months ended June 30, 2009 from $(197.8) million for the same period in 2008 primarily due to the $160 million settlement payment made in connection with the McCoy, Wachtel and Scharfman lawsuits in the three months ended March 31, 2008, offset by $43 million in payments for operations strategy and litigation matters in the three months ended June 30, 2009. See Note 9 to our consolidated financial statements for a discussion of the McCoy, Wachtel and Scharfman lawsuits.
for the Health Net Life Insurance Company health care business in the states of Connecticut and New Jersey. At the closing, we will receive up to $350 million, consisting of a $60 million minimum payment for the commercial membership of the acquired business and the Medicare and Medicaid businesses of the Acquired Companies and up to an additional $290 million representing a portion of the adjusted tangible net equity of the Acquired Companies at closing. Under the Stock Purchase Agreement, we will also receive one-half of the remaining amount of the adjusted tangible net equity at closing on the first anniversary of closing and the other half on the second anniversary, subject to certain adjustments. After closing, UnitedHealth could pay Health Net additional consideration on a per member basis as our Northeast commercial members and/or Medicare and/or Medicaid businesses transition to other UnitedHealth products to the extent such amounts exceed the initial minimum payment of $60 million. HNNE will continue to serve the members of the Acquired Companies under Administrative Services Agreements with UnitedHealth or its affiliates following the close of the transaction until all members are either transitioned to UnitedHealth or non-renewed. We expect the Administrative Services Agreements to be in effect for approximately two years following the closing of the transaction. The sale is subject to regulatory approvals and is expected to close within twelve months after the date of the Stock Purchase Agreement. As of June 30, 2009, the Company did not meet the paragraph 30 criteria of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Asset and therefore did not classify the Northeast plans as held-for-sale. Additionally, as of June 30, 2009, the Company did not consider that the sale of the Northeast plans was more-likely-than-not to occur.
The Acquired Companies had approximately $660 million and $1,295 million of premium revenues in the three and six months ended June 30, 2009, respectively, which represent 21% and 21% of our health plan services premiums for the three and six months ended June 30, 2009, respectively. The Acquired Companies had approximately $671 million and $1,342 million of premium revenues in the three and six months ended June 30, 2008, respectively, which represent 22% and 22% of our health plan services premiums for the three and six months ended June 30, 2008, respectively. The Acquired Companies had a combined pre-tax loss of $26 million and $29 million for the three and six months ended June 30, 2009, respectively, and a combined pre-tax income of $20 million and $0.4 million for the three and six months ended June 30, 2008, respectively. As of June 30, 2009 and 2008, we had approximately 577,000 and 586,000 total health plan members, respectively, in the Acquired Companies. We are currently evaluating the impact of the pending sale on our 2009 financial results, including potential impairment of goodwill and other intangibles, tax benefits, severance costs, other transaction-related costs and operating costs that will be incurred during the transition period following the close of the transaction.
Read the The complete ReportHNT is in the portfolios of Richard Snow of Snow Capital Management, L.P., Richard Snow of Snow Capital Management, L.P., Bill Miller of Legg Mason Value Trust, David Einhorn of Greenlight Capital Inc, Edward Owens of Vanguard Health Care Fund.
Health Net Inc. is an integrated managed care organization which administers the delivery of managed health care services. The company\'s health maintenance organizations insured preferred provider organizations and government contracts subsidiaries provide health benefits to individuals through group individual Medicare risk Medicaid and TRICARE programs. Health Net Inc. has a market cap of $1.44 billion; its shares were traded at around $13.86 with a P/E ratio of 7.45 and P/S ratio of 0.09. Health Net Inc. had an annual average earning growth of 6.6% over the past 5 years.
Highlight of Business Operations:
Net income decreased for the three months ended June 30, 2009 to $40.1 million from $76.7 million for the same period in 2008 and increased for the six months ended June 30, 2009 to $62.2 million from $41.0 million for the same period in 2008. Our diluted earnings per share for the three and six months ended June 30, 2009 were $0.38 and $0.60, respectively, compared with $0.71 and $0.37 for the three and six months ended June 30, 2008, respectively. Our pretax margin was 1.6% for the three months ended June 30, 2009, compared with 3.1% for the same period in 2008, and was 1.1% for the six months ended June 30, 2009 compared with 0.9% for the same period in 2008. Our operating results for the three and six months ended June 30, 2009 included $17.6 million and $62.3 million, respectively, in pretax charges related to our operations strategy and reductions from litigation reserve true-ups. Our operating results for the three and six months ended June 30, 2008 included a $13.0 million pretax charge related to our operations strategy and a $95.5 million pretax charge related to litigation and regulatory-related matters and our operations strategy, respectively. Also included in the operating results for the six months ended June 30, 2008 is $94 million of unfavorable prior period reserve development and higher than expected health care costs.Total revenues increased by $172.2 million, or 4%, for the three months ended June 30, 2009 and by $268.2 million, or 3%, for the six months ended June 30, 2009 as compared to the same periods in 2008. Health plan services premium revenues increased 1% for the three months ended June 30, 2009 and by 1% for the six months ended June 30, 2009 as compared to the same periods in 2008. The health plan services medical care ratio (MCR) was 86.2% and 86.5% for the three and six months ended June 30, 2009, respectively, compared to 85.3% and 87.3% for the three and six months ended June 30, 2008, respectively. Our Government contracts revenues increased 20% and 17% for the three and six months ended June 30, 2009, respectively, as compared to the same periods in 2008.
Our cash flows used in operations decreased to $(60.0) million for the six months ended June 30, 2009 from $(197.8) million for the same period in 2008 primarily due to the $160 million settlement payment made in connection with the McCoy, Wachtel and Scharfman lawsuits in the three months ended March 31, 2008, offset by $43 million in payments for operations strategy and litigation matters in the three months ended June 30, 2009. See Note 9 to our consolidated financial statements for a discussion of the McCoy, Wachtel and Scharfman lawsuits.
for the Health Net Life Insurance Company health care business in the states of Connecticut and New Jersey. At the closing, we will receive up to $350 million, consisting of a $60 million minimum payment for the commercial membership of the acquired business and the Medicare and Medicaid businesses of the Acquired Companies and up to an additional $290 million representing a portion of the adjusted tangible net equity of the Acquired Companies at closing. Under the Stock Purchase Agreement, we will also receive one-half of the remaining amount of the adjusted tangible net equity at closing on the first anniversary of closing and the other half on the second anniversary, subject to certain adjustments. After closing, UnitedHealth could pay Health Net additional consideration on a per member basis as our Northeast commercial members and/or Medicare and/or Medicaid businesses transition to other UnitedHealth products to the extent such amounts exceed the initial minimum payment of $60 million. HNNE will continue to serve the members of the Acquired Companies under Administrative Services Agreements with UnitedHealth or its affiliates following the close of the transaction until all members are either transitioned to UnitedHealth or non-renewed. We expect the Administrative Services Agreements to be in effect for approximately two years following the closing of the transaction. The sale is subject to regulatory approvals and is expected to close within twelve months after the date of the Stock Purchase Agreement. As of June 30, 2009, the Company did not meet the paragraph 30 criteria of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Asset and therefore did not classify the Northeast plans as held-for-sale. Additionally, as of June 30, 2009, the Company did not consider that the sale of the Northeast plans was more-likely-than-not to occur.
The Acquired Companies had approximately $660 million and $1,295 million of premium revenues in the three and six months ended June 30, 2009, respectively, which represent 21% and 21% of our health plan services premiums for the three and six months ended June 30, 2009, respectively. The Acquired Companies had approximately $671 million and $1,342 million of premium revenues in the three and six months ended June 30, 2008, respectively, which represent 22% and 22% of our health plan services premiums for the three and six months ended June 30, 2008, respectively. The Acquired Companies had a combined pre-tax loss of $26 million and $29 million for the three and six months ended June 30, 2009, respectively, and a combined pre-tax income of $20 million and $0.4 million for the three and six months ended June 30, 2008, respectively. As of June 30, 2009 and 2008, we had approximately 577,000 and 586,000 total health plan members, respectively, in the Acquired Companies. We are currently evaluating the impact of the pending sale on our 2009 financial results, including potential impairment of goodwill and other intangibles, tax benefits, severance costs, other transaction-related costs and operating costs that will be incurred during the transition period following the close of the transaction.
Read the The complete ReportHNT is in the portfolios of Richard Snow of Snow Capital Management, L.P., Richard Snow of Snow Capital Management, L.P., Bill Miller of Legg Mason Value Trust, David Einhorn of Greenlight Capital Inc, Edward Owens of Vanguard Health Care Fund.
