Health Net Beats Analyst Estimates on EPS

Seth Jayson, The Motley Fool
Updated

Health Net (NYS: HNT) reported earnings Feb. 3. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Health Net beat slightly on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue contracted significantly and GAAP earnings per share shrank.

Gross margins improved, operating margins improved, net margins shrank.

Revenue details
Health Net reported revenue of $2.81 billion. The 14 analysts polled by S&P Capital IQ foresaw sales of $2.78 billion. Sales were 17% lower than the prior-year quarter's $3.37 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.90. The 17 earnings estimates compiled by S&P Capital IQ predicted $0.89 per share on the same basis. GAAP EPS of $0.71 for Q4 were 14% lower than the prior-year quarter's $0.83 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 15.8%, 160 basis points better than the prior-year quarter. Operating margin was 3.5%, 60 basis points better than the prior-year quarter. Net margin was 2.1%, 30 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $2.89 billion. On the bottom line, the average EPS estimate is $0.63.

Next year's average estimate for revenue is $11.58 billion. The average EPS estimate is $3.35.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 98 members rating the stock outperform and 30 members rating it underperform. Among 58 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 49 give Health Net a green thumbs-up, and nine give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Health Net is hold, with an average price target of $31.38.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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