Shares of Health Net Inc. managed to gain ground Wednesday as analysts said the health insurer’s revised outlook was mostly to be expected and highlighted the company’s takeover possibilities, BusinessWeek.com reports.
The Los Angeles-based company continues to face an increasingly difficult market, marked by Medicare rate cuts and higher costs on top of a host of legal and restructuring charges. Those costs helped drive it to report a first-quarter loss and prompted the second cut to its 2008 guidance since January.
But shares rose 42 cents to $30.14 in afternoon trading, as several analysts said the outlook was expected following the company’s warning in April that its guidance was again under review. Several analysts commented that the continued weakness could bring the possibility of a Health Net sale closer to reality.
“Health Net is citing a legitimate laundry list of factors impacting 2008,” said Goldman Sachs analyst Matthew Borsch, in a note to investors. “However, we continue to see the underlying driver here being the industry cycle and the intensifying competitive pressure on margins that has been building for several years with the end of the 2000-2005 up cycle.”