Boston, MA 05/12/2014 (wallstreetpr) – The Affordable Care Act (ACA) saw insurers benefiting from higher new enrollments and new policy sales in 1Q. However, Health Net, Inc. (NYSE:HNT) fell short of expectations in the latest quarter, and that has brought it under intense investor spotlight.
Though the company’s 1Q results topped a year earlier figures, analysts on the average expected something better than what the company eventually reported for the quarter.
The company declared that its 1Q2014 performance that exceeded a year earlier performance was supported by higher revenue linked to the new ACA enrolments. Though the company failed to capture the lion’s share in new enrolments in the quarter, the management expects to benefit from internal improvements that have been achieved in the company. Furthermore, the company expects to draw more clients to its side given its new policies.
In any case, Health Net, Inc. (NYSE:HNT) expects ACA enrollment gains to continue through the balance of 2014. The company estimates about 120,000 new member enrolments in the balance of the year, according to CEO Jay Gellert.
Third place
In the Covered California new-customer signup, Health Net, Inc. (NYSE:HNT) lost the race to Anthem Blue Cross and Blue Shield to emerge third. The company secured 18.9 percent of the new signups at a time when Anthem and Blue Shield achieved 30.5 and 27.3 percent respectively. Though the company failed to capture the biggest market share, the management said that all was not lost given that the company still enjoys many advantages in the market that should support higher revenue.
1Q2014 and the aftermath
Health Net, Inc. (NYSE:HNT) reported a net income of $28.8 million, reflecting 36 cents per share. That compared with a net income of 19.8 million or 25 cents per share in 1Q2013. Revenue in the latest quarter was up 10.8 percent to touch $3 billion. However, both the top-line and the bottom-line in the latest quarter fell short of Wall Street expectation. Wall Street was looking for revenue of $3.3 billion and 42 cents per share.
The weaker results have invited increased investor scrutiny of the stock, but confidence has not faded as the stock remained on the gaining side throughout the week.
