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


The company’s Divested Operations and Services segment includes items related to the run-out of the Northeast business and transition-related revenues and expenses related to the Medicare PDP business that was sold on April 1, 2012. Health Net continues to provide run-out support services for the Northeast business pursuant to claims servicing agreements in place with UnitedHealthcare and its affiliates.


In the third quarter of 2012, Health Net repurchased 1.5 million shares of its common stock for $36.1 million at an average price of $23.79 per share. At September 30, 2012, approximately $350.0 million of authorization under the company’s existing $400 million share repurchase program remained.


Below is a table with specific 2012 guidance metrics.


2012 Guidance

Year-end membership (a)


-9% to -10%

+7% to +8%

Medicare Advantage
+11% to +13%

Total Western Region
                    -1% to -2%

Consolidated revenues (b)(c)

~$11.0 billion to $11.5 billion

Commercial premium yields PMPM (a)

~ +4.8% to +5.3%

Commercial health care costs PMPM (a)

350 to 400 bps > premium yields PMPM

Selling cost ratio (a)
~2.3% to 2.4%

G&A expense ratio (a)(c)
                    ~8.5% to 8.7%

Tax rate (b)

30.0% to 31.0%

Weighted-average fully diluted shares outstanding (d)

~83.0 million to 84.0 million

GAAP EPS (c)(d)

$1.45 to $1.55

Combined Western Region and Government Contracts EPS (c)(d)
                    $1.00 to $1.10
(a)     For the company’s Western Region Operations segment
(b) For the combined Western Region Operations and Government Contracts segments
(c) These metrics include the impact of the sale of the company’s Medicare PDP business that closed on April 1, 2012.
(d) The company’s guidance does not include the impact of share repurchases other than those to counter dilution.


Health Net will discuss the company’s third quarter 2012 results and state settlement agreement during its previously announced conference call on Monday, November 5, 2012, beginning at approximately 11:30 a.m. Eastern time. The live conference call should be accessed at least 15 minutes prior to its start with the following numbers:
(866) 393-1637 (Domestic Toll-Free) (855) 859-2056 (Replay – Domestic Toll-Free)
(706) 643-5711 (International) (404) 537-3406 (Replay – International)

The access code for the live conference call and replay is 35473774. A replay of the conference call will be available through November 10, 2012. A live webcast and replay of the conference call also will be available at under “Investor Relations.” The conference call webcast is open to all interested parties. Anyone listening to the company’s conference call will be presumed to have read Health Net’s Annual Report on Form 10-K for the year ended December 31, 2011 and Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2012 and June 30, 2012, and other reports filed by Health Net from time to time with the SEC.


Health Net, Inc. is a publicly traded managed care organization that delivers managed health care services through health plans and government-sponsored managed care plans. Its mission is to help people be healthy, secure and comfortable. Health Net, through its subsidiaries, provides and administers health benefits to approximately 5.4 million individuals across the country through group, individual, Medicare (including the Medicare prescription drug benefit commonly referred to as “Part D”), Medicaid, U.S. Department of Defense, including TRICARE, and Veterans Affairs programs. Health Net’s behavioral health services subsidiary, Managed Health Network, Inc., provides behavioral health, substance abuse and employee assistance programs to approximately 4.9 million individuals, including Health Net’s own health plan members. Health Net’s subsidiaries also offer managed health care products related to prescription drugs, and offer managed health care product coordination for multi-region employers and administrative services for medical groups and self-funded benefits programs.

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