Health Net 2015 Annual Report Download - page 169

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-8
Note 1—Description of Business and Significant Events
Health Net, Inc. (referred to herein as "Health Net," "the Company," "we," "us," "our" or "HNT") is a publicly
traded managed care organization that delivers managed health care services. Together with our subsidiaries, we
provide health benefits through our health maintenance organizations ("HMOs"), insured preferred provider
organizations ("PPOs"), exclusive provider organization ("EPO"), point of service ("POS") plans and indemnity
products, among others, to approximately 6.1 million individuals across the country through group, individual,
Medicare (including the Medicare prescription drug benefit commonly referred as "Part D"), Medicaid ("Medi-Cal" in
California), and dual eligible programs as well as programs with the the United States Department of Defense
("Department of Defense" or "DoD") and United States Department of Veterans Affairs ("VA"). Our subsidiaries also
offer managed health care products related to behavioral health and prescription drugs.
Our reportable segments are comprised of Western Region Operations and Government Contracts, each of which
is described below.
Our health plan services are provided under our Western Region Operations reportable segment, which includes
the operations primarily conducted in California, Arizona, Oregon and Washington for our commercial, Medicare and
Medicaid health plans, our health and life insurance companies, our pharmaceutical services subsidiary and certain
operations of our behavioral health subsidiaries.
Our Government Contracts reportable segment includes our government-sponsored managed care federal
contract with the DoD under the TRICARE program in the North Region and other health care, mental health and
behavioral health government contracts. On April 1, 2011, we began delivering administrative services under the new
T-3 contract for the TRICARE North Region ("T-3 contract"). The T-3 contract for the North Region covers
Connecticut, Delaware, Illinois, Indiana, Kentucky (except Fort Campbell), Maine, Maryland, Massachusetts,
Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Vermont,
Virginia, West Virginia, Wisconsin and the District of Columbia and portions of Iowa and Missouri. The Company
provides administrative services to approximately 2.8 million Military Health System ("MHS") eligible individuals
under the T-3 contract. In addition to the beneficiaries that we service under the T-3 contract, we administer contracts
with VA to manage the Patient Centered Community Care program ("PC3 Program") and community based outpatient
clinics in one state covering approximately 4,083 enrollees, We also provide behavioral health services to military
families under the Department of Defense sponsored Military and Family Life Counseling, formerly Military and
Family Life Consultant, ("MFLC") program. See Note 2 under the heading "Government Contracts" for additional
information on our T-3 contract for the North Region, the MFLC contract and PC3 Program contract.
Significant Events
Centene Transaction
On July 2, 2015, the Company entered into the Merger Agreement with Centene, together with Merger Sub I and
Merger Sub II. Upon the terms and subject to the conditions set forth in the Merger Agreement, (i) Merger Sub I will
merge with and into the Company (the "Merger"), with the Company as the surviving corporation (the "Surviving
Corporation") and (ii) subject to delivery of a legal opinion from counsel to the Surviving Corporation regarding certain
aspects of the tax treatment of the transactions, immediately after the consummation of the Merger, the Surviving
Corporation will merge with and into Merger Sub II, with Merger Sub II continuing as the surviving company.
At the effective time of the Merger, the Company's existing stockholders will receive per share merger
consideration consisting of $28.25 in cash and 0.6220 of one share of Centene's common stock.
The completion of the Merger is subject to the satisfaction or waiver of customary closing conditions, including,
without limitation, certain approval, notice or similar requirements with applicable regulatory authorities. On August
11, 2015, the Antitrust Division of the Department of Justice and the Federal Trade Commission granted early
termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"). On October 23, 2015, our stockholders approved the adoption of the Merger Agreement and Centene’s
stockholders approved the issuance of the shares of its common stock forming part of the merger consideration.