WOODLAND HILLS, Calif. (AP) -- Health Net Inc.'s first-quarter loss narrowed compared to last year, but the managed care company slashed its 2012 earnings outlook for its continuing operations due to some unexpected costs, and its performance fell far short of analyst expectations.
The Woodland Hills, Calif., company's shares plummeted 27 percent, or $9.72, to $26.60, in midday trading Thursday.
The insurer said Thursday it lost $26.6 million, or 32 cents per share, in the three months that ended March 31. That compares to a loss of $108.2 million, or $1.16 per share, the year before, when litigation and restructuring costs weighed on its performance.
Adjusted earnings were 10 cents per share.
Total revenue fell 16 percent in the quarter to $2.83 billion, as money from government contracts fell. However, health plan services premiums rose 7 percent to $2.6 billion.
Analysts surveyed by FactSet expected, on average, earnings of 60 cents per share on $2.91 billion in revenue.
Health Net administers Medicaid and Medicare coverage and works with TriCare, which provides health insurance for active and retired military members and their families. It also provides behavioral health, substance abuse and employee assistance programs.
The company said in a statement it took an approximately $67 million hit in the quarter because claims leftover from the previous quarter came in higher than expected due in part to "significant" delays in claims submissions. Health Net attributed that to a new Health Insurance Portability and Accountability Act billing format.
Health Net now forecasts 2012 earnings forecast for its Western region and government contracts segments to range between $2.35 and $2.50 per share. In February, it said it would earn $3.30 to $3.40 per share.
The reduction was disappointing and larger than the impact from the leftover claims, Bernstein analyst Ana Gupte said in a research note. She expects earnings of $3.31 per share.
Health Net absorbed several other charges in the quarter. It recorded an $18.5 million loss from a Medicare prescription drug business it sold to a CVS Caremark Corp. affiliate after the quarter ended. It also recorded $23.1 million in expenses tied to Northeast operations it has sold.
Total health plan enrollment climbed 1.2 percent to about 3 million people.