Health Net and Oxford Health Plans both posted higher-than-expected net income in the first quarter and raised their full-year earnings forecasts, citing slower medical cost growth. Health Net, Woodland Hills, Calif., said first-quarter net income rose 36% to $68.2 million, or 57 cents per share, beating analysts' average estimate of 55 cents per share. Revenue rose 10% to $2.7 billion, helped by a 30% increase in military business due to the Iraq war. Medical costs consumed 83.3% of premiums, compared with 83.8% in the year-ago period. Health Net, with about 5.3 million members, raised its full-year earnings forecast to between $2.56 per share and $2.60 per share, from an earlier range of between $2.48 per share and $2.52 per share.
Oxford, Trumball, Conn., said net income grew 2.1% to $72.9 million, or 86 cents per share, despite a $45 million charge for costs related to the settlement of a 1997 shareholder lawsuit. Excluding the charge and other one-time items, Oxford earned $1.13 per share, exceeding analysts' average estimate of 89 cents per share. Revenue rose 15% to 1.35 billion. The company's medical cost ratio was 78.9%, compared with 79.9% in the year-ago period. Oxford, with about 1.6 million members, raised its 2003 earnings outlook to between $4.17 per share and $4.27 per share, from a prior forecast of between $4 per share and $4.10 per share. -- by Laura B. Benko