Health Net's Financial Strengths


Communicating Health Net’s Financial Strengths

A strong company. A sound balance sheet. And built to last.

These are some of highlights of Health Net's financials that you may find useful in conveying to your clients during presentations or when answering questions. You are welcome to use any of the information when communicating with clients about Health Net.

Health Net hopes you find it useful.

  • Health Net remains a strong company that is "built to last," and customers and stakeholders can take comfort in knowing that Health Net’s balance sheet has (as of December 31, 2009):
  • Total assets of $4.3 billion.
  • Total cash & investments of $2.1 billion.
  • A conservative investment portfolio with $1.4 billion of market value and AA+ average credit quality.
  • Cash and cash equivalents of $683 million.
  • $952 million in reserve for claims and settlements.
  • Debt of less than 30 percent of Health Net’s total capital – among the lowest ratios in the health plan industry.
  • In 2009, Health Net challenged the award of the TRICARE North region contact. In December, the Department of Defense said it would prepare the appropriate corrective action. The department did not provide a timeline for concluding its review.
  • Meanwhile, the Department of Defense has granted an extension of Health Net’s current TRICARE contract through March 31, 2011.
  • Our subsidiaries' capital position remains strong. After the close of the sale of our Northeast business in December 2009, we used $100 million of the $350 million we received in proceeds to further increase capital at the subsidiary level.
  • Health Net expects to have $350 million in cash at the parent by year-end 2010 and to receive $140 million to $260 million in additional net proceeds from the Northeast transaction over the next two years.  
  • This gives Health Net substantial financial flexibility and is characteristic of an investment-grade rated company.
  • Moody's, a company that rates Health Net's financial strength, on January 22, 2010, concluded a review for a possible ratings downgrade.
  • Moody's confirmed Health Net, Inc.’s ratings (senior debt at Ba3).
  • Moody's also changed its outlook on Health Net to “stable.”
  • Moody's had placed Health Net under review in July 2009 following the initial Department of Defense announcement to award the TRICARE North contract to Aetna. As explained above, the Department of Defense has granted an extension of Health Net's current TRICARE contract through March 31, 2011.
  • Another ratings agency, Standard and Poor's, is expected to re-look at Health Net's financials and management activities in May 2010.
  • Health Net operates competitively in diverse markets, and they do not overly rely on any single segment for revenues:
  • Commercial: 49 percent of 2009 revenues
  • Medicare: 23 percent of 2009 revenues
  • TRICARE: 20 percent of 2009 revenues
  • Medicaid: 8 percent of 2009 revenues
  • Health Net ranks No. 165 on the 2009 Fortune 500 list of companies.
  • For three years running (2007, 2008, 2009), U.S. News & World Report’s annual evaluation of the nation’s health plans (printed in November each year) ranked Health Net among the highest evaluated in California (ahead of Anthem Blue Cross, Blue Shield, Aetna and CIGNA).
  • In the 2009 evaluation, Health Net of California is the highest-ranked major network model plan in the state and the highest-ranked Medi-Cal plan in the state.
  • On March 2, 2010, Zacks Investment and Research issued a press release announcing it upgraded its rating on Health Net to "outperform" meaning it expects Health Net to do better than the financial markets in the coming months.
  • Excerpts from the Zacks press release:
  • "Following the sale of its Northeast segment to UnitedHealth, Health Net will be able to concentrate on its Western markets."
  • "Health Net's fourth quarter earnings per share came in at $0.69, marginally above the Zacks Consensus Estimate of $0.67 and the year-ago earnings of $0.61."
  • “Health Net is also encouraged by its recent partnership program with Stanford University to provide health care coverage to its students."
  • "While remain concerned about the decline in membership, Health Net believes a gradual improvement of the U.S. economy should improve its membership status. Moreover, a strong balance sheet should enable it to tackle the current scenario."

Health Net appreciates your business and continues to work hard to help you serve your clients needs. For more information, please contact your b&p Group Sales Representative.