Health Net Posts Loss on Higher Legal Costs

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Health Net Inc. moved to a loss in the first quarter, largely due to litigation and restructuring costs, but the health insurer’s adjusted results beat analysts’ expectations.

The Woodland Hills company on Wednesday reported a loss of $108 million (-$1.16 per share), compared with net income of $16.1 million (16 cents) a year earlier. Revenue rose 3 percent to $3.53 billion, with health plan premium revenue up 3 percent to $2.61 billion and government contract revenue up 8 percent to $875 million. Even so, total health plan enrollment was down 0.9 percent to 2.9 million members.

Excluding one-time items, Health Net earned 61 cents per share. Analysts surveyed by Thomson Reuters on average expected adjusted per-share profit of 57 cents on $3.38 billion in revenue.

Health Net took a $11 million charge to cover restructuring and cost reduction efforts. The company also took a $177 million charge related to litigation. In 1999, Health Net sold health plans in three states to a competitor, AmCareco. After the plans were put under state supervision three years later, regulators in each state sued both companies.

Health Net raised its outlook for the full year, and now expects to earn $2.90 to $3 per share on revenue between $12 billion and $12.5 billion for the full year. It earlier expected to earn at least $2.75 per share. The Wall Street consensus is for full-year earnings of $2.86 per share on $12 billion in revenue.

The company’s board also authorized a new $300 million share repurchase program.

Shares closed up 68 cents, or 2 percent, to $33.48 on the New York Stock Exchange.

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