Health Net 2011 Annual Report Download - page 70

RESULTS OF OPERATIONS
Consolidated Results
The table below and the discussion that follows summarize our results of operations for the years ended
December 31, 2011, 2010 and 2009.
Year Ended December 31,
2011 2010 2009
(Dollars in thousands, except per share data)
Revenues
Health plan services premiums .......................... $10,364,278 $ 9,996,888 $12,440,589
Government contracts ................................. 1,416,619 3,344,483 3,104,700
Net investment income ................................ 74,161 71,181 105,930
Administrative services fees and other income .............. 11,532 21,133 62,022
Northeast administrative services fees and other ............ 34,446 186,167 —
Total revenues ................................... 11,901,036 13,619,852 15,713,241
Expenses
Health plan services (excluding depreciation and
amortization) ...................................... 8,948,349 8,609,117 10,731,951
Government contracts ................................. 1,237,884 3,168,160 2,939,722
General and administrative ............................. 1,128,185 956,264 1,361,956
Selling ............................................. 238,199 238,759 330,112
Depreciation and amortization .......................... 32,209 34,800 53,042
Interest ............................................. 32,148 34,880 40,887
Northeast administrative and claims services expenses ....... 145,879 279,434 —
Loss (adjustment to loss) on sale of Northeast health plan
subsidiaries ....................................... (40,815) (41,959) 105,931
Asset impairments .................................... — 6,000 174,879
Early debt extinguishment charge ........................ — 3,532 —
Total expenses ................................... 11,722,038 13,288,987 15,738,480
Income (loss) from operations before income taxes .............. 178,998 330,865 (25,239)
Income tax provision ...................................... 106,878 126,622 23,765
Net income (loss) ........................................ $ 72,120 $ 204,243 $ (49,004)
Net income (loss) per share:
Basic .......................................... $ 0.81 $ 2.08 $ (0.47)
Diluted ......................................... $ 0.80 $ 2.06 $ (0.47)
Summary of Operating Results
Year Ended December 31, 2011 Compared to Year Ended December 31, 2010
In the year ended December 31, 2011, we reported net income of $72.1 million or $0.80 per diluted share as
compared to net income of $204.2 million or $2.06 per diluted share for the same period in 2010. Pretax margin
was 1.5 percent for 2011 compared to 2.4 percent for 2010.
Our total revenues decreased 12.6 percent in the year ended December 31, 2011 to $11.9 billion from $13.6
billion in the same period in 2010. This decrease was primarily driven by the decline in our Government
Contracts revenue due to the impact of the T-3 contract for the TRICARE North Region. Our Government
contracts revenues decreased by 57.6 percent in 2011 to $1.4 billion from $3.3 billion in 2010. The Government
contracts costs decreased by 60.9 percent in 2011 to $1.2 billion from $3.2 billion in 2010. The declines in our
Government contracts revenues and costs are due to the change from our prior contract for the TRICARE North
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