Health Net Inc.
) second-quarter 2013 operating income, which comprises combined
net earnings from the Western Region Operations and Government
Contracts segments, came in at $41.4 million or 52 cents per
share, improving from the year-ago quarter's earnings of $15.9
million or 19 cents per share. Operating income was in line with
the Zacks Consensus Estimate.
Health Net reported net income of $33.5 million or 42 cents
per share in the second quarter of 2013, declining considerably
from $124.6 million or $1.48 per share in the year-ago quarter.
Net income includes pre-tax corporate expenses of $12.9 million
in the reported quarter and $119.4 million or $1.42 per share for
gains on sale of the Medicare stand-alone Part D prescription
drug plan business in the second quarter of 2012.
Health Net's total revenue declined 3.6% year over year to
$2.74 billion in the reported quarter. Revenues surpassed the
Zacks Consensus Estimate of $2.73 billion.
Health plan services premiums revenues of Health Net came in
at $2.6 billion, down 1.5% from the second quarter of 2012.
Meanwhile, total health plan services expenses declined 7.1% to
$2.2 billion from $2.4 billion in the year-ago quarter. Total
expenses declined 5.2% year over year to $2.69 billion from $2.83
Western Region Operations:
This segment of Health Net posted revenues of $2.6 billion in the
quarter, down 2% from the year-ago quarter. Net investment income
for the segment declined to $17.1 million from $24.7 million in
the year-ago quarter. Health plan services expenses declined 8.3%
year over year to $2.2 billion.
Total enrollment in the segment declined 3.2% year over year
to 2.5 million members as of Jun 30, 2013. Western Region
commercial enrollment dipped 11.6% to 1.1 million members, while
enrollment in the company's California health plans declined 1.7%
year over year. However, enrollment climbed 3.5% to 0.24 million
in Medicare Advantage plans. Medicaid enrollment also increased
5.5% to 1.1 million in the reported quarter.
Medical care ratio (MCR) for Health Net's health plan services
in the segment improved to 85% during the reported quarter from
90.1% in the year-ago quarter and Commercial MCR declined to
84.9% from 88.7% in the prior-year quarter. Medicare Advantage
MCR deteriorated to 89.9% from 92% in the year-ago quarter.
Medicaid MCR amounted to 79.5%, plunging from 91.3% in the
Revenues from this segment of Health Net declined to $139.9
million from $176.2 million in the second quarter of 2012. The
segment's expenses also plummeted to $121.8 million from $152.7
million in the prior-year quarter.
As of Jun 30, 2013, Health Net had cash and investments of
approximately $1.9 billion, declining from $2.1 billion as of Jun
30, 2012. The company's debt-to-total capital ratio also
increased to 25.6% from 24.1% as of Jun 30,
Health Net's operating cash outflow stood at $106.3 million in
the reported quarter compared with an inflow of $119.8 million in
the year-ago quarter.
Total assets of Health Net were worth $3.88 billion as of Jun
30, 2013, declining from $4.03 billion as of Jun 30, 2012.
Stockholder equity declined to $1.52 billion from $1.54 billion
as of Jun 30, 2012.
Outlook for 2013
Health Net reduced its reported net income guidance for 2013
to $2.10-$2.20 per share from $2.20-$2.30 per share. Operating
income is expected to be $2.20-$2.30 per share.
Health Net estimates total health plan membership in the
Western Region Operations in 2013 to decline 1%−2% over 2012. The
expected decline is primarily due to an 8%−9% estimated downturn
in commercial enrollment, partially offset by a 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 expected
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 2.0% year over year.
Government Contract's pre-tax income is expected to be about
$55-$60 million. Meanwhile, the tax rate for Health Net is
expected to be 38%−38.5%.
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 second-quarter 2013 adjusted income of $2.60 per
share, beating the Zacks Consensus Estimate of $2.08. Adjusted
income also surpassed the year-ago earnings of $2.04 per share by
UnitedHealth Group Inc.
) reported its second-quarter 2013 earnings of $1.40 per share,
higher than the Zacks Consensus Estimate of 1.26 per share.
Earnings were also up 7.4% on a year-over-year basis.
Molina Healthcare Inc.
) reported second-quarter 2013 operating earnings per share of 34
cents, surpassing the Zacks Consensus Estimate of 31 cents.
Earnings per share rebounded from the year-ago quarter's loss of
Health Net carries a Zacks Rank #2 (Buy).
HEALTH NET INC (HNT): Free Stock Analysis
MOLINA HLTHCR (MOH): Free Stock Analysis
UNITEDHEALTH GP (UNH): Free Stock Analysis
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