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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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

As a result of prior period development booked in the first quarter and the higher commercial health care costs run rate entering 2012, we now expect commercial health care cost to be higher than our premium yields on a reported basis by 200 to 220 basis points.

In giving this guidance, we additionally took into account, first, our premium yields are coming in higher than previous guidance by about 50-basis-point, as we continue to hold the line on pricing. The pricing trend assumptions we had used were primarily based on claims experienced through the first half of 2011. They are basically unchanged even when we look at the fourth quarter of '11 with the prior period development included. We are still confident that our pricing adequately reflects underlying run rate medical claims trends. Second, as we've earlier indicated, we have a new pharmacy agreement with CVS Caremark that will improve our pharmacy trend. And third, negotiated provider unit costs are coming in slightly below expectations.

We are working on several other initiatives aimed at improving our results throughout the remainder of 2012. We are introducing new tailored network products in the second quarter. We are renegotiating provider contracts to improve unit cost trends. And there are many other contracting medical management expense and revenue initiatives.

Now let me discuss the impact the prior period development has on past and projected trends. We saw decelerating commercial trends throughout '11. With the $67 million of prior period development now reflected, we see that our medical cost trends through the second half of '11 have essentially leveled out at a slightly lower level than the trends in the first half of last year. We have indicated in prior presentations that our 2012 outlook of trend assumed stable underlying utilization trends. The resulting trends through the fourth quarter of 2011, after including the prior period development, are consistent with that outlook. To date, our first quarter 2012 claims experience also supports stable underlying utilization trends.

3 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 16,915.07 -70.54 -0.42%
S&P 500 1,964.68 -8.15 -0.41%
NASDAQ 4,396.2040 -22.83 -0.52%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs