Health Net 1999 Annual Report Download - page 5

KEEPI NG BABI ES WELL
Health Net enco urages wellness fro m the very
start of life. That’s why Health Net pro vides
its members access to prenatal education
pro grams that will help prepare bo th moms
and dads fo r a healthy pregnancy and delivery.
When members c o mplete the prenatal pro g ram,
Health Net pro vides a high quality, rear- facing
infant car seat – free of charge. To date, mo re
than 75,000 car seats have been given away
to Health Net members who have successfully
co mpleted this co urse.
Regular checkups and immunizatio ns are
extremely impo rtant for newbo rns and
infants. To keep these visits “to p-o f- mind”
fo r parents, Health Net sends reminders to
parents to schedule reg ular checkups and
immunizatio ns with their physicians.
Sho uld a baby wake in the middle o f
the night with a high fever o r ano ther
tro ubling sympto m, Health Net
members can call HealthLine, a
service available 24/ 7 to pro vide
parents with medical info rmatio n
and assistance fro m a medical
pro fessio nal.
Financial Performance
FHS’ financial performance in 1999 was far ahead
of 1998.While overall performance was consistent
with management’s expectations, operating cash
flow far exceeded our expectations and the
balance sheet strengthened considerably.
R evenues for 1999 were $8,706,219,000, a slight
increase from the $8,634,469,000 recorded by
FHS in 1998. Net income, before the effect of a
change in accounting principle, for the year
reached $147,782,000, or $1.21 per diluted share,
compared with a net loss of $165,158,000 or $1.35
per diluted share in 1998. In 1999, FHS recorded
gains on transactions, charges for restructuring,
impairment and other non-recurring items and a
change in accounting principle which, in the
aggregate, increased earnings by $.12 per diluted
share, resulting in adjusted annual earnings per
diluted share of $1.09. In 1998, FHS recorded
many one-time items, amounting to a charge of
$2.28 per diluted share, bringing earnings before
the charges to $.93 per diluted share.
While cash flow had been a concern, operating
cash flow for the full year of 1999 amounted to
$297,128,000 compared with $100,867,000 for
all of 1998. More rigorous financial controls and a
tight operational focus on this issue by our man-
agement team caused this dramatic improvement.
Thanks to these substantial cash flow gains,
and to the proceeds from our divestiture program,
we substantially reduced the level of debt
in 1999.At the end of the year, our debt stood at
$1,039,352,000, a $215,000,000 reduction
compared with the end of 1998.An important
measure for our lenders is the debt to total capital
ratio.At the end of 1999, it stood at 54 percent,
against 63 percent at the end of 1998.We believe
that, if we continue our consistent financial
performance, we can achieve a debt to total capital
ratio of less than 50 percent by the end of 2000.
Two other important, and connected, financial
barometers improved markedly in 1999. R eserves
for claims and other settlements climbed 13
percent to stand at $1,138,801,000 at the end of