Health Net 2015 Annual Report Download - page 25

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fraud and the introduction of new treatments or therapies; the recompetition of our T-3 contract for the TRICARE North
region; negative prior period claims reserve developments; rate cuts and other risks and uncertainties affecting our
Medicare or Medicaid businesses; our ability to successfully participate in California’s Coordinated Care Initiative,
which is subject to a number of risks inherent in untested health care initiatives and requires us to adequately predict the
costs of providing benefits to individuals that are generally among the most chronically ill within each of Medicare and
Medi-Cal and implement delivery systems for benefits with which we have limited operating experience; trends in
medical care ratios; membership declines or negative changes in our health care product mix; unexpected utilization
patterns or unexpectedly severe or widespread illnesses; failure to effectively oversee our third-party vendors; our
ability to reduce administrative expenses while maintaining targeted levels of service and operating performance;
noncompliance by our or our business associates with any privacy laws or any security breach involving the
misappropriation, loss or other unauthorized use or disclosure of confidential information; the timing of collections on
amounts receivable from state and federal governments and agencies; litigation costs; regulatory issues with federal and
state agencies including, but not limited to, the California Department of Managed Health Care and Department of
Health Care Services, the Arizona Health Care Cost Containment System, the Centers for Medicare & Medicaid
Services, the Office of Civil Rights of the U.S. Department of Health and Human Services and state departments of
insurance; operational issues; changes in political, economic or market conditions; investment portfolio impairment
charges; volatility in the financial markets; and general business and market conditions.
Additional factors that could cause our actual results to differ materially from those reflected in forward-looking
statements include, but are not limited to, the risks set forth below, and the other risks discussed in our other filings with
the SEC.
Any or all forward-looking statements in this Annual Report on Form 10-K and in any other public filings or
statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by
known or unknown risks and uncertainties. Many of the factors discussed below will be important in determining future
results. These factors should be considered in conjunction with any discussion of operations or results by us or our
representatives, including any forward-looking discussion, as well as information contained in press releases,
presentations to securities analysts or investors or other communications by us. You should not place undue reliance on
any forward-looking statements, which reflect management's analysis, judgment, belief or expectation only as of the
date thereof and are subject to changes in circumstances and a number of risks and uncertainties. Except as may be
required by law, we do not undertake to address or update forward-looking statements.
Risks Related to the Merger
On July 2, 2015, we entered into the Merger Agreement, pursuant to which we will be acquired by Centene,
subject to the receipt of required regulatory approvals and the satisfaction of customary closing conditions. See Note 1
to our consolidated financial statements for additional information and disclosures related to the Merger, which is
incorporated herein by reference. 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. In connection with the pending Merger, we and our stockholders are subject to a number of risks,
including the following:
The Merger is subject to conditions, some or all of which may not be satisfied, or completed on a timely basis, if at
all. Failure to complete the Merger could have material adverse effects on the Company.
The completion of the Merger is subject to a number of conditions, including, among others, the receipt of
certain regulatory approvals, which make the completion and timing of the completion of the Merger uncertain. Also,
either we or Centene may terminate the merger agreement if the Merger has not been consummated by July 2, 2016,
except that this right to terminate the Merger Agreement will not be available to any party whose failure to perform any
obligation under the Merger Agreement has been the cause of or the primary factor that resulted in the failure of the
Merger to be consummated on or before that date.
If the Merger is not completed, our ongoing business may be materially adversely affected and, without realizing
any of the benefits of having completed the Merger, we will be subject to a number of risks, including but not limited to
the following:
• the market price of our common stock could decline;
• we could owe substantial termination fees to Centene under certain circumstances;
• if the Merger Agreement is terminated and our Board of Directors (“Board”) seeks another business