LOS ANGELES (AP) — Insurer Health Net Inc. said Friday its profit decreased 25 percent in the fourth quarter under new terms of a contract with the U.S. military's TriCare health program.
Health Net said its profit fell to $60.2 million, or 71 cents per share, from $80.4 million, or 83 cents per share. Excluding costs related to its Northeast business, which it sold in 2009, Health Net said it earned 90 cents per share in profit from its Western and government business. Revenue fell 17 percent, to $2.81 billion from $3.37 billion.
Analysts expected the company to report a profit of 89 cents per share and $2.78 billion in revenue, according to FactSet.
Health Net's premium revenue grew 4 percent to $2.6 billion, but government contract revenue dropped 76 percent to $194.6 million. Under its new contract with TriCare, Health Net is only reimbursed for expenses and paid fixed fees. TriCare provides health insurance for active and retired military members and their families.
The company reported a $26.8 million loss related to the Northeast business, and said it also took charges related to cost-cutting efforts.
Health Net said it spent 84.8 percent of its premium revenue on medical care in the fourth quarter, down from 85.5 percent a year ago.
In 2011 the company's profit shrank 65 percent, to $72.1 million, or 80 cents per share, from $204.2 million, or $2.06 per share. Revenue fell 13 percent, to $11.9 billion from $13.62 billion.
The company forecast a profit of $2.80 to $2.90 per share in 2012, and said it will earn $3.30 to $3.40 per share from Western region and government business. It expects $11.5 billion to $12 billion in consolidated revenue.
Analysts are projecting a profit of $3.35 per share and $11.6 billion in revenue. Shares of Health Net lost $1.84, or 4.8 percent, to $36.75 in morning trading.