Health Net Q3 Income Drops 95% on $79.7M ‘Restructuring’ Charge
Health Net of California announced a 95% drop in net income for the third quarter as a result of a $79.7 million pretax charge for "restructuring and cutting more than 1,500 jobs" -- 15% of the company's workforce, Bloomberg News/Los Angeles Times reports. The health insurer, one of the largest in California, said that third-quarter net income dropped to $2.3 million from $44.6 million a year earlier. However, excluding the charge, earnings rose 20% to 42 cents a share in the quarter, matching Wall Street estimates. Third-quarter revenue also rose from $2.29 billion a year earlier to $2.54 billion. Bloomberg News/Los Angeles Times reports that Health Net has raised premiums faster than the increase in medical costs and has "controlled administrative costs." Officials at Health Net, which offers lower health insurance premiums than "some rivals," said that the insurer's health plans "may be attractive as health care costs rise." In the third quarter, medical costs dropped to 85.2 cents of each premium dollar, down from 85.3 a year earlier. Medical costs rose 5.1% for employer-sponsored health plans and "less" for Medicare and Medicaid plans. For the fourth quarter, Health Net predicts earnings of 44 cents per share (Snider, Bloomberg News/Los Angeles Times, 11/10).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.