The 10-second takeaway
For the quarter ended June 30 (Q2), Health Net met expectations on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank. Non-GAAP earnings per share grew significantly. GAAP earnings per share contracted significantly.
Gross margins expanded, operating margins grew, net margins dropped.
Health Net reported revenue of $2.74 billion. The 13 analysts polled by S&P Capital IQ hoped for a top line of $2.74 billion on the same basis. GAAP reported sales were 3.6% lower than the prior-year quarter's $2.84 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
EPS came in at $0.52. The 17 earnings estimates compiled by S&P Capital IQ forecast $0.52 per share. Non-GAAP EPS of $0.52 for Q2 were 174% higher than the prior-year quarter's $0.19 per share. (The prior-year quarter included $1.42 per share in earnings from discontinued operations.) GAAP EPS of $0.42 for Q2 were 72% lower than the prior-year quarter's $1.48 per share. (The prior-year quarter included $1.42 per share in earnings from discontinued operations.)
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
For the quarter, gross margin was 15.3%, 370 basis points better than the prior-year quarter. Operating margin was 2.2%, 130 basis points better than the prior-year quarter. Net margin was 1.2%, 320 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $2.72 billion. On the bottom line, the average EPS estimate is $0.59.
Next year's average estimate for revenue is $11.09 billion. The average EPS estimate is $2.25.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 103 members out of 134 rating the stock outperform, and 31 members rating it underperform. Among 61 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 52 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 $31.86.
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