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.
Is Health Net the best health care stock for you? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average health care logistics company. Click here for instant access to this free report.
- Add Health Net to My Watchlist.
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 of Motley Fool Hidden Gems, which provides new small-cap ideas every month. The Motley Fool has no position in any of the stocks mentioned. 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.