California-based insurer Health Net reported lower-than-expected earnings for the first quarter and cut earnings projections for 2012, causing its stock to tumble, reported the Los Angeles Times and Dow Jones.
Health Net attributed the downward revisions to an additional $67 million in medical claims that were paid in the fourth quarter of 2011 but had not been included due to processing errors on behalf of outside vendors, the L.A. Times reported. Health Net CEO Jay Gellert attributed the issue to a government-mandated switch to a new coding system that delayed incoming claims, according to Dow Jones.
Health Net also cut its 2012 profit forecast from $3.30 to $3.40 a share down to $2.35 to $2.50 a share, according to the Times.
The plan reported a loss of $26.6 million for the quarter, an improvement year-over-year, but still below projected estimates, according to Dow Jones.
As a result of the financials, Wells Fargo downgraded Health Net's stock to "market perform" from "outperform," Dow Jones reported. Gellert told analysts Thursday that he was "deeply disappointed" in the first-quarter results and vowed to consistently execute for the remainder of 2012, Dow Jones reported.
Health Net's stock fell 25 percent on trading Thursday, according to the L.A. Times.
To learn more:
- read the Los Angeles Times article
- read the Dow Jones article (subscription required)