Health Net 2004 Annual Report Download - page 106

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HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
EOS Claims Services Subsidiary
Effective July 1, 2002, we sold our claims processing subsidiary, EOS Claims Services, Inc. (EOS Claims), to Tristar Insurance
Group, Inc. (Tristar). In connection with the sale, we received $500,000 in cash, and also entered into a Payor Services Agreement.
Under the Payor Services Agreement, Tristar has agreed to exclusively use EOS Managed Care Services, Inc. (one of our then
remaining subsidiaries) for various managed care services to its customers and clients. We estimated and recorded a $2.6 million pre-
tax loss on the sale of EOS Claims during the second quarter ended June 30, 2002. During the fourth quarter ended December 31,
2003, we recorded an additional $1.2 million pre-tax loss on the sale due to the sale price true-up as provided for in the sale
agreement. EOS Claims revenue through the date of the sale was reported as part of other income on the consolidated statements of
operations.
Our EOS claims services subsidiary had $7.2 million of total revenues and income from operations before income taxes of $0.1
million for the year ended December 31, 2002. As of the date of sale, our EOS claims services subsidiary had no net equity.
Assets Held for Sale
During 2002, we recorded a pre-tax $2.4 million estimated loss on assets held for sale related to a corporate facility building in
Trumbull, Connecticut consisting entirely of non-cash write-downs of a building and building improvements. On January 26, 2004,
we sold these assets for $6.9 million in cash and recognized a pre-tax loss of $0.7 million as an asset impairment charge in our
consolidated statement of operations for the year ended December 31, 2003 (see Note 14).
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