Health Net — Q2 2015 Earnings Presentation
25 slides from Health Net's earnings presentation, Sep 23, 2015
Slide 1: Health Net, Inc. Q2 2015 Investor Presentation
Health Net, Inc. Q2 2015 Investor Presentation 8/4/15
Slide 2: Cautionary Statements
Cautionary Statements FORWARD LOOKING STATEMENTS This material may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Centene, Health Net and the combined businesses of Centene and Health Net and certain plans and objectives of C
Slide 3: Additional Information and Where to Find It
ADDITIONAL INFORMATION AND WHERE TO FIND IT The proposed merger transaction involving Centene and Health Net will be submitted to the respective stockholders of Centene and Health Net for their consideration. In connection with the proposed merger, Centene prepared a registration statement on Form S
Slide 4: HNT Overview
HNT Overview Revenue by segment* Western Region Operations Government Contracts** Investment and Other * Q2 2015 ** Map shows states covered by TRICARE North Region contract and PC3/Choice contract 4
Slide 5: Commercial Business
Western Region Operations Commercial Business • Decline primarily due to losses in the Arizona individual and California large group businesses • Small Group ACA transition • Opportunities for private exchanges 1.06 1.08 1.1 1.12 1.14 1.16 1.18 1.2 2013 2014 Q2 2015 1.16 M 1.19 M 1.09 M Commercial M
Slide 6: Medicaid
0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 Expansion Medicaid Western Region Operations Medicaid—California • Medicaid expansion driving continued growth • CA eligibility redetermination • Rates and rebates 2014 Q2 2015 1.59 M 1.71 M Medicaid Membership (end of period, in Millions) 6
Slide 7: Duals Demonstration
Western Region Operations Duals Demonstration Market Leader in Duals Demonstration in Los Angeles County • Positive contribution margin • Opt-out rates continue to challenge enrollment 0 5 10 15 20 25 30 2014 Q2 2015 16.0 K 27.0 K Dual Eligibles Demonstration Membership (end of period, in Thousands)
Slide 8: Combined Duals
Western Region Operations Combined Duals • Positive growth outlook • Managing of both MA and Medicaid portions of benefits in Los Angeles and San Diego counties • Potential for migration to Duals Demonstration 10 35 60 85 110 135 160 Duals Demo D-SNP MA Managed Medicaid 2014 Q2 2015 166.0 K 36.16 K
Slide 9: Medicare Advantage
Western Region Operations Medicare Advantage • Continued mix improvements • 2015 membership affected by transfer of MA dual eligibles to duals demonstration project in Los Angeles and San Diego counties • Positioning for 2016 rate bid 200 210 220 230 240 250 260 270 2013 2014 Q2 2015 269 K 275 K 244
Slide 10: Health Net Degree Solutions
@ Health Net 360 Degree Solutions rH Health Net’ 10
Slide 11: Degree Solutions: Funding Entities
360 Degree Solutions Employer Individual Government (State and Federal) Funding Entities Funding Entities • Employer • Individual • Government—State and Federal
Slide 12: Degree Solutions: Product Mix
Medicaid Duals 360 Degree Solutions Commercial Product Mix Medicare Š Funding Entities Š Employer Š Individual Š Government—State and Federal Product Mix Š Commercial Š Medicaid Š Medicare Š Duals 12
Slide 13: Degree Solutions: Patient Care
360 Degree Solutions Patient Care Tailored Networks Provider Partnerships Fee-for-Service Funding Entities Š Employer Š Individual Š Government—State and Federal Product Mix Š Commercial Š Medicaid Š Medicare Š Duals Patient Care Š Tailored Networks Š Provider Partnerships Š Fee-for-Service 13
Slide 14: Degree Solutions: Payment Methodologies
360 Degree Solutions Payment Methodologies Funding Entities Š Employer Š Individual Š Government—State and Federal Product Mix Š Commercial Š Medicaid Š Medicare Š Duals Patient Care Š Tailored Networks Š Provider Partnerships Š Fee-for-Service Payment Methodologies Š Risk Arrangements Š Fee-for-Ser
Slide 15: Degree Solutions: Distribution Systems
360 Degree Solutions Distribution Systems Funding Entities Š Employer Š Individual Š Government—State and Federal Product Mix Š Commercial Š Medicaid Š Medicare Š Duals Patient Care Š Tailored Networks Š Provider Partnerships Š Fee-for-Service Payment Methodologies Š Risk Arrangements Š Fee-for-Serv
Slide 16: Degree Solutions: Shared Services G&A Leverage
360 Degree Solutions Shared Services G&A Leverage Funding Entities Š Employer Š Individual Š Government—State and Federal Product Mix Š Commercial Š Medicaid Š Medicare Š Duals Patient Care Š Tailored Networks Š Provider Partnerships Š Fee-for-Service Payment Methodologies Š Risk Arrangements Š Fee-
Slide 17: Degree Solutions
360 Degree Solutions Funding Entities Š Employer Š Individual Š Government—State and Federal Product Mix Š Commercial Š Medicaid Š Medicare Š Duals Patient Care Š Tailored Networks Š Provider Partnerships Š Fee-for-Service Payment Methodologies Š Risk Arrangements Š Fee-for-Service Distribution Syst
Slide 18: Tailored Network Solutions
Tailored Network Solutions* Individual Exchange Medicaid Duals Demonstration 93% 100% 100% *As of June 30, 2015 18
Slide 19: Government Contracts
Government Contracts • TRICARE –Operating in first of three additional one-year option periods –Responded to T2017 RFP on July 23, 2015 • Veterans Programs –Notified of intent to exercise option period two for PC3/Choice, which would commence on October 1, 2015 TRICARE North PC3/Choice Programs 19
Slide 20: Metrics and Government Contracts
Metrics Western Region Operations and Government Contracts • Revenue drivers –Medicaid expansion • Impact of California redeterminations • Income drivers –Moderate cost and utilization trends –Improved G&A and admin expense ratios 3 5 7 9 11 13 2013 2014 1H 2015 10 30 50 70 90 110 130 2013 2014 1H 2
Slide 21: Metrics
Metrics Western Region Operations 83 83.5 84 84.5 85 2013 2014 Q2 2015 2 4 6 8 10 12 2013 2014 Q2 2015 G&A Expense Ratio Administrative Expense Ratio • MCR Components –Year-over-year comparisons –Impact of the 3Rs –MA risk adjuster –California Medicaid • G&A –Impact of premium taxes and fees –VA PC3
Slide 22: 2015 Outlook
2015 Outlook • Continued growth in Medicaid • Continued rightsizing of MA business • Cognizant efforts suspended • TRICARE 2017 • VA PC3/Choice operations ramp-up
Slide 23: Recent Events
Recent Events • Announced definitive merger agreement with Centene Corporation on July 2, 2015 –Centene to acquire all issued and outstanding shares of Health Net –Subject to approval by Centene and Health Net shareholders and other customary closing conditions –Transaction expected to close in earl
Slide 24: 2015 Guidance
2015 Guidance* • Maintained combined Western Region and Government Contracts segments guidance of $3.25 to $3.35 per diluted share –Does not include the combined effect/costs associated with the merger with Centene and suspension of Cognizant transaction for the second half of 2015 • Updated and aff
Slide 25: Health Net, Inc. Q2 2015
Health Net, Inc. Q2 2015 Investor Presentation