Health Net 2014 Annual Report Download - page 24

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operate its own exchange, and Arizona, which elected the establishment of a federally-facilitated exchange.
Participation in these and other exchanges in the states in which we operate is conditioned on the continued approval of
the applicable state or federal government regulator. The factors considered for inclusion on the exchanges may be
subject to additional changes in future years, which could impact some carriers’ decision on participation in the
exchanges.
State regulations also may be more stringent than federal regulations that are applicable to us, and various health
insurance reform proposals have been implemented at the state level, including laws and regulations that implement
portions of the ACA. The interaction of new federal regulations and the implementation efforts of the various states in
which we do business will continue to create substantial uncertainty for us and other health insurance companies about
the requirements under which we must operate. For additional information, see “—Segment Information—Government
Regulation—Health Care Reform Legislation and Implementation.”
Intellectual Property
We have registered and maintain various trademarks that we use in our businesses, including marks and names
incorporating the “Health Net” phrase, and from time to time we apply for additional registrations of such marks. We
utilize these and other marks and names in connection with the marketing and identification of products and services.
We believe such marks and names are valuable and material to our marketing efforts.
Employees
As of December 31, 2014, Health Net, Inc. and its subsidiaries employed 7,922 persons on a full-time basis and
92 persons on a part-time or temporary basis. These employees perform a variety of functions, including, among other
things, provision of administrative services for employers, providers and members; negotiation of agreements with
physician groups, hospitals, pharmacies and other health care providers; handling of claims for payment of hospital and
other services; and provision of data processing services. Our employees are not unionized and we have not experienced
any work stoppages since our inception. We consider our relations with our employees to be very good.
Dependence Upon Customers
The federal government is the primary customer of our Government Contracts segment, with premiums and fees
accounting for approximately 96% of our Government Contracts revenue and 4% of our total revenues in 2014.
Premiums and fees from the federal government in connection with our TRICARE North Region contract accounted for
72%, 75% and 61% of our Government Contracts revenue in 2014, 2013 and 2012, respectively, and 3%, 4% and 4% of
total revenues in 2014, 2013 and 2012, respectively. In addition, the federal government and the state of California are
significant customers of our Western Region Operations segment as a result of our contract with CMS for coverage of
Medicare-eligible individuals and our contracts with California state agencies for the federally-subsidized Medicaid
program and the dual eligibles demonstration under the CCI. Medicare premiums accounted for 23%, 27% and 27% of
our Western Region Operations segment health plan services premium revenues in 2014, 2013 and 2012, respectively,
and 22%, 25% and 25% of our total revenues in 2014, 2013 and 2012, respectively. Medicaid premiums, including
CHIP, accounted for 36%, 23% and 19% of our Western Region Operations segment health plan services premium
revenues in 2014, 2013 and 2012, respectively, and 34%, 22% and 17% of our total revenues in 2014, 2013 and 2012,
respectively. Dual eligibles premium revenues accounted for 1% of health plan services premiums and 1% of our total
revenues in 2014. For a discussion of risks associated with our increasing dependence on government funded revenues,
see “Item 1A. Risk Factors—Government programs represent an increasing share of our revenues. If we are unable to
effectively administer these programs, if we do not effectively adapt to changes to these programs, or if we experience a
significant reduction in revenues from these government programs, it could have a material adverse effect on our
business, financial condition or results of operations.”
Shareholder Rights Plan
On July 27, 2006, our Board of Directors adopted a shareholder rights plan pursuant to a Rights Agreement with
Wells Fargo Bank, N.A. (the "Rights Agent"), dated as of July 27, 2006 (the "Rights Agreement").
In connection with the Rights Agreement, on July 27, 2006, our Board of Directors declared a dividend
distribution of one right (a "Right") for each outstanding share of Common Stock to stockholders of record at the close
of business on August 7, 2006 (the "Record Date"). Our Board of Directors also authorized the issuance of one Right
for each share of common stock issued after the Record Date and prior to the earliest of the Distribution Date (as
defined below) the redemption of the Rights and the expiration of the Rights and, in certain circumstances, after the
Distribution Date. Subject to certain exceptions and adjustment as provided in the Rights Agreement, each Right