Health Net 2014 Annual Report Download - page 137

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-27
The following table presents the major classes of assets included in this amount (dollars in millions):
Assets Classified
as Held for Sale Impairment Loss
Assets Held for Sale
as of
December 31, 2014
Property and equipment, net............................ $ 130.2 $ (80.2) $ 50.0
Goodwill allocated to sale of business ............ 7.0 (7.0) —
Assets held for sale.......................................... $ 137.2 $ (87.2) $ 50.0
Other impaired property and equipment, net... $(1.3)
Asset impairment............................................. $ (88.5)
In connection with the pending sale, we have assessed the recoverability of goodwill and other long-lived assets,
including property and equipment. As a result, in the year ended December 31, 2014, we recorded $87.2 million in
asset impairments, including goodwill impairment of $7.0 million (see Note 2) and impairment of property and
equipment of $80.2 million (see Note 7). In addition, we recorded an asset impairment of $1.3 million during the year
ended December 31, 2014 for internally developed software, bringing our total asset impairment to $88.5 million.
Sale of Medicare PDP Business
On April 1, 2012, our subsidiary Health Net Life Insurance Company ("HNL") sold substantially all of the assets,
properties and rights of HNL used primarily or exclusively in our Medicare PDP business to CVS Caremark for a total
purchase price of $248.2 million. In the year ended December 31, 2012, we recognized a $132.8 million pretax gain on
the sale of our Medicare PDP business, or $114.8 million net of tax, and this after tax gain was reported as gain on sale
of discontinued operation, net of tax.
In connection with the transaction, we were not permitted to offer Medicare PDP plans for one year following the
closing, subject to certain exceptions. We continue to provide prescription drug benefits as part of our Medicare
Advantage plan offerings.
In addition, we provided Medicare PDP transition-related services to CVS Caremark in connection with the
transaction prior to December 31, 2012, and certain transition-related services were provided in 2013. We recognized
the value of future transition-related services to be provided under the Asset Purchase Agreement of $12.0 million as
deferred revenue at fair value as of April 1, 2012. This deferred revenue was amortized on a straight-line basis over a
nine-month period. Revenues and expenses from these transition-related services are reported as part of divested
operations and services revenue and expenses (see Notes 2 and 14).
Our revenues related to our Medicare PDP business were $192.1 million for the year ended December 31, 2012.
These revenues were excluded from our continuing operating results and included in loss from discontinued operation.
Our Medicare PDP business had a pretax loss of $28.8 million for the year ended December 31, 2012. As of December
31, 2012, 2013 and 2014, we had no Medicare stand-alone prescription drug plan members. We had no revenues and no
pretax income from the Medicare PDP business for the years ended December 31, 2013 and 2014.
Northeast Sale
On December 11, 2009, we completed the sale of the Acquired Companies to United. As part of the Northeast
Sale, we were required to continue to serve the members of the Acquired Companies and provide certain administrative
services to United until July 1, 2011 under administrative services agreements, and we were required to provide run-out
support services under claims servicing agreements with United, which will be in effect until the last run out claim
under the applicable claims servicing agreement has been adjudicated. All revenues and expenses related to the
Northeast Sale, including those relating to the administrative services and/or claims servicing agreements and any