Health Net 2002 Annual Report Download - page 31

HEALTH NET, INC. | 29
The table below and the discussion that follows summarize the Company’s performance in the last three fiscal years.
Year ended December 31,
(Amounts in thousands, except per member per month data) 2002 2001(1) 2000(1)
REVENUES:
Health plan services premiums $ 8,584,418 $ 8,576,202 $ 7,609,625
Government contracts 1,498,689 1,339,066 1,265,124
Net investment income 65,561 78,910 90,087
Other income 52,875 70,282 111,719
Total revenues 10,201,543 10,064,460 9,076,555
EXPENSES:
Health plan services 7,161,520 7,241,185 6,322,691
Government contracts 1,450,808 1,321,483 1,196,532
General and administrative 857,201 868,925 942,316
Selling 199,764 186,143 158,031
Depreciation 61,832 61,073 67,260
Amortization 8,360 37,622 38,639
Interest 40,226 54,940 87,930
Asset impairment and restructuring charges 60,337 79,667 –
Net loss on assets held for sale and sale of businesses and properties 5,000 76,072 409
Total expenses 9,845,048 9,927,110 8,813,808
Income from operations before income taxes and cumulative
effect of a change in accounting principle 356,495 137,350 262,747
Income tax provision 118,928 50,821 99,124
Income before cumulative effect of a change in accounting principle 237,567 86,529 163,623
Cumulative effect of a change in accounting principle, net of tax (8,941) ––
Net income $ 228,626 $86,529 $ 163,623
Health plan services medical care ratio 83.4% 84.4% 83.1%
Government contracts cost ratio 96.8% 98.7% 94.6%
Administrative ratio(2) 10.6% 10.8% 13.1%
Selling costs ratio(3) 2.3% 2.2% 2.1%
Health plan services premiums per member per month (PMPM)(4) $186.98 $ 176.58 $ 162.22
Health plan services PMPM(4) $155.99 $ 149.12 $ 134.78
(1) Certain amounts have been reclassified to conform to the 2002 presentation. The reclassifications have no effect on total revenues, total expenses, net earnings or stock-
holders’ equity as previously reported. The reclassifications reflect changes in our organizational structure as discussed in Notes 1 and 2 to the Consolidated Financial
Statements.
(2) The administrative ratio is computed as the sum of general and administrative (G&A) and depreciation expenses divided by the sum of health plan services premium
revenues and other income.
(3) The selling cost ratio is computed as selling expenses divided by health plan services premium revenues.
(4) PMPM is calculated based on total at-risk member months and excludes ASO member months.
ENROLLMENT INFORMATION
The table below summarizes the Company’s at-risk insured and ASO enrollment information for the last three fiscal years.
Percent Percent
(Amounts in thousands) 2002 Change 2001 Change 2000
Health Plan Services:
Commercial 2,847 (4.6)% 2,985 (0.4)% 2,996
Federal Program 176 (18.5)% 216 (20.6)% 272
State Programs 874 10.9% 788 18.3% 666
Continuing Plans 3,897 (2.3)% 3,989 1.4% 3,934
Discontinued Plans –––(100.0)% 3
Total Health Plan Services 3,897 (2.3)% 3,989 1.3 % 3,937
Government Contracts:
TRICARE PPO and Indemnity 503 (1.0)% 508 (9.6)% 562
TRICARE HMO 958 (0.1)% 959 6.4 % 901
Total Government Contracts 1,461 (0.4)% 1,467 0.3 % 1,463
ASO 72 (7.7)% 78 (6.0)% 83