Health Net, Inc. (NYSE: HNT) today announced 2012 fourth quarter GAAP net income of $5.1 million, or $0.06 per diluted share, compared with GAAP net income of $60.2 million, or $0.71 per diluted share, for the fourth 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 fourth quarter 2012 GAAP results include $20.3 million in Corporate/Other pretax expenses, primarily driven by:
approximately $5.0 million related to the early termination of a medical management contract and approximately $5.2 million for severance expenses; and
approximately $7.1 million in litigation-related expenses.
The company also incurred a $13.8 million pretax loss in the company’s Divested Operations and Services segment, resulting primarily from a lease impairment related to the company’s divested Northeast business. The company’s Western Region Operations (Western Region) and Government Contracts segments produced combined net income of $29.8 million, or $0.36 per diluted share, in the fourth quarter of 2012 compared with $60.6 million, or $0.72 per diluted share, in the fourth quarter of 2011. For the full year 2012, Health Net reported GAAP net income of approximately $121.2 million, or $1.46 per diluted share, compared with $72.1 million, or $0.80 per diluted share, for the full year 2011. The company’s Western Region and Government Contracts segments produced combined net income of $85.1 million, or $1.02 per diluted share, for the full year 2012, and approximately $278.7 million, or $3.09 per diluted share, for the full year 2011. “While the first half of 2012 presented us with challenges, our performance in the second half of 2012 demonstrated stability as we continued to prepare for 2013 and 2014,” said Jay Gellert, Health Net’s chief executive officer.