Health Net Inc
) third-quarter 2013 operating income, which comprises combined
net earnings from the Western Region Operations and Government
Contracts segments, came in at 83 cents per share, breezing past
the Zacks Consensus Estimate of 59 cents. The result also
improved significantly from the year-ago quarter's earnings of 38
cents per share.
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Health Net's total revenues improved 1.3% year over year to $2.78
billion. Revenues surpassed the Zacks Consensus Estimate of $2.72
Health plan services premium revenues of Health Net came in at
$2.6 billion, down 1.1% from the third quarter of 2012.
Meanwhile, total health plan services expense declined 3.7% to
$2.2 billion from $2.3 billion in the year-ago quarter. Total
expenses for Health Net declined 3% year over year to $2.67
billion from $2.75 billion.
Western Region Operations
: This segment of Health Net posted revenues of $2.6 billion in
the quarter, almost flat year over year. Net investment income
for the segment declined to $11.3 million from $16.4 million in
the year-ago quarter. Health plan services expenses declined 4.3%
year over year to $2.2 billion.
Total enrollment in the segment dropped 3.4% year over year to
2.5 million members as of Sep 30, 2013. Western Region commercial
enrollment dipped 12.1% to 1.1 million members, while that under
the company's California health plans declined 1.6% year over
year. However, enrollment increased 3.5% to 0.24 million in
Medicare Advantage plans. Medicaid enrollment also increased 5.3%
to 1.1 million in the reported quarter.
Medical care ratio (MCR) for Health Net's health plan services in
the segment improved to 84.3% from 88.5% in the year-ago quarter,
while Commercial MCR fell to 84.2% from 86.7% in the prior-year
quarter. Medicare Advantage MCR improved to 89.9% from 90.1% a
year ago. Medicaid MCR amounted to 79.4%, plunging from 91.6% in
the year-ago quarter.
: Revenues from this segment of Health Net declined to $149.3
million from $169.8 million in the third quarter of 2012. The
segment's expenses also plummeted to $125.8 million from $148.7
million in the prior-year quarter.
As of Sep 30, 2013, Health Net had cash and investments of
approximately $2.3 billion, declining from $2.0 billion as of Sep
30, 2012. The company's debt-to-total capital ratio improved to
23.8% from 24.4% as of Sep 30,
Health Net's operating cash flow stood at $302.2 million in the
reported quarter compared with outflow of $169.4 million in the
Total assets of Health Net were worth $4.04 billion as of Sep 30,
2013, up from $3.81 billion as of Sep 30, 2012. Stockholder
equity increased to $1.60 billion from $1.55 billion as of Sep
Outlook for 2013 Revised
Health Net reiterated its reported net income guidance for 2013
at $2.10-$2.20 per share. Operating income is expected in the
range of $2.20-$2.30 per share.
Health Net estimates total health plan membership in the Western
Region Operations in 2013 is likely to decline 2% to 3% over
2012. Previously, it had estimated the same to decline 1% to 2%.
The expected decline is primarily due to an 11%−12% (earlier
decline of 8%−9%) estimated downturn in commercial enrollment,
partially offset by a 2%−3% (earlier increase of 1%-2%)
anticipated improvement in the Medicare Advantage enrollment and
a 4%−6% rise predicted in Medicaid enrollment.
Additionally, consolidated revenues for the combined Western
Region Operations and Government Contracts segments are
reiterated between $10.7 billion and $11.2 billion.
Moreover, the commercial premium yields per member per month
(PMPM) for the Western Region Operations segment in 2013 is
projected to grow 2.5% year over year, up from 2% growth
Meanwhile, the tax rate for Health Net is expected to be
The company also expects selling cost ratio in the range of
2.3%−2.4% and general and administrative expense ratio in the
range of 10%−10.5%. Outstanding share count is expected to be
around 80-81 million at the end of 2013.
Other Healthcare Companies
Another health maintenance organization (HMO),
) reported third-quarter 2013 adjusted income of $2.10 per share,
beating the Zacks Consensus Estimate of $1.83 per share. Adjusted
income was a penny higher than the year-ago earnings of $2.09 per
UnitedHealth Group Inc
) reported its third-quarter 2013 earnings of $1.53 per share,
missing the Zacks Consensus Estimate by a penny. Earnings,
however, grew 2.0% year over year.
Molina Healthcare Inc
) reported third-quarter 2013 operating earnings per share of 31
cents that missed the Zacks Consensus Estimate by a penny.
However, earnings per share surpassed the year-ago quarter's
earnings of 8 cents per share.
Health Net presently carries a Zacks Rank #2 (Buy).