Health Net 2005 Annual Report Download - page 49

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RESULTS OF OPERATIONS
Table of Summary Financial Information
The table below and the discussion that follows summarize our results of operations for the last three fiscal
years.
Year Ended December 31,
2005 2004 2003
(Dollars in thousands, except PMPM data)
Revenues
Health plan services premiums ............................ $ 9,553,525 $ 9,560,244 $ 9,093,219
Government contracts ................................... 2,307,483 2,021,871 1,865,773
Net investment income .................................. 72,751 58,147 59,332
Other income ......................................... 6,774 6,131 46,378
Total revenues .................................... 11,940,533 11,646,393 11,064,702
Expenses
Health plan services .................................... 8,013,017 8,413,638 7,516,838
Government contracts ................................... 2,211,253 1,927,598 1,789,523
General and administrative ............................... 956,840 888,480 912,531
Selling ............................................... 221,555 240,117 233,519
Depreciation .......................................... 30,250 41,426 55,903
Amortization .......................................... 3,444 2,862 2,774
Interest .............................................. 44,631 33,133 39,135
Litigation, severance and related benefits and asset
impairments ........................................ 83,279 32,893 16,409
Net gain on sales of businesses and properties ................ — (1,170) (18,901)
Total expenses .................................... 11,564,269 11,578,977 10,547,731
Income from continuing operations before income taxes ....... 376,264 67,416 516,971
Income tax provision ................................... 146,479 24,812 193,891
Income from continuing operations ........................ 229,785 42,604 323,080
Discontinued operations: Loss on settlement from disposition,
netoftax ........................................... — — (89,050)
Net income ........................................... $ 229,785 $ 42,604 $ 234,030
Pretax margin ......................................... 3.2% 0.6% 4.7%
Health plan services medical care ratio (MCR) ............... 83.9% 88.0% 82.7%
Government contracts cost ratio ........................... 95.8% 95.3% 95.9%
Administrative ratio (a) ................................. 10.3% 9.7% 10.6%
Selling costs ratio (b) ................................... 2.3% 2.5% 2.6%
Health plan services PMPM (c) ........................... $ 236.95 $ 217.31 $ 201.97
Health plan services costs PMPM (c) ....................... $ 198.75 $ 191.24 $ 166.96
(a) 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.
(b) The selling costs ratio is computed as selling expenses divided by health plan premium revenues.
(c) Premiums per member per month (PMPM) is calculated based on total at-risk member months and excludes
administrative services only (ASO) member months.
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