| Exhibit 99.1 | ||||
 | Health Net, Inc. 21650 Oxnard Street Woodland Hills, CA 91367 818.676.6000 800.291.6911 www.healthnet.com | |||
| Contacts: David Olson |
| 818.676.6978 |
| david.w.olson@healthnet.com |
| Michael Engelhard |
| 818.676.7620 |
| michael.engelhard@healthnet.com |
HEALTH NET REPORTS SECOND QUARTER 2004 NET INCOME
OF $.36 PER DILUTED SHARE
Results Include $17.4 Million Severance and
Related Benefits Charge; Administrative Ratio Improves
LOS ANGELES, August 3, 2004 – Health Net, Inc. (NYSE: HNT) today announced 2004 second quarter net income per diluted share of $.36 compared with $.63 in the second quarter of 2003.
Included in these results is the full effect of a $17,402,000 pretax charge, or approximately $.09 per diluted share after tax, for severance and related benefits associated with the workforce reduction commenced in the second quarter of 2004.
Health Net reported net income of $41,366,000 in the second quarter of 2004 compared to net income of $74,784,000 in the second quarter of 2003 and $15,012,000 in the first quarter of 2004. The year-over-year decline in net income was primarily the result of higher health care costs. The sequential improvement in net income was primarily the result of lower reported health care costs.
“This quarter demonstrated that we made significant progress as we strive to get back on track. We believe strengthened medical management practices and new provider contracting strategies are starting to have an impact on health care cost trends. We are especially pleased with the reduction in the administrative expense ratio, a result of our intense focus on these costs,” said Jay Gellert, president and chief executive officer of Health Net. “Achieving our goals in the quarter reinforces our confidence for the balance of the year. In addition, our Health Net One project is meeting the new deadlines established earlier this year and is on schedule for completion in the middle of 2005.”
Positive developments for the second quarter of 2004 included:
| • | Health Net’s Administrative Ratio was 9.4 percent, a 90 basis point improvement compared to the second quarter of 2003, and 60 basis points lower than the first quarter of 2004, its lowest level in the last 10 years. General, administrative and depreciation expenses fell by $16,800,000, or 7.0 percent, from the first quarter of 2004; |
| • | A Debt-to-Total Capital ratio of 22.6 percent, below the company’s target of 30 percent and down from 23.9 percent at the end of the first quarter of 2004; |
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| • | The Government contracts cost ratio improved by 40 basis points to 95.0 percent, compared with the first quarter of 2004, as the TRICARE program continues to perform well; and |
| • | Days claims payable increased by 1.4 days sequentially to 46.6 days in the second quarter of 2004. The company noted that it paid $150 million more in claims in second quarter of 2004 compared with the second quarter of 2003. |
Revenues
Health Net’s total revenues rose 6.0 percent in the second quarter of 2004 to $2,918,815,000 from $2,752,662,000 in the second quarter of 2003. Health plan services revenue climbed 6.2 percent to $2,398,943,000 in the second quarter of 2004 compared to $2,259,867,000 in the second quarter of 2003.
Health plan services revenue gains were the result of higher commercial and Medicare premium yields across the company’s health plans. The overall premium yield per member per month (PMPM), including commercial, Medicare and Medicaid enrollment, in the second quarter of 2004 rose 7.7 percent compared to the same period in 2003.
“Premium yields on our commercial business in the major plans were up approximately 9 percent compared with the second quarter of 2003, when adjusted for benefit changes at a single large account in the Northeast and product mix changes,” Gellert explained. “While premium yield increases have been below health care cost increases in the first half of this year, our focused price increases in all markets should reverse this relationship in the second half of the year.”
Small Group and Individual enrollment was up 3.1 percent in the second quarter of 2004 compared with the second quarter of 2003. The rate of growth in this segment is slowing as a
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result of disciplined pricing. Overall commercial enrollment, excluding Pennsylvania – a market that the company exited in the fourth quarter of 2003 – increased by more than 9,600 members compared with the second quarter of 2003. Medicare enrollment was flat while Medicaid enrollment declined as a result of tightened eligibility requirements in California. The company noted that it began a new Medicaid contract for Kern County in California on July 1, which will add approximately 30,000 Medicaid members in the third quarter of 2004.
In the second quarter of 2004, Health Net’s Government contracts revenue rose 8.3 percent from the second quarter of 2003, reaching $504,317,000. This increase was due to the effects on the TRICARE program from the nation’s ongoing heightened military activity.
“Our TRICARE operations continue to perform well. The implementation work on our new TRICARE contract for the North region is on schedule. We began health care delivery in a portion of the new North region on July 1. We will begin delivery on the remainder of the contract on September 1,” Gellert noted.
Other income decreased by $10,967,000 in the second quarter of 2004 compared to the second quarter of 2003, primarily due to lost revenue from the sale of the company’s Employer Services division in the third quarter of 2003.
In the second quarter of 2004, net investment income was $13,818,000, a decrease of $546,000 from the second quarter of 2003.
Health Care Costs
Overall PMPM health plan health care costs rose by 10.7 percent in the second quarter of 2004 compared with the second quarter of 2003.
“Our physician and pharmacy cost increases were very modest and consistent with our expectations. Inpatient and outpatient hospital costs rose year-over-year and, while they remain the number one health care cost issue, there are encouraging signs that the rate of growth is slowing,” Gellert said.
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The Government contracts cost ratio improved by 20 basis points to 95.0 percent for the second quarter of 2004 compared to the second quarter of 2003.
Administrative Expenses
In the second quarter of 2004, Health Net’s administrative ratio (G&A plus depreciation) was 9.4 percent, a 90 basis point improvement compared to the second quarter of 2003. Total general, administrative and depreciation expenses were $224,668,000 in the second quarter of 2004. The administrative ratio was lower in the second quarter of 2004 as compared to the second quarter of 2003 due to ongoing efficiency improvements and the divestiture of the company’s Employer Services division in October 2003.
Sequentially, there was a 60 basis point improvement compared with the first quarter of 2004, reflecting a continued focus on administrative expense control and modest benefits from the workforce reduction.
The company recorded a $17,402,000 pretax charge in the second quarter of 2004 for severance and related benefits expenses. “We believe that the reduction in force that began in the second quarter of 2004 will produce benefits in ongoing administrative expense reductions for the next several quarters,” Gellert said.
Health Net’s selling expenses increased by $3,193,000 to $59,993,000 in the second quarter of 2004 compared with $56,800,000 in the same period in 2003, consistent with the growth in broker-driven segments such as Small Group. The selling costs ratio was 2.5 percent for the second quarter of 2004, equal to the same period last year.
5
Balance Sheet Highlights
Cash and investments as of June 30, 2004 were $1,620,787,000 compared with $1,726,803,000 as of March 31, 2004.
The TRICARE receivable increased by $7,923,000 from the end of the first quarter of 2004 to $128,960,000 as of June 30, 2004, consistent with expectations surrounding the contract transitions.
Debt decreased by $22,383,000 from March 31, 2004, primarily as a result of the company entering into an interest rate swap contract in February of 2004 that caused a corresponding increase in noncurrent liabilities. Interest expense was $1,134,000 lower in the second quarter of 2004 compared to the first quarter of 2004 as a result of the swap arrangement.
Reserves for claims and other settlements decreased by $26,416,000 to $1,042,831,000 as of the end of the second quarter of 2004 versus the end of the first quarter of 2004. This lower reserve level reflects lower enrollment levels and faster claims payments. The company paid approximately $150 million more in claims in the second quarter of 2004 than it did in the second quarter of 2003. Days claims payable increased to 46.6 days for the second quarter of 2004, compared with 45.2 days for the first quarter of 2004, but declined by 6 days compared to the second quarter of 2003, a direct result of the substantially higher level of paid claims. The amount of Incurred But Not Reported (IBNR) reserves at the end of the second quarter of 2004 per member remained equal to the levels recorded as of the end of the first quarter of 2004.
“We are maintaining a cautious reserving posture until we are absolutely certain that the increase in claims payments reflect faster payment cycles we instituted earlier this year,” Gellert added. “Based on the second quarter’s results, we believe that the claims processing acceleration is the underlying cause of the higher level of paid claims.”
6
Cash Flow
Cash flow provided by operations in the second quarter of 2004 amounted to $12,514,000 compared to cash flow provided by operations of $29,944,000 in the second quarter of 2003. As noted in previous releases, cash flow from operations for 2004 is expected to be down from prior years due to the effects of the transition to the new TRICARE contract.
Health Net repurchased 127,800 shares of its common stock in the second quarter of 2004 under its stock repurchase program announced in May 2002. Health Net has repurchased 17,807,155 shares under the stock repurchase program at an average price of $27.20 through June 30, 2004.
Outlook
The company continues to believe that earnings within a range of $2.15 to $2.50 per diluted share for the full year of 2004 are achievable, excluding the effects of the severance and other benefits charges. Further, Health Net believes that earnings between $.67 to $.77 per diluted share in the third quarter of 2004, excluding the effects of severance and other benefits charges, are achievable. The company’s outlook described in this paragraph is based on currently available information.
Conference Call
As previously announced, Health Net will discuss the company’s second quarter results during a conference call with investors on Tuesday, August 3, 2004, at approximately 11:00 a.m. EDT. To listen to the call, please dial 719.457.2692, code 563724. A live webcast and replay of the conference call also will be available atwww.healthnet.com. The conference call webcast is open to all interested parties. The replay of the conference call will be available following the call on Tuesday, August 3, 2004 through Saturday, August 7, 2004, by dialing 719.457.0820,
7
code 563724. 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, 2003, Quarterly Report on Form 10-Q for the first quarter ended March 31, 2004, and other reports filed by the company from time to time with the Securities and Exchange Commission.
About Health Net
Health Net, Inc. is among the nation’s largest publicly traded managed health care companies. Its mission is to help people be healthy, secure and comfortable. The company’s HMO, POS, insured PPO and government contracts subsidiaries provide health benefits to approximately 5.2 million individuals in 14 states through group, individual, Medicare, Medicaid and TRICARE programs. Health Net’s subsidiaries also offer managed health care products related to behavioral health and prescription drugs, and offer managed health care product coordination for multi-region employers and administrative services for medical groups and self-funded benefits programs.
For more information on Health Net, Inc., please visit the company’s Web site atwww.healthnet.com.
Cautionary Statements
Certain matters discussed in this release contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, that involve risks and uncertainties. All statements, other than statements of historical information provided herein, may be deemed to be forward-looking statements. These statements are based on management’s analysis, judgment, belief and expectation only as of the date hereof, and are subject to uncertainty and changes in circumstances. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,”
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“expects,” “may,” “should,” “could,” “estimate,” “intend” and other similar expressions are intended to identify forward-looking statements. Actual results could differ materially due to, among other things, rising health care costs, trends in medical care ratios, operational issues, health care reform and general business conditions. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included within the company’s most recent Annual Report on Form 10-K filed with the SEC and the risks discussed in the company’s other periodic filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements. The company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this release.
# # #
[Five pages of tables follow]
9
Health Net, Inc.
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share and ratio data)
Second Quarter Ended June 30, 2003 | Third Quarter Ended September 30, | Fourth Quarter Ended December 31, 2003 | First Quarter Ended March 31, 2004 | Second Quarter Ended June 30, 2004 | ||||||||||||||||
REVENUES: | ||||||||||||||||||||
Health plan services premiums | $ | 2,259,867 | $ | 2,300,807 | $ | 2,295,217 | $ | 2,404,355 | $ | 2,398,943 | ||||||||||
Government contracts | 465,727 | 482,276 | 464,214 | 503,948 | 504,317 | |||||||||||||||
Net investment income | 14,364 | 17,777 | 14,212 | 15,201 | 13,818 | |||||||||||||||
Other income | 12,704 | 15,863 | 5,989 | 1,248 | 1,737 | |||||||||||||||
Total revenues | 2,752,662 | 2,816,723 | 2,779,632 | 2,924,752 | 2,918,815 | |||||||||||||||
EXPENSES: | ||||||||||||||||||||
Health plan services | 1,888,966 | 1,890,408 | 1,876,274 | 2,107,087 | 2,062,277 | |||||||||||||||
Government contracts | 443,549 | 464,295 | 448,162 | 480,905 | 478,927 | |||||||||||||||
General and administrative | 219,942 | 236,723 | 231,814 | 231,485 | 214,244 | |||||||||||||||
Selling | 56,800 | 62,562 | 59,021 | 63,577 | 59,993 | |||||||||||||||
Depreciation | 14,453 | 13,561 | 12,878 | 9,983 | 10,424 | |||||||||||||||
Amortization | 669 | 669 | 767 | 606 | 606 | |||||||||||||||
Interest | 9,769 | 9,763 | 9,841 | 8,438 | 7,304 | |||||||||||||||
| 2,634,148 | 2,677,981 | 2,638,757 | 2,902,081 | 2,833,775 | ||||||||||||||||
Asset impairments | — | — | 16,409 | (b) | — | — | ||||||||||||||
Severance and related benefits | — | — | — | — | 17,402 | (e) | ||||||||||||||
Gain on sale of businesses | — | — | (18,901 | )(c) | (1,875 | )(d) | — | |||||||||||||
Total expenses | 2,634,148 | 2,677,981 | 2,636,265 | 2,900,206 | 2,851,177 | |||||||||||||||
Income from continuing operations before income taxes | 118,514 | 138,742 | 143,367 | 24,546 | 67,638 | |||||||||||||||
Income tax provision | 43,730 | 51,930 | 54,018 | 9,534 | 26,272 | |||||||||||||||
Income from continuing operations | 74,784 | 86,812 | 89,349 | 15,012 | 41,366 | |||||||||||||||
Discontinued operations: | ||||||||||||||||||||
Loss on settlement from disposition, net of tax | — | (89,050 | )(a) | — | — | — | ||||||||||||||
Net income (loss) | $ | 74,784 | $ | (2,238 | ) | $ | 89,349 | $ | 15,012 | $ | 41,366 | |||||||||
Basic earnings (loss) per share: | ||||||||||||||||||||
Income from continuing operations | $ | 0.64 | $ | 0.75 | $ | 0.79 | $ | 0.13 | $ | 0.37 | ||||||||||
Loss on settlement from disposition, net of tax | — | (0.77 | ) | — | — | — | ||||||||||||||
Net | $ | 0.64 | $ | (0.02 | ) | $ | 0.79 | $ | 0.13 | $ | 0.37 | |||||||||
Diluted earnings (loss) per share: | ||||||||||||||||||||
Income from continuing operations | $ | 0.63 | $ | 0.74 | $ | 0.77 | $ | 0.13 | $ | 0.36 | ||||||||||
Loss on settlement from disposition, net of tax | — | (0.76 | ) | — | — | — | ||||||||||||||
Net | $ | 0.63 | $ | (0.02 | ) | $ | 0.77 | $ | 0.13 | $ | 0.36 | |||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 116,446 | 115,122 | 113,515 | 112,600 | 112,574 | |||||||||||||||
Diluted | 118,631 | 117,827 | 115,943 | 114,342 | 113,460 | |||||||||||||||
Ratios: | ||||||||||||||||||||
Health plan services MCR | 83.6 | % | 82.2 | % | 81.7 | % | 87.6 | % | 86.0 | % | ||||||||||
Government contracts cost ratio | 95.2 | % | 96.3 | % | 96.5 | % | 95.4 | % | 95.0 | % | ||||||||||
Administrative ratio ((G&A+Dep) / (HP serv rev + Other income)) | 10.3 | % | 10.8 | % | 10.6 | % | 10.0 | % | 9.4 | % | ||||||||||
Selling costs ratio (Selling costs / HP serv rev) | 2.5 | % | 2.7 | % | 2.6 | % | 2.6 | % | 2.5 | % | ||||||||||
Days claims payable | 52.6 | 50.4 | 49.4 | 45.2 | 46.6 | |||||||||||||||
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Health Net, Inc.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except ratio data)
June 30, 2003 | September 30, 2003 | December 31, 2003 | March 31, 2004 | June 30, 2004 | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 788,296 | $ | 727,377 | $ | 860,871 | $ | 684,782 | $ | 467,565 | ||||||||||
Investments - available for sale | 955,401 | 1,001,840 | 1,082,789 | 1,042,021 | 1,153,222 | |||||||||||||||
Premiums receivable, net | 184,239 | 137,485 | 144,968 | 186,178 | 151,619 | |||||||||||||||
Amounts receivable under government contracts | 92,982 | 135,570 | 90,928 | 121,037 | 128,960 | |||||||||||||||
Reinsurance and other receivables | 114,327 | 127,562 | 105,074 | 94,469 | 93,920 | |||||||||||||||
Deferred taxes | 60,081 | 89,367 | 43,008 | 40,827 | 40,652 | |||||||||||||||
Other assets | 95,654 | 80,963 | 84,842 | 92,404 | 103,907 | |||||||||||||||
Total current assets | 2,290,980 | 2,300,164 | 2,412,480 | 2,261,718 | 2,139,845 | |||||||||||||||
Property and equipment, net | 198,502 | 198,848 | 190,900 | 186,700 | 186,570 | |||||||||||||||
Goodwill, net | 762,066 | 762,066 | 729,506 | 723,595 | 723,595 | |||||||||||||||
Other intangible assets, net | 21,129 | 20,524 | 19,918 | 19,313 | 21,505 | |||||||||||||||
Deferred taxes | 15,270 | 21,289 | 44,769 | 41,409 | 41,868 | |||||||||||||||
Other noncurrent assets | 168,077 | 148,067 | 151,703 | 214,894 | 282,258 | |||||||||||||||
Total Assets | $ | 3,456,024 | $ | 3,450,958 | $ | 3,549,276 | $ | 3,447,629 | $ | 3,395,641 | ||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Current Liabilities | ||||||||||||||||||||
Reserves for claims and other settlements | $ | 1,079,748 | $ | 990,333 | $ | 1,024,550 | $ | 1,069,247 | $ | 1,042,831 | ||||||||||
Health care and other costs payable under government contracts | 236,935 | 257,048 | 256,009 | 233,331 | 216,816 | |||||||||||||||
Unearned premiums | 73,905 | 81,682 | 178,115 | 95,614 | 85,894 | |||||||||||||||
Accounts payable and other liabilities | 281,732 | 435,176 | 315,031 | 272,000 | 254,453 | |||||||||||||||
Total current liabilities | 1,672,320 | 1,764,239 | 1,773,705 | 1,670,192 | 1,599,994 | |||||||||||||||
Senior notes payable | 398,892 | 398,928 | 398,963 | 406,603 | 384,220 | |||||||||||||||
Other noncurrent liabilities | 63,246 | 65,893 | 82,383 | 78,958 | 95,243 | |||||||||||||||
Total Liabilities | 2,134,458 | 2,229,060 | 2,255,051 | 2,155,753 | 2,079,457 | |||||||||||||||
Stockholders’ Equity | ||||||||||||||||||||
Common stock and additional paid-in capital | 760,430 | 770,514 | 789,392 | 794,602 | 798,432 | |||||||||||||||
Restricted common stock | 6,229 | 5,885 | 5,885 | 6,027 | 5,855 | |||||||||||||||
Unearned compensation | (5,278 | ) | (4,507 | ) | (3,995 | ) | (3,624 | ) | (3,121 | ) | ||||||||||
Treasury common stock, at cost | (413,918 | ) | (517,064 | ) | (549,102 | ) | (577,484 | ) | (580,634 | ) | ||||||||||
Retained earnings | 964,665 | 962,427 | 1,051,776 | 1,066,788 | 1,108,154 | |||||||||||||||
Accumulated other comprehensive income (loss) | 9,438 | 4,643 | 269 | 5,567 | (12,502 | ) | ||||||||||||||
Total Stockholders’ Equity | 1,321,566 | 1,221,898 | 1,294,225 | 1,291,876 | 1,316,184 | |||||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 3,456,024 | $ | 3,450,958 | $ | 3,549,276 | $ | 3,447,629 | $ | 3,395,641 | ||||||||||
Debt-to-Total Capital Ratio | 23.2 | % | 24.6 | % | 23.6 | % | 23.9 | % | 22.6 | % | ||||||||||
11
Health Net, Inc.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
Second Quarter June 30, 2003 | Third Quarter Ended September 30, | Fourth Quarter Ended December 31, 2003 | First Quarter Ended March 31, 2004 | Second Quarter June 30, 2004 | ||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||||
Net income (loss) | $ | 74,784 | $ | (2,238 | ) | $ | 89,349 | $ | 15,012 | $ | 41,366 | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Amortization and depreciation | 15,122 | 14,230 | 13,645 | 10,589 | 11,030 | |||||||||||||||
Gain on sale of businesses | — | — | (18,901 | ) | (1,875 | ) | — | |||||||||||||
Asset impairments | — | — | 16,409 | — | — | |||||||||||||||
Other changes | 1,842 | 1,351 | 270 | (898 | ) | 1,518 | ||||||||||||||
Changes in assets and liabilities, net of the effects of dispositions: | ||||||||||||||||||||
Premiums receivable and unearned premiums | (59,631 | ) | 54,531 | 87,769 | (130,211 | ) | 24,839 | |||||||||||||
Other assets | (28,065 | ) | 16,942 | 27,944 | 4,718 | 515 | ||||||||||||||
Amounts receivable/payable under government contracts | 51,000 | (22,475 | ) | 43,603 | (52,787 | ) | (24,438 | ) | ||||||||||||
Reserves for claims and other settlements | (24,974 | ) | (89,415 | ) | 37,154 | 42,962 | (26,416 | ) | ||||||||||||
Accounts payable and other liabilities | (134 | ) | 106,722 | (117,256 | ) | (42,085 | ) | (15,900 | ) | |||||||||||
Net cash provided by (used in) operating activities | 29,944 | 79,648 | 179,986 | (154,575 | ) | 12,514 | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
Sales of investments | 107,591 | 127,622 | 32,243 | 125,015 | 65,320 | |||||||||||||||
Maturities of investments | 113,105 | 143,532 | 121,944 | 112,345 | 84,102 | |||||||||||||||
Purchases of investments | (249,283 | ) | (306,732 | ) | (259,912 | ) | (186,289 | ) | (284,446 | ) | ||||||||||
Purchases of property and equipment | (15,060 | ) | (13,891 | ) | (12,435 | ) | (5,853 | ) | (10,045 | ) | ||||||||||
Cash received from the sale of businesses | — | — | 90,316 | 11,026 | — | |||||||||||||||
Purchases of restricted investments and other | (14,317 | ) | 4,650 | (4,685 | ) | (49,279 | ) | (84,552 | ) | |||||||||||
Net cash (used in) provided by investing activities | (57,964 | ) | (44,819 | ) | (32,529 | ) | 6,965 | (229,621 | ) | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
Proceeds from exercise of stock options and employee stock purchases | 15,187 | 7,414 | 12,798 | 4,785 | 3,040 | |||||||||||||||
Proceeds from other financing arrangements | 5,680 | — | — | — | — | |||||||||||||||
Repurchases of common stock | (68,092 | ) | (103,146 | ) | (26,761 | ) | (33,264 | ) | (3,150 | ) | ||||||||||
Repayment of debt and other noncurrent liabilities | (5,799 | ) | (16 | ) | — | — | — | |||||||||||||
Net cash used in financing activities | (53,024 | ) | (95,748 | ) | (13,963 | ) | (28,479 | ) | (110 | ) | ||||||||||
Net (decrease) increase in cash and cash equivalents | (81,044 | ) | (60,919 | ) | 133,494 | (176,089 | ) | (217,217 | ) | |||||||||||
Cash and cash equivalents, beginning of period | 869,340 | 788,296 | 727,377 | 860,871 | 684,782 | |||||||||||||||
Cash and cash equivalents, end of period | $ | 788,296 | $ | 727,377 | $ | 860,871 | $ | 684,782 | $ | 467,565 | ||||||||||
12
Health Net, Inc.
Notes to Condensed Consolidated Statements of Operations
Notes:
| (a) | Loss on settlement from disposition of discontinued operations of $89.1 million, net of tax of $47.9 million, related to the settlement of a lawsuit arising from our 1998 sale of certain of our workers’ compensation subsidiaries. |
| (b) | Pretax impairment charges for buildings held for sale of $2.6 million and our investment in CSMS IPA connectivity services of $13.8 million. |
| (c) | Pretax $18.9 million gain on the sales of our Employers Services, Dental and Vision subsidiaries. |
| (d) | Pretax $1.9 million gain on the sales of our Subacute subsidiaries. |
| (e) | Pretax severance and related benefit costs of $17.4 million related to involuntary workforce reduction announced in May 2004. |
13
HEALTH NET, INC.
Medical Covered Lives at June 30, 2004
(in Thousands)
Commercial- Large Group* | Commercial - Small Group & Individual | Commercial Risk Subtotal | ASO | Commercial Subtotal | |||||||||||||||||||||||||||||||
| 06/04 | 03/04 | 06/03 | 06/04 | 03/04 | 06/03 | 06/04 | 03/04 | 06/03 | 06/04 | 03/04 | 06/03 | 06/04 | 03/04 | 06/03 | |||||||||||||||||||||
Arizona | 71 | 70 | 72 | 54 | 52 | 46 | 125 | 122 | 119 | — | — | — | 125 | 122 | 119 | ||||||||||||||||||||
California | 1,170 | 1,194 | 1,145 | 515 | 524 | 494 | 1,685 | 1,718 | 1,639 | 3 | 3 | 2 | 1,688 | 1,721 | 1,641 | ||||||||||||||||||||
Connecticut | 200 | 202 | 227 | 44 | 44 | 49 | 244 | 246 | 276 | 51 | 52 | 58 | 296 | 298 | 334 | ||||||||||||||||||||
New Jersey | 122 | 133 | 147 | 135 | 147 | 144 | 257 | 279 | 291 | 18 | 18 | 19 | 274 | 297 | 309 | ||||||||||||||||||||
New York | 156 | 157 | 157 | 112 | 114 | 114 | 268 | 271 | 272 | 6 | 7 | 10 | 274 | 277 | 281 | ||||||||||||||||||||
Oregon | 95 | 91 | 83 | 33 | 31 | 18 | 128 | 121 | 101 | — | — | — | 128 | 121 | 101 | ||||||||||||||||||||
Pennsylvania | — | — | 28 | — | — | — | — | — | 28 | — | — | — | — | — | 28 | ||||||||||||||||||||
Total | 1,815 | 1,846 | 1,859 | 893 | 912 | 866 | 2,707 | 2,758 | 2,725 | 79 | 79 | 89 | 2,786 | 2,837 | 2,814 | ||||||||||||||||||||
Year over Year | (2 | )% | 3 | % | (1 | )% | (11 | )% | (1 | )% | |||||||||||||||||||||||||
Sequential | (2 | )% | (2 | )% | (2 | )% | (1 | )% | (2 | )% | |||||||||||||||||||||||||
Medicare Risk | Medicaid | Health Plan Total | |||||||||||||||||||
| 06/04 | 03/04 | 06/03 | 06/04 | 03/04 | 06/03 | 06/04 | 03/04 | 06/03 | |||||||||||||
Arizona | 36 | 36 | 37 | — | — | — | 161 | 158 | 156 | ||||||||||||
California | 97 | 98 | 101 | 662 | 691 | 726 | 2,447 | 2,510 | 2,468 | ||||||||||||
Connecticut | 27 | 27 | 28 | 96 | 98 | 106 | 419 | 423 | 468 | ||||||||||||
New Jersey | — | — | — | 44 | 44 | 48 | 318 | 341 | 357 | ||||||||||||
New York | 5 | 5 | 6 | — | — | — | 280 | 283 | 287 | ||||||||||||
Oregon | 5 | 3 | 0 | — | — | — | 133 | 124 | 101 | ||||||||||||
Pennsylvania | — | — | — | — | — | — | — | — | 28 | ||||||||||||
Total | 170 | 169 | 172 | 803 | 833 | 880 | 3,758 | 3,840 | 3,865 | ||||||||||||
Year over Year | (1 | )% | (9 | )% | (3 | )% | |||||||||||||||
Sequential | 0 | % | (4 | )% | (2 | )% | |||||||||||||||
| 06/04 | 06/03 | Year Over Year | |||||
TRICARE** | |||||||
Active Duty Dependents | 664 | 671 | (1 | )% | |||
Retirees | 813 | 807 | 1 | % | |||
Total TRICARE | 1,477 | 1,478 | (0 | )% |
| * | Commercial Large Group includes Medicare Supplement |
| ** | Best estimate based on available government data |
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