Health Net 2015 Annual Report Download - page 55

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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.
While the Merger with Centene is pending, we are restricted from engaging in potential transactions of this type,
unless approved by Centene.
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, 2015, we
employed 8,541 individuals on a full-time basis and 86 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 ability to recruit, manage, enable and retain a skilled and talented
workforce may also be impacted by the pendency of the Merger, as further described above under the risk factor
heading “—Uncertainties associated with the Merger may cause a loss of management personnel and other key
employees which could adversely affect our business and results of operations.”
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
our future performance. As a result, we cannot assure that our performance will meet any management forecasts or that
the variation from such forecasts will not be material and adverse. You are cautioned not to base your entire analysis of
our business and prospects upon isolated predictions, but instead are encouraged to utilize the entire mix of publicly
available historical and forward-looking information, as well as other available information affecting us, our services,
and our industry when evaluating our forecasts and other forward-looking statements relating to our operations and
financial performance.