Health Net Announces 37% First-Quarter Profit Increase
Woodland Hills-based Health Net, one of the state's largest health insurers, Monday reported that its first-quarter profit increased 37% to $68.2 million, or 57 cents a share, from $49.8 million, or 40 cents a share, a year earlier because of lower-than-expected medical costs and increased revenue from its participation in the military health program, the Los Angeles Times reports. First-quarter revenue rose 10% to $2.7 billion from $2.5 billion a year earlier, as first-quarter revenue from the company's Tricare unit, which provides health plans to the military, increased 29% to $435.6 million. Because of the war in Iraq, many reservists were called up for active duty, making their dependents eligible to sign up for Health Net Tricare plans. In addition, with many military doctors and nurses on duty overseas, some military dependents had to receive care from more expensive off-base private care doctors, for which Health Net has a built-in profit margin. Company officials increased the company's 2003 profit estimates to be between $2.56 and $2.60 a share, up from earlier estimates of $2.48 to $2.52 a share. "Tricare is a strong business for the company," Scott Fidel, an analyst with J.P. Morgan, said, adding, "We are going to see increased Tricare activity because of increased defense spending and manpower needs" (White, Los Angeles Times, 5/6). Health Net currently is bidding on a new military contract that could be worth as much as $1.5 billion, the Los Angeles Daily News reports. A company spokesperson said the contract should be awarded this summer (Pondel, Los Angeles Daily News, 5/5).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.