Health Net 2014 Annual Report Download - page 55

53
necessary for us to liquidate our investment portfolio on an accelerated basis, it could have an adverse effect on our
results of operations.
If our stock price experiences significant fluctuations or if our market capitalization materially declines, we could
be required to take an impairment charge to reduce the carrying amount of our goodwill. If we were required to take
such a charge, it would be non-cash and would not affect our liquidity or financial condition, but could have a
significant adverse effect on our results of operations in the period in which the charge was taken.
The market price of our common stock is volatile.
The market price of our common stock is subject to volatility, and, although the price of our common stock rose
significantly in 2014, it has shown significant volatility in years past. In 2012, the per share value of our common stock
decreased by 20.1%. In 2013, the per share value of our common stock increased by 21.8%, and in 2014, the per share
value of our common stock increased by 82.3%. There can be no assurance that the trading price of our common stock
will vary in a manner consistent with the variation in the Standard & Poor's 400 Mid-Cap Index of which our common
stock is a component. The market prices of our common stock and the securities of certain other publicly-traded
companies in our industry have in the past or may in the future show significant volatility and sensitivity in response to
many factors, including, without limitation, the ACA and health care reform generally, public communications
regarding managed care, legislative or regulatory actions, political developments, developments in connection with our
master services agreement with Cognizant, litigation or threatened litigation, health care cost trends, proposed premium
increases, pricing trends, reductions in government reimbursement, competition, earnings, proposed changes in or the
introduction of new government programs or initiatives, developments with respect to the CCI, receivable collections or
membership reports of particular industry participants, and market speculation about or actual merger and acquisition
activity. Additionally, adverse developments affecting any one of the companies in our sector could cause the price of
our common stock to weaken, even if those adverse developments do not otherwise affect us. There can be no
assurances regarding the level or stability of our share price at any time or the impact of these or any other factors on
our stock price.
Securities class action lawsuits are often brought against companies after periods of volatility in the market price
of their securities. If we were to become involved in securities litigation, it could subject us to substantial costs, divert
resources and the attention of management from our business, and otherwise adversely affect our business.
Negative publicity regarding the managed health care industry and health care reform could adversely affect our
ability to market and sell our products and services.
Managed health care companies have received and continue to receive negative publicity reflecting the public
perception of the industry. For example, the Company and the managed health care industry have been subject to
negative publicity surrounding premium rate increases and government investigations into the industry and our own
business practices. Such risks may be exacerbated in the event we and other companies in our industry raise premium
rates by more than has been done in recent years to price for the expanded benefits required by, and the fees, taxes and
assessments imposed by, the ACA or to respond to any increase in medical cost trends. In addition, health care, health
care reform and its implementation and related health care reform proposals have been and are expected to continue to
be the subject of intense media attention and political debate. Such political discourse can often generate publicity that
portrays managed care in a negative light. Our marketing efforts may be affected by, among other things, the amount of
negative publicity to which the industry has been subject, as well as by speculation and uncertainty relating to merger
and acquisition activity among companies in our industry. Speculation, uncertainty or negative publicity about us, our
industry, our third party vendors or our lines of business could adversely affect our ability to market and sell our
products or services, require changes to our products or services, or stimulate additional legislation, regulation, review
of our practices or those of the industry or litigation that could adversely affect us.
Managing executive succession and retention is critical to our success. If we are unable to manage the succession of
our key executives, it could adversely affect our business.
We are dependent on retaining existing key executives and attracting additional qualified executives to meet
current and future needs. We face intense competition for qualified executives, and there can be no assurance that we
will be able to attract and retain such executives. Although we have succession plans in place and have employment
arrangements with our key executives, these do not guarantee that the services of these key executives will continue to
be available to us or that we will be able to attract and retain suitable successors. We would be adversely affected if we
fail to adequately plan for future turnover of our senior management team.