Health Net Reports Increased Fourth-Quarter Net Income, Lowers Forecast for First Quarter 2004

Woodland Hills-based insurer Health Net on Wednesday reported fourth-quarter net income of $90.3 million, or 78 cents per share, compared with $45.2 million, or 36 cents per share, a year earlier, the Los Angeles Times reports (Girion, Los Angeles Times, 2/12). In addition, Health Net reported charges of $18.9 million for pre-tax gains on the sale of dental, vision and employer services divisions and $16.4 million for building write-downs and investments, the Hartford Courant reports. Health Net reported fourth-quarter revenue of $2.78 billion, compared with $2.65 billion a year earlier. Profit for continuing operations in 2003 was $324 million, or $2.74 per share, compared with $278 million, or $2.21 per share, in 2002. Net income for 2003, including one-time items, was $235 million, or $2.03 per share, compared with $228.6 million, or $1.82 per share, for 2002. Health Net officials predicted first-quarter 2004 earnings to be 51 to 55 cents per share, "well below" analysts' estimates of 68 cents per share, according to the Courant. Company officials said they lowered estimates because of the ongoing costs of system consolidation, an extra day of expenses from the leap year and re-contracting with New Jersey providers after underestimating the effects of the company's takeover of First Option Health Plans. The company estimated 2004 earnings of $2.92 to $3.07 per share, also less than analysts' estimates (Levick, Hartford Courant, 2/12). Health Net has 2.5 million members in California and 5.3 million members nationwide (Los Angeles Times, 2/12).

Long Beach-based managed care company Molina Healthcare on Wednesday announced a fourth-quarter profit of $11.9 million, or 46 cents per share, compared with $4.9 million, or 24 cents per share, a year earlier, the Los Angeles Times reports. The company for 2003 posted a profit of $42.5 million, or $1.88 per share, compared with $30.5 million, or $1.48 per share, for 2002. Company officials said that profits increased in part because membership increased 15.3% to 564,000 members last year. Company officials also increased their earnings forecast for the first quarter of 2004 to 39 to 40 cents per share and for the full year to $1.83 to $1.93 per share. Molina Healthcare went public in July 2003 and specializes in serving Medicaid beneficiaries and low-income residents of California, Michigan, Utah and Washington (Los Angeles Times, 2/12).