Wednesday, Health insurance company Health Net Inc. (HNT) reported a loss for the fourth quarter that reflected hefty asset impairment charges related to the sale of Northeast businesses. Adjusted earnings increased from the prior year and surpassed analysts' estimate. The company also raised its earnings guidance for full year 2010.
The Woodland Hills, California-based company reported net loss for the fourth quarter of $45.2 million or $0.43 per share, compared to net income of $35.5 million or $0.34 per share in the year-ago quarter.
The fourth quarter of 2009 include two pretax charges, a $137.3 million related to the Northeast businesses in the form of impairments on assets, legal and regulatory costs and severance costs, and a $15.3 million in cash charges related to the company's operations strategy and other expenses.
Excluding these items, the company's adjusted net income in the fourth quarter of 2009 was $72.4 million or $0.69 per share, compared to $63.1 million or $0.61 per share in the same quarter last year.
On average, 12 analysts polled by Thomson Reuters expected the company to earn $0.67 per share for the quarter. Analysts estimates typically exclude special items. .
Total revenues for the quarter decreased to $3.80 billion from $3.87 billion in the prior-year quarter. Six analysts had a revenue consensus of $3.95 billion for the fourth quarter.
Health plan services premiums for the quarter decreased to $2.98 billion from $3.08 billion last year. Revenues from government contracts were $754.77 million, slightly higher than $751.60 million last year. Net investment income increased to $33.49 million from $24.54 million a year ago. Administrative services fees and other income for the quarter were $28.17 million, up from $11.21 million in the comparable period.
Total health plan enrollment as of December 31, declined to 3.0 million members from $3.1 million members a year ago. As of December 31, total commercial risk enrollment decreased by 34 thousand, or 2.3%, to around 1.44 million members from last year.
Commercial premium yields per member per month, or PMPM, increased 6.1% from a year ago. Total commercial health care costs PMPM increased 8.6% compared with the third quarter of 2008.
General and administrative expenses were $359.0 million in the fourth quarter of 2009, compared to $347.1 million in the fourth quarter of 2008. On an adjusted basis, G&A expense was $299.7 million in the fourth quarter of 2009, compared to $293.6 million in the fourth quarter of 2008.
For the full year 2009, Health Net reported net loss of $49.0 million or $0.47 per share, compared to $95.0 million or $0.88 per share for full year 2008. Adjusted net income for the full year was $235.1 million or $2.25 per share, compared to $199.1 million or $1.85 per share for 2008.
Total revenue for the fiscal year 2009 rose to $15.71 billion from $15.37 billion for the fiscal year 2008.
Analysts were looking for earnings of $2.24 per share, on revenues of $15.85 billion for fiscal 2009.
Looking ahead, the company revised up its 2010 earnings guidance to $1.92 - $2.02 per share from its prior outlook of $1.90 - $2.00 per share.
Also, 2010 non-GAAP earnings are now expected to lie in the range of $2.32 - $2.42 per share, compared to its previous range of $2.30 - $2.40 per share
Ten analysts currently anticipate earnings of $2.32 per share for 2010.
HNT is currently trading at $23.75, down $0.86 or 3.49% on a volume of 574,411 shares.
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