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Health Net's Profit, Enrollment Climb

The managed-care company posts a quarterly earnings gain of 15% to $75 million and raises its outlook.

August 05, 2003|Ronald D. White | Times Staff Writer

Health Net Inc., one of California's largest health insurers, reported Monday a 15% increase in second-quarter profit as the company raised premiums to stay ahead of medical costs and increased its enrollment.

The Woodland Hills-based company said net income rose to $75 million, or 63 cents a share, from $65 million, or 51 cents, a year earlier. The latest earnings beat analysts' consensus estimate by 2 cents a share.

Revenue rose 10% in the April-June quarter to $2.75 billion from $2.51 billion.

Health Net raised its earnings guidance for the full year from a range of $2.56 to $2.60 to a new target of $2.63 to $2.67.

Thomas A. Carroll, an analyst with Legg Mason Wood Walker, said he was impressed with Health Net's enrollment gain, particularly in the competitive New York market.

Overall, Health Net's membership rose by 50,000 from the end of the first quarter to the end of the second.

"We have been working over the last four years to build relationships with brokers and employers in the small-group segment," said Jay Gellert, Health Net's president and chief executive.

Some other major managed-care companies, including Thousand Oaks-based WellPoint Health Networks Inc., recently reported enrollment declines from the first to the second quarter as they felt the effects of a weak economy and employers' switching or dropping plans.

Health Net's total enrollment of 3.9 million at quarter's end was still down compared with a year earlier. That reflected the loss of 175,000 CalPERS members at the start of this year after the California Public Employees' Retirement System and the company parted ways.

Health Net released its earnings after the market's close Monday. Shares of Health Net had closed down 68 cents to $33.20 on the New York Stock Exchange.

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