Health Net 2014 Annual Report Download - page 56

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Acquisitions, divestitures and other significant transactions may adversely affect our business.
We continue to evaluate the profitability realized or that we expect to be realized by our existing businesses and
operations. From time to time we review, from a strategic standpoint, potential acquisitions and divestitures in light of
our core businesses and growth strategies. The success of any such acquisition or divestiture depends, in part, upon our
ability to identify suitable buyers or sellers, negotiate favorable contractual terms and, in many cases, obtain
governmental approval. For acquisitions, success is also dependent upon efficiently integrating the acquired business
into our existing operations. For divestitures, success may also be dependent upon efficiently reducing general and
administrative or other functions for our remaining operations. In the event the structure of the transaction results in
continuing obligations by the buyer to us or our customers, a buyer's inability to fulfill these obligations could lead to
future financial loss on our part. As a seller, we may have significant continuing indemnification, administrative
services or other obligations to the buyer. Potential acquisitions or divestitures present financial, managerial and
operational challenges, including diversion of management attention from existing businesses, difficulty with
integrating or separating personnel and financial and other systems, significant post-closing obligations, increased
expenses, assumption of unknown liabilities, indemnities and potential disputes with the buyers or sellers.
Our revolving credit facility contains restrictive covenants that could limit our ability to pursue our business
strategies.
Our $600 million revolving credit facility due in October 2016 requires us to comply with various covenants that
impose restrictions on our operations, including our ability to incur additional indebtedness, create liens, pay dividends,
make investments or other restricted payments, sell or otherwise dispose of substantially all of our assets and engage in
other activities. Our revolving credit facility also requires us to comply with a maximum leverage ratio and a minimum
fixed charge coverage ratio. See “Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources-Capital Structure-Revolving Credit Facility” for further details regarding
our revolving credit facility.
The restrictive covenants under our revolving credit facility could limit our ability to pursue our business
strategies. In addition, any failure by us to comply with these restrictive covenants could result in an event of default
under the revolving credit facility and, in some circumstances, under the indenture governing our Senior Notes, which,
in any case, could have a material adverse effect on our financial condition.
We are dependent on our ability to recruit, manage, enable and retain a skilled and talented workforce.
Our products and services and our operations require a large number of employees. As of December 31, 2014, we
employed 7,922 individuals on a full-time basis and 92 individuals on a part-time or temporary basis. It is critical that
we recruit, manage, enable and retain talent to successfully execute our strategic objectives, which requires aligned
policies, a positive work environment and a robust succession and talent development process. Further, particularly in
light of the changing health care environment, we must focus on building employee capabilities to help ensure that we
can meet upcoming challenges and opportunities. Our business could be adversely affected if we are unable to recruit,
manage, enable and retain talent and meet upcoming challenges and opportunities. In addition, the impact of the
external or internal environment or other factors on employee morale, enablement and engagement could also
significantly impact the success of the Company.
Our forecasts and other forward-looking statements are based on a variety of assumptions that are subject to
significant uncertainties. Our performance may not be consistent with these forecasts and forward-looking
statements.
From time to time in press releases and otherwise, we publish forecasts or other forward-looking statements
regarding our future results, including estimated revenues, net earnings and other operating and financial metrics. Any
forecast of our future performance reflects various assumptions. These assumptions are subject to significant
uncertainties, and, as a matter of course, any number of them may prove to be incorrect.
The achievement of any forecast depends on numerous risks and other factors, including those described in this
report, many of which are beyond our control. In addition, the uncertainties associated with federal and state health care
reform, challenging economic conditions and our potential participation in new government programs or the provision
of new services and/or benefits to new populations, among other things, may make it particularly difficult to forecast