Health Net 2011 Annual Report Download - page 124

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
eligible individuals. Medicare revenues accounted for 28%, 30% and 30% of our health plan premium revenues
in 2011, 2010 and 2009, respectively. For 2009, these amounts included revenues from our Northeast business
through the closing date of the Northeast Sale. All of our Medicaid/Medi-Cal revenue is derived in California.
We are the sole commercial plan contractor with DHCS to provide Medi-Cal services in Los Angeles County,
California. As of December 31, 2011, revenue from our Medi-Cal members in Los Angeles County was
approximately 42% of our total Medicaid premium revenue and approximately 6% of total health plan premium
revenue. In May 2005, we renewed our contract with the California Department of Health Care Services (DHCS)
to provide Medi-Cal service in Los Angeles County. On March 29, 2010, DHCS executed an amendment to
extend our contract for a second 24-month extension period ending March 31, 2012. On December 1, 2011, our
contract with DHCS was extended for a third 24-month period ending March 31, 2014.
Earnings Per Share
Basic earnings per share excludes dilution and reflects net income divided by the weighted average shares of
common stock outstanding during the periods presented. Diluted earnings per share is based upon the weighted
average shares of common stock and dilutive common stock equivalents (this reflects the potential dilution that
could occur if stock options were exercised and restricted stock units (RSUs) and performance share units (PSUs)
were vested) outstanding during the periods presented.
Common stock equivalents arising from dilutive stock options, RSUs and PSUs are computed using the treasury
stock method. For the years ended December 31, 2011 and 2010, 1,446,000 shares and 1,000,000 shares of dilutive
common stock equivalents were outstanding, respectively. For the year ended December 31, 2009, 563,000 shares of
common stock equivalents were excluded from the computation of loss per share due to their anti-dilutive effect.
Options, RSUs and PSUs to purchase an aggregate of 2,496,000 and 2,563,000 shares of common stock
were considered anti-dilutive during 2011 and 2010, respectively, and were not included in the computation of
diluted earnings per share. Options expire at various times through April 2019 (See Note 8).
In March 2010, our Board of Directors authorized a $300 million stock repurchase program (2010 stock
repurchase program). We completed our 2010 stock repurchase program in April 2011. In May 2011, our Board
of Directors authorized a new stock repurchase program for the repurchase of up to $300 million of our
outstanding common stock (2011 stock repurchase program). The remaining authorization under our 2011 stock
repurchase program as of December 31, 2011 was $76.3 million. See Note 9 for more information regarding our
2010 and 2011 stock repurchase programs.
Comprehensive Income
Comprehensive income includes all changes in stockholders’ equity (except those arising from transactions with
stockholders) and includes net income (loss), net unrealized appreciation (depreciation) after tax on investments
available-for-sale and prior service cost and net loss related to our defined benefit pension plan (see Note 10).
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