 Bank of America and Merrill Lynch Bank of America and Merrill Lynch 2009 Health Care Conference 2009 Health Care Conference Jay Gellert President and Chief Executive Officer May 13, 2009 Exhibit 99.1 |
 2 Cautionary Statement Cautionary Statement All statements in this presentation, other than statements of historical information, may be deemed to be forward-looking statements and as such are subject to a number of risks and uncertainties. These statements are based on management’s analysis, judgment, belief and expectation only as of the date of this presentation, and are subject to uncertainty and changes in circumstances. Without limiting the foregoing, statements including the words “believes,” “anticipates,” “plans,” “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, a continued decline in the economy, negative prior period claims reserve developments, investment portfolio impairment charges, volatility in the financial markets, trends in medical care ratios, unexpected utilization patterns or unexpectedly severe or widespread illnesses, membership declines, rate cuts affecting our Medicare or Medicaid business, litigation costs, regulatory issues, operational issues, health care reform and general business and market 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 filings with the SEC. Audience participants are cautioned not to place undue reliance on these forward-looking statements. The company undertakes no obligation to publicly revise any of its forward-looking statements to reflect events or circumstances that arise after the date of this presentation. |
 3 Non-GAAP Measures Non-GAAP Measures • This presentation includes quarterly income statement measurements that are not calculated and presented in accordance with Generally Accepted Accounting Principles. Audience participants should refer to the reconciliation table available in the company’s first quarter 2009 earnings press release, available on the company’s Web site at www.healthnet.com, which reconciles certain non-GAAP financial information to GAAP financial information. • Management believes that the non-GAAP financial information discussed in this presentation is useful as it provides the audience a basis to better understand the company’s results by excluding items that are not indicative of our core operating results for the periods presented. |
 4 Investment Thesis Investment Thesis • Medicare improvement in 2009 • Commercial margin expansion • Solid TRICARE performance • Continued G&A savings • Value creation opportunities and enhanced focus through strategic review • Positioned for health reform |
 5 Report Card: 1Q09 Results Report Card: 1Q09 Results • EPS of $0.41 (1) vs. First Call mean of $0.35 per diluted share • Medicare business MA MCR improved 60 basis points vs. 1Q08 PDP MCR improved 960 basis points vs. 1Q08 • Commercial business PMPM premium yield > PMPM health care costs Commercial MCR (2) improved 100 basis points vs. 1Q08 • Government Contracts ratio improved 50 basis points vs. 1Q08 • G&A expense ratio (3) improved 30 basis points vs. 1Q08 (1) Excludes the impact of a $2.2 million pretax benefit for a litigation reserve true-up, a $46.9 million pretax operations strategy-related charge, and a $6.3 million tax benefit for the favorable outcome resulting from a tax audit in 1Q09 (2) Excludes the impact of a $2.2 million pretax benefit for a litigation reserve true-up in 1Q09 and $43.2 million in litigation-related charges in 1Q08 (3) Excludes the impact of a $46.9 million pretax operations strategy-related charge in 1Q09, a $35.8 million operations strategy-related charge, and a $3.4 million loss on the sale of assets of a small non-core subsidiary in 1Q08 As of March 31, 2009 |
 6 Medicare Strategy Medicare Strategy • Achieve 2009 gross margin targets • Grow network-model MA plans • Exit Private Fee-for-Service in 2010 • Position for ongoing business resulting from changes in Medicare |
 7 Commercial Business Opportunities Commercial Business Opportunities • Further margin expansion • Lower-cost, narrow network products • Underwriting discipline • Improved health care cost management |
 8 Government & Specialty Services Government & Specialty Services • Stable financial performance near-term • Growth opportunities with MHN providing behavioral health services to military beneficiaries • Awaiting TRICARE award announcement • Additional opportunities for growth – TRICARE Overseas – Expansion of Military Family Life Consultant program – Veterans Affairs support for PTSD and traumatic brain injury |
   9 Achieving Operational Excellence Achieving Operational Excellence Timeline 2007 - 2008 2007 - 2008 2008 - 2009 2008 - 2009 2009 - 2010 2009 - 2010 Recognize Opportunity Year of Investment Harvesting Benefits • G&A ratio improved 140 basis points since 2006 (1) • Additional opportunities from Operations Strategy – Application and infrastructure repositioning – Standardization of processes – Consolidation of operations • Further G&A savings in 2010 (1) Excludes the impact of a $46.9 million pretax operations strategy-related charge As of March 31, 2009 |
 10 2009 and Beyond 2009 and Beyond • Medicare – Significant improvement in MA and PDP in 2009 – Planning for potential changes • Solid commercial assets with margin improvement opportunities • Value creation opportunities through strategic review • Positioned for health reform |