Health Net, Inc. (NYSE: HNT) today announced 2012 third quarter GAAP net income of $18.0 million, or $0.22 per diluted share, compared with GAAP net income of $61.8 million, or $0.70 per diluted share, for the third quarter of 2011.
The 2011 and 2012 financial results included in this release and the attached financial tables reflect the treatment of the company’s Medicare stand-alone Part D (Medicare PDP) business that was sold on April 1, 2012 as discontinued operations.
The third quarter 2012 GAAP results include approximately $7.2 million in pretax expenses related to the company’s general and administrative (G&A) cost reduction efforts and a $4.7 million pretax loss related to the company’s divested operations and services.
The company’s Western Region Operations (Western Region) and Government Contracts segments produced combined net earnings of $0.38 per diluted share in the third quarter of 2012 compared with $0.84 per diluted share in the third quarter of 2011.“We made significant progress on several fronts in the third quarter. We made substantial strides in addressing challenges in our largest commercial accounts, and we believe that our new agreement with California’s Department of Health Care Services sets the stage for steadier performance in our state health plans going forward,” said Jay Gellert, Health Net’s chief executive officer. “Our financial performance in the third quarter was consistent with revised expectations. There was no adverse prior period development in the quarter, the commercial yield-to-cost spread narrowed compared with prior quarters this year, and our Medicare Advantage business continued to improve compared with last year,” Gellert added. “We’re on track to meet our revised 2012 expectations while, at the same time, preparing for what we believe will be a much better 2013,” Gellert noted. STATE SETTLEMENT AGREEMENT Health Net today also announced that the company and the state of California’s Department of Health Care Services (DHCS) have entered into a comprehensive agreement covering Health Net’s state-sponsored programs, including Medi-Cal, Seniors and Persons with Disabilities (SPDs), the dual-eligibles pilot programs that currently are expected to begin in the first half of 2013, and any potential future Medicaid expansion under federal health care reform.