This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Health Net's CEO Discusses Q1 2012 Results - Earnings Call Transcript

In today's call, we will refer to adjusted days claims payable. This adjusted metric is not being presented in accordance with generally accepted accounting principles or GAAP. Please refer to today's press release, which is available on the company's website for a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure, days claims payable.

I will now turn the call over to Jay Gellert, Health Net CEO.

Jay M. Gellert

Thank you, Angie. I want to get directly to the issues impacting our first quarter and our revised guidance for 2012. After that, I'll spend just a few moments on other factors influencing the first quarter, and then open it up to your questions.

As you've seen in our release, we recorded $67 million in adverse medical claims development from prior periods in the first quarter of 2012. The adverse development was due to an underestimate of our incurred but not reported claims liability at year-end 2011. As we indicated, it was the result of an unanticipated flattening of our commercial medical claims trend, coupled with a larger-than-expected impact from the implementation of HIPAA 5010, the new claims coding system mandated by the federal government.

We did not have similar trend expectations in Medicare and Medicaid. As a result, we had adequate reserves for those lines.

In late March, we saw substantial uptick in claims for 2011 service date coming from our intermediaries. The level was above our expectation. It led to slower claims completion factors than anticipated. This led to the unanticipated increase in commercial development.

We believe that the 5010 issues have now been essentially resolved. We have seen the daily claims submissions have settled down to a reasonable and expected level. The $67 million of adverse development impacts our run rate for 2012. In addition, we recognized the $67 million in prior development in the first quarter. Therefore, we have adjusted the low end of our guidance to reflect the $134 million pretax impact of the adverse development and the run rate impact.

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,037.97 -42.17 -0.23%
S&P 500 2,108.92 -8.77 -0.41%
NASDAQ 5,060.2460 -31.8390 -0.63%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs