Health Net 2002 Annual Report Download - page 11

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HEALTH NET, INC. | 9
Health Net into a well-integrated, highly-focused organization. Excluding these items,
earnings grew by 24 percent to $2.21 per diluted share from $1.78 per diluted share last year.
Total company revenues grew by just 1 percent to $10,201,543,000. Revenues for our health
plans grew only slightly, as we continued to concentrate on new market segments. As a result,
health plan membership declined by 2 percent in 2002. However, we added members in small
group and middle market accounts to counter the departures from many large group accounts
where it is increasingly difficult to deploy cost-effective benefit designs.
As affirmation of our strategy, company-wide enrollment grew toward the latter part of
the year, while California and New Jersey’s membership grew handsomely in small group and
middle market segments.
To address market needs and cost concerns, we introduced products that focus on networks
of providers that share our commitment to the twin goals of quality and cost effectiveness. In
addition, we launched products with variable hospital copays. Along with these products, we
provided members and physicians Internet-based information about hospital cost and quality.
We hope this promotes greater consumer participation in health care decisions at a time when
rapidly rising hospital costs are the primary factor driving health care inflation.
Our team serving dependents of active duty military personnel and military retirees and their
dependents through the Department of Defense’s TRICARE program had an excellent year.
Their work is vital at such a critical time for our nation’s armed forces. We are in the process
of bidding on a new series of TRICARE contracts and hope we have the chance to continue in
this important program for many years to come.
Finally, in April the Board of Directors approved a $250 million share repurchase program.
During 2002, the company repurchased 6.7 million shares. Simply put, we believe that buying
Health Net’s stock is the single best way to affirm our belief in the company’s future.
I hope you, as stockholders, continue to share our faith. During the fall, I saw our commit-
ment first hand as I traveled around the country to introduce the new Mission, Vision and
Goals to our associates. And what I saw was a team coming together to focus on One
Mission, One Vision and One Future – dedicated to serving our members and rewarding the
trust placed in us by you, our stockholders.
Sincerely,
JAY GELLERT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MARCH 19, 2003
“IN SUM, 2002 WAS
AN EVENTFUL AND
SUCCESSFUL YEAR FOR
HEALTH NET AND I AM
PROUD OF ALL THAT
OUR ASSOCIATES
ACCOMPLISHED.”