Health Net 2010 Annual Report Download - page 51

Negative publicity regarding the managed health care industry could adversely affect our ability to market
and sell our products and services.
Managed health care companies have received and continue to receive negative publicity reflecting the
public perception of the industry. For example, the Company and the managed health care industry have been
subject to negative publicity surrounding premium rate increases. In addition, health care and related health care
reform and proposals have been and are expected to continue to be the subject of intense media attention and
political debate. Such political discourse can often generate publicity that portrays managed care in a negative
light. Our marketing efforts may be affected by the amount of negative publicity to which the industry has been
subject, as well as by speculation and uncertainty relating to merger and acquisition activity among companies in
our industry. Speculation, uncertainty or negative publicity about us, our industry or our lines of business could
adversely affect our ability to market and sell our products or services, require changes to our products or
services, or stimulate additional legislation, regulation, review of industry practices or litigation that could
adversely affect us.
We have historically experienced significant turnover in senior management. If we are unable to manage
the succession of our key executives, it could adversely affect our business.
We have experienced a high turnover in our senior management team in recent years. Although we have
succession plans in place and have employment arrangements with our key executives, these do not guarantee
that the services of these key executives will continue to be available to us. We would be adversely affected if we
fail to adequately plan for future turnover of our senior management team.
It may be difficult for a third party to acquire us, which could decrease the value of your shares of our
common stock.
We are subject to the Delaware anti-takeover laws regulating corporate takeovers. These provisions may
prohibit stockholders owning 15% or more of our outstanding voting stock from merging or combining with us.
In addition, federal antitrust laws apply to us, and any change in control of our state health plans or health
insurance companies also would require the approvals of the applicable regulatory agencies in each state in
which we operate.
In addition to the Rights Agreement, our certificate of incorporation and bylaws also contain provisions that
could have the effect of delaying, deferring, or preventing a change in control of the Company that our
stockholders may consider favorable or beneficial. These provisions could discourage proxy contests and make it
more difficult for our stockholders to elect directors and take other corporate actions. These provisions could also
limit the price that investors might be willing to pay for shares of our common stock.
Large-scale public health epidemics and/or terrorist activity could cause us to incur unexpected health care
and other costs and could materially and adversely affect our business, financial condition and results of
operations.
An outbreak of a pandemic disease and/or future terrorist activities, including bio-terrorism, could
materially and adversely affect the U.S. economy in general and the health care industry specifically. Depending
on the government’s actions and the responsiveness of public health agencies and insurance companies, a large-
scale public health epidemic or future acts of bio-terrorism could lead to, among other things, increased use of
health care services, disruption of information and payment systems, increased health care costs due to increased
in-patient and out-patient hospital costs and the cost of any anti-viral medication used to treat affected people.
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