Health Net Has Higher Earnings For Q4, 2010

Health Net Inc. had better net income for the fourth quarter and entire year of 2010 even though it had lower revenues compared to the previous fourth quarter and year, the Woodland Hills-based insurer announced. The company had net income of $80.4 million, or $0.83 per diluted share, on revenues of $3.4 billion for the fourth quarter of 2010. For the same period in 2009, the company had a net loss of $45.2 million, or $0.43 per share, on revenues of $3.8 billion. Health Net also had higher net income for the entire year of 2010 compared to the previous year. For 2010, the company had net income of $204.2 million, or $2.06 per diluted share, on revenues of $13.6 billion. In 2009, the company had a net loss of $49 million, or $0.47 per share, on revenues of $15.7 billion. “Our solid fourth quarter and full year 2010 results affirm that our ongoing efforts to sharpen the focus of the company continue to drive improved performance,” said Jay Gellert, CEO of Health Net. “Membership in our efficient-network commercial products is growing. Our balance sheet strengthened throughout 2010, and we ended the year with a debt-to-total capital ratio of less than 20 percent. Our strong results produced cash flow that supported more than $230 million of share repurchases in 2010.” For the fourth quarter of 2010, health plan services premium revenues and health plan services expenses both decreased by 16.5 percent and 17.9 percent, respectively. Investment income decreased by 18.3 percent. The year-over-year decreases are primarily attributed to the company’s sale of its Northeast businesses in December 2009. The fourth-quarter financial results include a $24.9 million noncash benefit to health plan expenses related to a litigation reserve true-up, or a positive readjustment. They also include $13 million of expenses primarily related to litigation expenses and the company’s overhead cost reduction efforts. Gellert added that further improvement is expected in 2011, particularly in commercial enrollment growth. The company’s 2011 Medicare Advantage enrollment is also faring better than the company had projected in December 2010 in its 2011 guidance report, he said. Jessica Vernabe