Health Net 2009 Annual Report Download - page 57

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. Effective December 11, 2009, we completed the Northeast Sale. As a result, the revenues and expenses
and related metrics for the year ended December 31, 2009 exclude the results of the Acquired Companies after
December 11, 2009 through December 31, 2009. The financial results for the 20 days following the closing of the
Northeast Sale were not material to our consolidated operations for the year ended December 31, 2009.
Year Ended December 31,
2009 2008 2007
(Dollars in thousands, except per share and PMPM
data)
Revenues
Health plan services premiums ............................ $12,440,589 $12,392,006 $11,435,314
Government contracts ................................... 3,104,700 2,835,261 2,501,677
Net investment income .................................. 105,930 91,042 120,176
Administrative services fees and other income ................ 62,022 48,280 51,104
Total revenues ..................................... 15,713,241 15,366,589 14,108,271
Expenses
Health plan services (excluding depreciation and amortization) . . 10,731,951 10,762,657 9,762,896
Government contracts ................................... 2,939,722 2,702,573 2,307,610
General and administrative ............................... 1,361,956 1,291,059 1,275,555
Selling ............................................... 330,112 360,381 327,827
Depreciation and amortization ............................ 53,042 59,878 42,982
Interest ............................................... 40,887 42,909 32,497
Asset impairment on Northeast operations ................... 174,879 — —
Loss on sale of Northeast health plan subsidiaries ............. 105,931 — —
Total expenses ..................................... 15,738,480 15,219,457 13,749,367
Income from operations before income taxes ................. (25,239) 147,132 358,904
Income tax provision .................................... 23,765 52,129 165,207
Net income ........................................... $ (49,004) $ 95,003 $ 193,697
Net income per share:
Basic ............................................ $ (0.47) $ 0.89 $ 1.74
Diluted ........................................... $ (0.47) $ 0.88 $ 1.70
Pretax margin ......................................... (0.2)% 1.0% 2.5%
Health plan services medical care ratio (MCR) (a) ............. 86.3% 86.9% 85.4%
Government contracts cost ratio (b) ........................ 94.7% 95.3% 92.2%
G&A expense ratio (c) .................................. 10.9% 10.4% 11.1%
Selling costs ratio (d) ................................... 2.7% 2.9% 2.9%
Health plan services premiums per member per month
(PMPM) (e) ......................................... $ 294.25 $ 277.79 $ 263.54
Health plan services costs PMPM (e) ....................... $ 253.84 $ 241.27 $ 225.00
(a) MCR is calculated as health plan services cost divided by health plan services premiums revenue.
(b) Government contracts cost ratio is calculated as government contracts cost divided by government contracts
revenue.
(c) The G&A expense ratio is computed as G&A expenses divided by the sum of health plan services premium
revenues and administrative services fees and other income.
(d) The selling costs ratio is computed as selling expenses divided by health plan services premium revenues.
(e) PMPM is calculated based on total at-risk member months and excludes ASO member months.
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