Health Net Inc. on Wednesday posted a first-quarter loss and cut its full-year profit forecast.
The Woodland Hills-based company said it did not reserve adequately for medical claims primarily from the fourth quarter of 2007 that it described as unusual. Results also were hurt by a surge in medical costs from the flu.
Health Net said it was seeing higher-than-expected costs in its Medicare plans for the elderly and expected lower income from its Medicaid plan for low-income Californians because of a rate cut. It also faces higher-than-expected taxes.
For the quarter, the company posted a loss of $35.7 million, or 33 cents a share, compared with net income of $88.6 million, or 77 cents, a year earlier. Revenue climbed 12% to $3.84 billion.
Health Net's charges cover legal costs as well as severance expenses tied to plans to reduce operational costs.
Excluding the charges, earnings were 16 cents a share, far below the 63 cent average estimate of analysts, according to Reuters Estimates.
Enrollment stood at nearly 3.9 million at the end of March, up 5.5% from a year earlier and 3% from the end of 2007.
Health Net forecast full-year earnings of $3.45 to $3.55 a share, excluding charges. The company previously predicted $4.14 to $4.17 a share, excluding charges. Analysts had looked for $3.91.
Health Net shares fell 43 cents to $29.29 after the earnings news.