Health Net to Sell Medicare Stand-Alone Prescription Drug Plan Business 

Health Net has reached an agreement with a subsidiary of CVS Caremark to sell our standalone Medicare Part D Prescription Drug Plan (PDP) business. Details are in our press release.

Our two organizations will immediately begin obtaining all necessary regulatory approvals. The expected completion date of the sale is in the second quarter of 2012.

We expect to continue offering Group PDP products to our employer groups.

Through both the pre- and post-transaction activities, Health Net will continue being laser-focused on the needs of our Medicare PDP customers and providing them with high-quality prescription drug products and services. We are working hard to ensure that our current PDP customers and business partners experience a seamless transition of services, and are confident of this due to our current partnership with CVS Caremark.

This transaction affects only our standalone Medicare PDP product, not our Medicare Advantage or commercial products.

CVS Caremark is one of the largest PBMs in the country and is committed to responding to our members’ needs conveniently and cost-effectively.

Health Net has some substantial opportunities, and we will continue making important business decisions to keep our company strong. We are committed to being innovative and developing new ways of meeting the needs of our customers and stakeholders.

Going forward, Health Net will continue having a full array of quality products for you to sell to health care consumers.

LOS ANGELES, January 09, 2012 – Health Net, Inc. (NYSE:HNT) today announced that its subsidiary, Health Net Life Insurance Company, has entered into a definitive agreement to sell its Medicare stand-alone Prescription Drug Plan (Medicare PDP) business to a subsidiary of CVS Caremark (NYSE:CVS) for approximately $160 million in cash.

Health Net expects to realize approximately $140 million in net cash proceeds from the transaction, after the effect of freed-up capital, taxes and transaction- and transition-related costs.

The transaction, subject to customary closing conditions and applicable regulatory approvals, including approval from the Centers for Medicare & Medicaid Services (CMS), is expected to close in the second quarter of 2012.

Health Net has approximately 400,000 Medicare PDP members in 49 states and the District of Columbia. Health Net’s annualized revenue for the Medicare PDP business is approximately $490 million.

Health Net will continue to provide prescription drug plans as part of its Medicare Advantage plan offerings.

“We believe this proposed transaction is in the best interests of our Medicare PDP members and our stockholders,” said Jay Gellert, president and chief executive officer of Health Net. “Our Medicare PDP members, who have received certain services from CVS Caremark for five years, will now be affiliated with one of the nation’s largest Medicare PDP sponsors.

“Given our ongoing relationship with CVS Caremark, we are confident that the transition of members will proceed smoothly with no disruption in services,” Gellert added.

“In addition, we expect to redeploy the proceeds from this transaction in ways that will benefit Health Net stockholders,” noted Gellert.