82.1 F
San Fernando
Thursday, Mar 28, 2024
Array

Health Net Issues Higher 2012 Earnings Guidance

Health Net Inc. of Woodland Hills announced that it expects 2012 earnings to outpace 2011 results. The company issued 2012 annual guidance of $2.80 to $2.90 for earnings per diluted share, or $3.30 to $3.40 per diluted share for the company’s overall ongoing business in the western region. The figures compare with 2011 guidance of $3.08 to $3.10 for 2011, which the company issued during its third quarter earnings call in November. The company said it expects consolidated year-end revenues of $11.5 to $12 billion, compared with $13.6 billion for the year ended Dec. 31, 2010. The guidance issued today includes the impact of approximately $15 million to $20 million of pretax expenses, primarily severance costs related to the company’s cost reduction efforts and approximately $46 million to $52 million of anticipated pretax expenses related to the run-out of the company’s Northeast operations. The company continues to expect that the final cash value of the Northeast transaction will be between $510 million and $530 million. Compared with year-end 2011 enrollment, the company expects the following with regard to year-end 2012 enrollment for the Western Region: • Total health plan membership will be flat to up 1 percent; • Commercial enrollment is expected to decline by 3 to 5 percent; • Medicare Advantage enrollment is expected to increase by 8 to 10 percent; • Medicare Part D stand-alone enrollment is expected to increase by 10 to 12 percent; and • Medicaid enrollment is expected to increase by 3 to 5 percent. Western Region commercial premium yields per member per month in 2012 are expected to increase by approximately 4.3 to 4.8 percent compared with 2011. In 2012, Western Region commercial health care costs per member per month are expected to increase approximately 40 to 60 basis points less than the increase in commercial premium yields per member per month in 2012. “We remain committed to achieving a positive spread between commercial premium yields per member per month and health care costs per member per month in 2012 through disciplined pricing and prudent health care cost management,” Jay Gellert, Health Net’s president and chief executive officer said in a statement. The company also expects its Medicare Advantage performance to improve in 2012. “We are encouraged by the early enrollment results during the Medicare open enrollment period,” said Gellert. While the Medicare business is growing, pretax contribution from the Government Contracts segment is expected to decline to $90 million to $100 million in 2012, down from approximately $180 million in 2011, the company said. “We expect that improved performance from our Western Region Operations segment will help compensate for the reduction in pretax contribution from our Government Contracts segment,” said Gellert. The company is working to reduce overhead to compensate for declining government contract work. General and administrative (G&A) expense ratio for the Western Region is expected to be between approximately 8.6 and 8.8 percent in 2012. “We will continue to focus on lowering our G&A expenses to enhance our competitive position. This ongoing effort includes reviewing potential outsourcing opportunities and reducing corporate overhead,” Gellert noted.

Featured Articles

Related Articles