Health Net Inc.
) first-quarter 2013 operating income, which comprises combined
net earnings from the Western Region Operations and Government
Contracts segments, came in at $8.2 million or 10 cents per
share, rebounding from the year-ago loss of $8.1 million or 10
cents per share. Operating income, however, lagged the Zacks
Consensus Estimate of 41 cents per share.
Health Net reported net income of $50.1 million or 62 cents
per share in the first quarter of 2013, improving considerably
from a loss of $26.6 million or 32 cents per share in the
Health Net's total revenue declined 1.2% year over year to
$2.8 billion in the reported quarter. Revenues came in line with
the Zacks Consensus Estimate.
Health plan services premiums revenues of Health Net came in
at $2.6 billion, in line with the first quarter of 2012.
Meanwhile, total health plan services expenses declined 3.2% to
$2.27 billion from $2.34 billion in the year-ago quarter. Total
expenses declined 4.5% year over year to $2.72 billion from $2.84
Western Region Operations:
This segment of Health Net posted revenues of $2.7 billion in the
quarter, in line with the year-ago quarter. Net investment income
for the segment increased to $29.6 million from $22.3 million in
the year-ago quarter. Health plan services expenses declined 3.4%
year over year to $2.3 billion.
Total enrollment in the segment declined 2.8% year over year
to 2.5 million members as of Mar 31, 2013. Western Region
commercial enrollment dipped 11.2% to 1.1 million members, while
enrollment in the company's Calif. health plans declined 1.5%
year over year. However, enrollment climbed 3.1% to 0.23 million
in Medicare Advantage plans. Medicaid enrollment also increased
6.4% to 1.1 million in the reported quarter.
Medical care ratio (MCR) for Health Net's health plan services
in the segment improved to 86.2% during the reported quarter from
89.6% in the year-ago quarter and Commercial MCR declined to
85.9% from 91.4% in the prior-year quarter. Medicare Advantage
MCR deteriorated to 91.9% from 87.9% in the year-ago quarter.
Revenues from this segment of Health Net declined to $134.5
million from $181.4 million in the first quarter of 2012. The
segment's expenses also plummeted to $125.5 million from $159.3
million in the prior-year quarter.
As of Mar 31, 2013, Health Net had cash and investments of
approximately $2.0 billion, increasing from $2.2 billion as of
Dec 31, 2012. The company's debt-to-total capital ratio also
inched up to 24.6% from 24.3% as of Dec 31, 2012.
Health Net's operating cash outflow stood at $28.2 million in
the reported quarter compared with an inflow of $4.2 million in
the year-ago quarter.
Total assets of Health Net were worth $3.88 billion as of Mar
31, 2013, declining from $3.93 billion as of Dec 31, 2012.
Stockholder equity increased to $1.53 billion from $1.56 billion
as of Dec 31, 2012.
Share Repurchase Update
During the reported quarter, Health Net repurchased 2.7
million shares at an average price of $26.34, totaling $70
million. The company had $280 million remaining under its current
$400 million share repurchase authorization as of Mar 31,
Outlook for 2013
Health Net raised its reported net income guidance for 2013 to
$2.20-$2.30 per share from $2.00-$2.10 per share.
Health Net estimates total health plan membership in the
Western Region Operations in 2013 to dip 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.
Meanwhile, the tax rate for Health Net is expected to be
38%−39%. 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 9.0%−9.4%.
Outstanding share count is expected to be around 80 million at
the end of 2013. The above mentioned guidance includes operating
expenses of $30 million related to the implementation of the
health care reform but excludes costs related to Health Net's
participation in Calif.'s Coordinated Care Initiative.
Other Healthcare Companies
Another health maintenance organization (HMO),
) reported first-quarter 2013 adjusted income of $2.94 per share,
beating the Zacks Consensus Estimate of $2.37. Adjusted income
also surpassed the year-ago earnings of $2.34 per share by
UnitedHealth Group Inc.
) reported first-quarter 2013 earnings of $1.16 per share, in
line with the Zacks Consensus Estimate. Earnings, however,
declined 11.4% on a year-over-year basis.
Molina Healthcare Inc.
) reported first-quarter 2013 net earnings per share of 64 cents,
significantly surpassing the Zacks Consensus Estimate of 26
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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