Health Net (Health Net) Operating Income : $506 Mil (TTM As of Dec. 2015)

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What is Health Net Operating Income?

Health Net's Operating Income for the three months ended in Dec. 2015 was $137 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Dec. 2015 was $506 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Health Net's Operating Income for the three months ended in Dec. 2015 was $137 Mil. Health Net's Revenue for the three months ended in Dec. 2015 was $4,036 Mil. Therefore, Health Net's Operating Margin % for the quarter that ended in Dec. 2015 was 3.39%.

Health Net's 5-Year average Growth Rate for Operating Margin % was 0.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Health Net's annualized ROC % for the quarter that ended in Dec. 2015 was 6.88%. Health Net's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2015 was 308.39%.

Health Net Operating Income Historical Data

The historical data trend for Health Net's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Health Net Operating Income Chart

Health Net Annual Data

Trend

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Dec15

Operating Income

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193.90

64.87

302.57

319.70

489.84

Health Net Quarterly Data
	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15
Operating Income	Get a 7-Day Free Trial															136.22	75.76	140.51	153.35	136.68

Health Net Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Dec. 2015 adds up the quarterly data reported by the company within the most recent 12 months, which was $506 Mil.

Health Net (NYSE:HNT) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Health Net's annualized ROC % for the quarter that ended in Dec. 2015 is calculated as:

	ROC % (Q: Dec. 2015 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2015 )	+	Invested Capital (Q: Dec. 2015 ))	/ count )
=	546.712 * ( 1 - 63.47% )	/	( (2819.846	+	2986.227)	/ 2 )
=	199.7138936	/	2903.0365
=	6.88 %

where

	Invested Capital		(Q: Sep. 2015 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	6023.431	-	1542.55	-	( 3194.186	-	max(0, 3348.034	-	5009.069	+	3194.186	))
=	2819.846

	Invested Capital		(Q: Dec. 2015 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	6397.646	-	1959.286	-	( 3215.221	-	max(0, 3871.91	-	5324.043	+	3215.221	))
=	2986.227

Note: The Operating Income data used here is four times the quarterly (Dec. 2015) data.

2. Joel Greenblatt's definition of Return on Capital:

Health Net's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2015 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Dec. 2015 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Sep. 2015		Q: Dec. 2015
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	439.664	/	( ( (139.083 + max(-1964.138, 0))	+	(146.053 + max(-2889.36, 0)) )	/	2 )
=	439.664	/	( ( 139.083	+	146.053 )	/	2 )
=	439.664	/	142.568
=	308.39 %

where Working Capital is:

	Working Capital		(Q: Sep. 2015 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(997.858	+	0	+	386.038)	-	(1542.55	+	121.061	+	1684.423)
=	-1964.138

	Working Capital		(Q: Dec. 2015 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(267.655	+	0	+	429.895)	-	(1959.286	+	134.232	+	1493.392)
=	-2889.36

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Dec. 2015) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Health Net's Operating Margin % for the quarter that ended in Dec. 2015 is calculated as:

Operating Margin %	=	Operating Income (Q: Dec. 2015 )	/	Revenue (Q: Dec. 2015 )
	=	136.678	/	4036.401
	=	3.39 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Health Net Operating Income Related Terms

Thank you for viewing the detailed overview of Health Net's Operating Income provided by GuruFocus.com. Please click on the following links to see related term pages.

Health Net (Health Net) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Healthcare Plans » Health Net Inc (NYSE:HNT) » Definitions » Operating Income

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Address

Website

http://www.health.net

Health Net Inc was incorporated in the state of Delaware on 1990. The Company is an integrated managed care organization that delivers managed health care services. The Company's health plans and government contracts subsidiaries provide health benefits through its health maintenance organizations (HMOs), insured preferred provider organizations (PPOs) and point of service (POS). Its subsidiaries also offer managed health care products related to behavioral health and prescription drugs. The Company also owns health and life insurance companies licensed to sell exclusive provider organization (EPO), PPO, POS and indemnity products as well as auxiliary non-health products such as life and accidental death and dismemberment, dental, vision, behavioral health and disability insurance. These products are offered by its health and life insurance subsidiaries, which are licensed to sell insurance in approximately 49 states and the District of Columbia. It operates within three reportable segments: West Operations, Northeast Operations and Government Contracts. The Company's West Operations segment includes the operations of its commercial, Medicare and Medicaid health plans, the operations of its health and life insurance companies and its behavioral health and pharmaceutical services subsidiaries in Arizona, California and Oregon. The Company offers a full spectrum of managed health care products and services. It offers a range of Medicare products, including Medicare Advantage plans with and without prescription drug coverage, Medicare Part D stand-alone prescription drug plans ('PDP'), and Medicare supplement products that supplement traditional fee-for-service Medicare coverage. Its portfolio of Medicare Advantage plans focuses on simplicity so that members can sign up and use benefits with minimal paperwork and receive coverage that starts immediately upon enrollment. The Company provides ASO products to large employer groups in California. Its Government Contracts segment includes its TRICARE contract for the North Region and other health care-related government contracts that it administers for the U.S. Department of Defense (the 'Department of Defense') and the U.S. Department of Veterans Affairs. Certain components of these contracts are subcontracted to unrelated third parties. Its wholly-owned subsidiary, Health Net Federal Services, LLC ('HNFS'), administers a large managed care federal contract with the Department of Defense under the TRICARE program in the North Region. The Company maintains a network of qualified physicians, hospitals and other health care providers in each of the states in which it offers network based managed care products and services. It markets its products and services to individuals and employer groups through inside sales staff, independent brokers, agents and consultants and through the Internet. The Company operates in a highly competitive environment in an industry. Its health plans face subst

Executives

Mary Anne Citrino	director	345 PARK AVENUE, 29TH FLOOR, NEW YORK NY 10154
Craver Theodore F Jr	director	DUKE ENERGY CORPORATION, 550 SOUTH TRYON STREET - DEC45A, CHARLOTTE NC 28202
Kathleen Alyce Waters	officer: SVP, Gen. Counsel & Secretary	C/O DAVITA INC., 2000 16TH STREET, DENVER CO 80202
Jay M Gellert	director, officer: President, CEO	6520 PLATT AVENUE, #695, WEST HILL CA 91307
Gale S Fitzgerald	director	800 DELEWARE AVE, COMPUTER TASK GROUP INC, BUFFALO NY 14209
James Woys	officer: EVP, CFO and COO	21650 OXNARD STREET, 22ND FLOOR, WOODLAND HILLS CA 91367
Patrick Foley	director	C/O GLENBOROUGH REALTY TRUST, 400 SOUTH EL CAMINO REAL, SAN MATEO CA 94402
Steven H Nelson	officer: President Health Net of the NE	21650 OXNARD STREET, WOODLAND HILLS CA 91367
Anthony S Piszel	officer: EVP & Chief Financial Officer	C/O PRUDENTIAL FINANCIAL INC, 751 BROAD ST 4TH FL, NEWARK NJ 07102
Maurice Hebert	officer: Corporate Controller	C/O WELLCARE HEALTH PLANS, INC., 8735 HENDERSON ROAD, TAMPA FL 33634
Richard W Hanselman	director	21650 OXNARD STREET, 22ND FLOOR, WOODLAND HILLS CA 91367
J Thomas Bouchard	director	5301 N IRONWOOD RD, MILWAUKEE WI 53217