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Health Net Inc (NYSE:HNT)
Gross Profit
$2,599 Mil (TTM As of Dec. 2015)

Health Net Inc's gross profit for the three months ended in Dec. 2015 was $654 Mil. Health Net Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2015 was $2,599 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Health Net Inc's gross profit for the three months ended in Dec. 2015 was $654 Mil. Health Net Inc's revenue for the three months ended in Dec. 2015 was $4,036 Mil. Therefore, Health Net Inc's Gross Margin for the quarter that ended in Dec. 2015 was 16.21%.

Health Net Inc had a gross margin of 16.21% for the quarter that ended in Dec. 2015 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Health Net Inc was 30.80%. The lowest was 12.12%. And the median was 14.71%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Health Net Inc's Gross Profit for the fiscal year that ended in Dec. 2015 is calculated as

Gross Profit (A: Dec. 2015 )=Revenue - Cost of Goods Sold
=16243.587 - 13644.877
=2,599

Health Net Inc's Gross Profit for the quarter that ended in Dec. 2015 is calculated as

Gross Profit (Q: Dec. 2015 )=Revenue - Cost of Goods Sold
=4036.401 - 3381.931
=654

Health Net Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2015 was 604.493 (Mar. 2015 ) + 662.619 (Jun. 2015 ) + 677.128 (Sep. 2015 ) + 654.47 (Dec. 2015 ) = $2,599 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Health Net Inc's Gross Margin for the quarter that ended in Dec. 2015 is calculated as

Gross Margin (Q: Dec. 2015 )=Gross Profit (Q: Dec. 2015 ) / Revenue (Q: Dec. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=654 / 4036.401
=16.21 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Health Net Inc had a gross margin of 16.21% for the quarter that ended in Dec. 2015 => No sustainable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Health Net Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross_Profit 2,0364,3451,9012,0421,7271,6381,3681,6642,1642,599

Health Net Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Gross_Profit 453389505525561573604663677654
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