Health Net Inc. (HNT) Friday reported a surge in profit for the second quarter, helped mainly by gains from the sale of discontinued operations. Nonetheless, on a continuing operations basis, earnings slid from last year as higher operating expenses offset growth in revenues.
Moving forward, the company slashed its outlook for the full year 2012, sending its shares plunging 17 percent in afternoon trade on the New York Stock Exchange.
Health Net, which provides health maintenance and medicare plans, said revenues for the quarter rose 7 percent from last year on strong growth in premiums. Nevertheless, this was offset by a 11 percent rise in expenses as health plan services and other costs escalated.
Total enrollment in the Western Region at June 30, 2012 was about 2.6 million members, or essentially flat compared with last year. Western Region commercial enrollment declined 7.4 percent to about 1.3 million members from a year ago.
Woodland Hills, California-based Health Net reported second quarter net income of $124.6 million or $1.48 per share, an increase from $58.3 million or $0.63 per share in the prior year.
Results for the 2012 quarter included a gain of $119.4 million from the sale of discontinued operations.
On a continuing operations basis, net income for the quarter was $5 million or $0.06 per share, compared to $56.8 million or $0.62 per share in the prior year.
Revenues for the quarter were $2.84 billion, compared to $2.65 billion in the corresponding quarter last year.
For fiscal year 2012, Health Net now expects net earnings of $1.45 to $1.55 per share, compared to its prior guidance of $2.85 to $3.00 per share.
The company said it is adjusting rates, modifying network configurations, and taking other actions to achieve commercial improvement in 2013.
HNT is trading at $18.89, down $3.81 or 16.79%, on the NYSE.
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