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Health Net Reports Third Quarter 2012 GAAP Net Income Of $18.0 Million, Or $0.22 Per Diluted Share

Commercial health care costs PMPM in the Western Region increased by 7.1 percent to approximately $327 in the third quarter of 2012 compared with $305 in the third quarter of 2011.

“While the spread in the third quarter of 2012 was consistent with our expectations, it narrowed considerably compared with the first and second quarter of 2012 as cost trends have stabilized and we recorded no adverse prior period development in the quarter,” explained Woys.

Medical Care Ratios (MCR)

The health plan services MCR in the Western Region was 88.5 percent in the third quarter of 2012 compared with 86.4 percent in the third quarter of 2011.

The Western Region commercial MCR was 86.7 percent in the third quarter of 2012 compared with 84.8 percent in the third quarter of 2011 and 88.7 percent in the second quarter of 2012.

The MA MCR in the Western Region was 90.1 percent in the third quarter of 2012 compared with 90.7 percent in the third quarter of 2011.

“Our improving MA MCR is consistent with our enrollment growth this year and moderate cost trends,” said Woys.

G&A and Selling Expenses

G&A expense in the Western Region was approximately $218.4 million in the third quarter of 2012 compared with $211.4 million in the third quarter of 2011. The G&A expense ratio of 8.5 percent in the third quarter of 2012 was flat compared with the third quarter of 2011 and increased 20 basis points from 8.3 percent in the second quarter of 2012.

Selling expense in the Western Region was approximately $61.1 million in the third quarter of 2012 compared with $57.9 million in the third quarter of 2011.

“We spent approximately $4 million in incremental G&A expenses during the third quarter of 2012 to prepare for the implementation of the dual-eligibles pilot programs currently scheduled for the middle of 2013,” commented Woys. “We expect to see this amount increase in the fourth quarter of 2012.”

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