Health Net 2010 Annual Report Download - page 76

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
The Northeast Operations had approximately $2,651.5 million and $2,847.2 million in total revenues in the
years ended December 31, 2009 and 2008, respectively, which represent 17 percent and 19 percent of our total
revenues for the years ended December 31, 2009 and 2008, respectively. The Northeast Operations had a pretax
loss of $165.6 million for the year ended December 31, 2009 and pretax income of $10.4 million for the year
ended December 31, 2008. Our operating results for the year ended December 31, 2009 were impacted by a
$105.9 million loss on the sale of our Northeast health plan subsidiaries.
The Northeast Operations health plan services premium revenues decreased $211.9 million, or 8 percent, for
the year ended December 31, 2009 as compared to the same period in 2008. The Northeast health plan services
costs decreased by $146.3 million, or 6 percent for the year ended December 31, 2009 as compared to the same
period in 2008. These decreases are primarily attributable to the Northeast Sale on December 11, 2009.
Corporate/Other
Year Ended December 31,
2010 2009 2008
(Dollars in thousands, except
per share data)
Charges included in net investment income ........................... $ 0 $ 0 $ (14,642)
Charges included in administrative services fees and other income ........ (5,460) 0 (3,400)
Charges included in health plan services costs ........................ (46,509) (4,799) 37,496
Charges included in government contract costs ........................ 2,413 3,632 0
Charges included in G&A ........................................ 58,840 124,797 119,541
Early debt extinguishment charge .................................. 3,532 0 0
Asset impairment ............................................... 0 174,879 0
Loss from operations before income taxes ............................ (23,736) (298,509) (175,079)
Income tax benefit .............................................. (9,028) (103,818) (70,948)
Net loss ....................................................... $(14,708) $(194,691) $(104,131)
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
Our Corporate/Other segment is not a business operating segment. It is added to our reportable segments to
reconcile to our consolidated results. The Corporate/Other segment includes costs that are excluded from the
calculation of segment pretax income because they are not managed within the reportable segments. See Note
14—Segment Information to our consolidated financial statements for discussion on changes to our reportable
segments and segment profit/(loss) measurement.
Our operating results for the year ended December 31, 2010 were impacted by $61.2 million in pretax costs
related to our operations strategy and other cost management initiatives, $9.0 million in early debt
extinguishment and related interest rate swap termination costs reduced by a $46.5 million benefit from litigation
reserve true-ups. See Note 2 for more information regarding the litigation reserve true-ups. See “—Liquidity and
Capital Resources—Capital Structure—Termination of Amortizing Financing Facility” for additional
information regarding the early debt extinguishment charge.
Our operating results for the year ended December 31, 2009 included $123.6 million in pretax costs relating
to our operations strategy and reductions from litigation reserve true-ups. In 2009, we recorded a $174.9 million
pretax asset impairment charge as a result of entering into the Stock Purchase Agreement with United. See Note
3 to our consolidated financial statements for more information on the Northeast Sale and see Note 2 for more
information regarding the impairments of goodwill and other assets.
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