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Health Net Beats Street

Health Net Inc. on Tuesday reported fourth-quarter earnings that exceeded Wall Street expectations after excluding the expenses for a cost-cutting initiative. The Woodland Hills health insurer had net income of $4.9 million (6 cents a share) for the fourth quarter ended Dec. 31, but excluding one-time costs, the results were 65 cents a share. That compares to $19.8 million (25 cents) for the same quarter the previous year. Revenue declined by less than 1 percent to $3.76 billion. Analysts on average expected net income of 57 cents on revenue of $3.97 billion, according to Thomson Financial Network. The company explained the slump in earnings as the result of $72 million in pretax expenses related to its agreement with Cognizant Technology Solutions Corp. In August, Health Net announced a deal with Cognizant to implement a technology system that will help manage a larger number of health policies and reduce administrative costs. For the full year, Health Net had net income of $146 million ($1.80 a share) compared to $170 million ($2.12) for the previous year. Revenue in 2014 climbed almost 27 percent to $14 billion. Analysts expected net income of $2.30 on revenue of $14.2 billion, according to Thomson Financial Network. Chief Executive Jay Gellert said he expects more revenue growth in 2015, in part because of the Cognizant deal. “We believe this agreement will position Health Net for expanded product development and service capabilities that will support and provide scale for incremental growth in the years ahead,” he said in a statement. The company also provided guidance for 2015 of $2.70 in per-share net income and annual revenue growth of 23 percent. Shares closed up $1.21, or more than 2 percent, to $56.01 on the New York Stock Exchange.

Joel Russel
Joel Russel
Joel Russell joined the Los Angeles Business Journal in 2006 as a reporter. He transferred to sister publication San Fernando Valley Business Journal in 2012 as managing editor. Since he assumed the position of editor in 2015, the Business Journal has been recognized four times as the best small-circulation tabloid business publication in the country by the Alliance of Area Business Publishers. Previously, he worked as senior editor at Hispanic Business magazine and editor of Business Mexico.

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