Health Net Inc. says its operating results were solid during the third quarter despite charges that affected net results.
Health Net, Woodland Hills, Calif., is reporting a $104 million net loss for the third quarter on $3.6 billion in revenue, compared with $91 million in net income on $3.2 billion in revenue for the third quarter of 2006.
The managed care company ended the quarter providing or administering health coverage for 3.7 million people, 1.8% more people than it was covering a year earlier.
The net loss was due mainly to the effect of $297 million in charges related to class-action suits involving out-of-network claim payment practices in New Jersey and a consent order related to that issue, Health Net says.
Excluding the effects of the litigation costs, Health Net would have reported about $112 million in net income, the company says.
Standard & Poor’s Ratings Services, New York, says it will be holding the BB plus rating it has assigned to Health Net steady.
Excluding the litigation charges, “Health Net’s 2007 operating earnings are stable and consistent with expectations,” the rating agency says. “Standard & Poor’s believes that the company has adequate access to the capital markets to supplement any additional liquidity requirements resulting from the settlements and that the amount of any additional debt would result in debt leverage and interest coverage that would be supportive of the rating.”