Health Net reports 1Q loss due to litigation costs
WOODLAND HILLS, Calif. (AP) — Insurer Health Net Inc. said Wednesday that it swung to a loss for its first quarter because of litigation and restructuring costs and rising general expenses, but the company's adjusted results beat forecasts and it brightened its 2011 profit outlook.
The Woodland Hills, Calif., company reported a loss of $108.2 million, or $1.16 per share, in the three months that ended March 31. That compares to profit of $16.1 million, or 16 cents per share, a year earlier.
Revenue rose 3 percent to $3.53 billion from $3.42 billion.
Excluding legal costs and other one-time items, the company said it earned 61 cents per share. Analysts surveyed by FactSet on average expected adjusted earnings of 57 cents per share and $3.38 billion in revenue.
The company said it recorded $177.2 million in charges related to litigation over its dealings with AmCareco. In 1999, Health Net sold health plans in three states to AmCareco. The plans were placed under state supervision in 2002, and each state's insurance department sued AmCareco and Health Net, alleging fraud, negligence, conspiracy and breach of fiduciary duty.
The company also spent on restructuring during the quarter, and its general and other costs rose.
Health Net said its quarterly revenue from health plan premiums rose 3 percent to $2.61 billion and its government contract revenue rose 8 percent to $875.1 million.
Health Net's total health plan enrollment fell 0.9 percent to 2.9 million members.
Looking ahead, the company expects to earn $2.90 to $3 per share on revenue between $12 billion and $12.5 billion for the full year. The company previously said it expected to earn at least $2.75 per share for the year.
Analysts expect full-year earnings of $2.86 per share on $12 billion in revenue, according to FactSet.
Health Net shares rose 49 cents, or 1.5 percent, to $33.29 in afternoon trading.