Health Net Swings to Profit in 3rd Quarter

Health Net Inc. posted a quarterly profit on higher premiums, reversing a year-earlier loss, as the health insurer attempts to negotiate better contracts to rein in hospital costs.

Health Net also forecast fourth-quarter profit below analysts’ expectations and warned that membership would drop in 2005.

The Los Angeles-based health maintenance organization said it might incur further costs in the fourth quarter as it continued to recover.

Third-quarter net income was $71.9 million, or 64 cents a share, contrasted with a loss of $2.24 million, or 2 cents, a year earlier, when it had large litigation costs. Excluding one-time items, the company said earnings were 67 cents a share, below analysts’ estimates of 69 cents.