 July 15, 2015 Filed by Centene Corporation Pursuant to Rule 425 under the Securities Act of 1933, as amended, and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934, as amended Subject Company: Health Net, Inc. Commission File No.: 1-12718 This filing relates to the previously disclosed proposed business combination of Health Net, Inc. and Centene Corporation. The following is an updated investor and analyst presentation posted to Centene Corporation’s website on July 15, 2015. Centene + Health Net |
 2 Safe Harbor Statement Cautionary Statement Regarding Forward-Looking Statements This document contains certain forward-looking statements with respect to the financial condition, results of operations and business
of Centene, Health Net and the combined businesses of Centene and
Health Net and certain plans and objectives of Centene and Health Net with respect thereto, including the expected benefits of the proposed merger. These forward-looking statements can be identified by the fact that they do not relate
only to historical or current facts. Forward-looking
statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “hope”,
“aim”, “continue”, “will”, “may”,
“would”, “could” or “should” or other words of similar meaning or the negative thereof. There are several factors which could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors
include, but are not limited
to, the expected closing date of the transaction; the possibility that the expected synergies and value creation from the proposed merger will not be realized, or will not be realized within the expected time period; the risk that the businesses will not be integrated successfully;
disruption from the merger making it more difficult to maintain
business and operational relationships; the risk that unexpected costs will be incurred; changes in economic conditions, political conditions, changes in federal or state laws or regulations, including the Patient Protection and Affordable Care
Act and the Health Care
Education Affordability Reconciliation Act and any regulations enacted thereunder, provider and state contract changes, the outcome of pending legal or regulatory proceedings, reduction in provider payments by governmental payors, the expiration of Centene’s or Health Net’s Medicare or Medicaid managed care contracts by federal or state governments and tax matters; the possibility that the merger does not close, including, but not limited to, due to the failure to satisfy the closing conditions, including the receipt of approval of both Centene’s stockholders
and Health Net’s stockholders; the risk that financing for
the transaction may not be available on favorable terms; and risks and uncertainties discussed in the reports that Centene and Health Net have filed with the Securities and Exchange Commission (the “SEC”). These forward-looking statements
reflect Centene’s and Health Net’s current views with
respect to future events and are based on numerous assumptions and assessments made by Centene and Health Net in light of their experience and perception of historical trends, current conditions, business strategies, operating environments, future
developments and other factors they believe appropriate. By their
nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. The factors described in the context of such
forward-looking statements in this announcement
could cause Centene’s and Health Net’s plans with respect to the proposed merger, actual results, performance or achievements, industry results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although
it is believed that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and persons reading this announcement are therefore cautioned not to place undue reliance on these forward-looking statements
which speak only as of the date of this announcement.
Neither Centene nor Health Net assumes any obligation to update the information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law. A further list
and description of risks and uncertainties can be found in
Centene’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and in its reports on Form 10-Q and Form 8-K as well as in Health Net’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014
and in its reports on Form 10-Q and Form 8-K.
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 3 Safe Harbor Statement Additional Information and Where to Find It The proposed merger transaction involving Centene and Health Net will be submitted to the respective stockholders of Centene and Health
Net for their consideration. In connection with the
proposed merger, Centene will prepare a registration statement on Form S-4 that will include a joint proxy statement/prospectus for the stockholders of Centene and Health Net to be filed with the SEC, and each will mail the joint proxy
statement/prospectus to their respective stockholders and file
other documents regarding the proposed transaction with the SEC. Centene and Health Net urge investors and stockholders to read the joint proxy statement/prospectus when it becomes available, as well as other documents filed with the SEC, because they will
contain important information. Investors and security holders
will be able to receive the registration statement containing the joint proxy statement/prospectus and other documents free of charge at the SEC’s web site, http://www.sec.gov. These documents can also be obtained (when they are
available) free of charge from Centene upon written request to
the Investor Relations Department, Centene Plaza 7700 Forsyth Blvd. St. Louis, MO 63105, (314) 725-4477 or from Centene’s website, http://www.centene.com/investors/, or from Health Net upon written request to the Investor Relations Department, Health Net,
Inc. 21650 Oxnard Street Woodland Hills, CA 91367, (800)
291-6911, or from Health Net’s website, www.healthnet.com/InvestorRelations.
Participants in Solicitation
Centene, Health Net and their respective directors and
executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the respective stockholders of Centene and Health Net in favor of the merger.
Information regarding the persons who may, under the rules of the
SEC, be deemed participants in the solicitation of the respective stockholders of Centene and Health Net in connection with the proposed merger will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. You can find
information about Centene’s executive officers and directors
in its definitive proxy statement for its 2015 Annual Meeting of Stockholders, which was filed with the SEC on March 16, 2015. You can find information about Health Net’s executive officers and directors in its definitive proxy statement for its 2015
Annual Meeting of Stockholders, which was filed with the SEC on
March 26, 2015. You can obtain free copies of these documents from Centene and Health Net using the contact information above.
No Offer or Solicitation
This communication shall not constitute an offer to sell
or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law. |
 Earnings Guidance Policy
4 Our Company’s policy is, “that the Company undertakes no obligation to update its earnings guidance, other than as part of its quarterly or yearly earnings disclosure, and that silence on guidance by the Company or Company officials should not be interpreted that guidance has or has not changed. In any event, no updated guidance would ever be given that is not previously or simultaneously disclosed in an SEC filing or other broad non-exclusionary means.” “Further, it is Company policy to generally not hold discussions with investors commencing two weeks prior to earnings release.” |
 5 Enhanced Capabilities for Delivering High Quality, Affordable Healthcare 1. Growth in 2017 and beyond 2. Critical mass 3. Increased capabilities 4. Pro Forma 2015E Premium & Service Revenue of $37B 5. Pro Forma 2015E Adj. EBITDA in excess of $1.5B + = |
 6 Growth Drivers • Deeper Penetration in California (Largest Medicaid State, Segment Size: 12 Million)
o Medicaid 1.7 M members o Medicare over 265K members o Exchange nearly 300K members o Duals Demo 27K members o Prison Health 125K eligibles • Medicare Advantage across Centene States o Over 65% of Medicare beneficiaries at or under 400% of FPL o HNT Medicare Advantage in AZ, CA, OR, WA • Additional Business o Tricare 2.8 M eligibles o VA nearly 5M eligibles o $600M in revenue • Centene o Additional Segments o Specialty Company Growth |
 7 Key Transaction Terms $28.25 in cash plus 0.622 shares of Centene Implies $78.57 per Health Net share based on July 1 st close Total transaction value of $6.8B, including assumption of Health Net debt Purchase Price Projected Financial Impact Greater than 10% accretive to GAAP EPS in first full year Greater than 20% accretive to Adjusted EPS in first full year Pre tax synergies of $150M by the end of year 2; half in year 1 (On top of Cognizant Savings)
Path to Closing Expect to close in early 2016 Health Net and Centene shareholder approval Expiration of Hart-Scott-Rodino waiting period and customary State approvals—including “change
of control” approvals from State insurance and health regulators in
Arizona, California and Oregon. Financing commitment of
$2.7B Pro forma debt to capital ratio of ~40%
Permanent financing to consist primarily of senior notes
Financing Ownership Centene shareholders to own ~71% of Company and Health Net shareholders to own
~29% of Company |
 8 Cost Synergy Opportunities Core G&A Efficiencies Specialty Company Integration Medical Costs Technology Platform $150M in Year 2 Savings Are Incremental to Growth Opportunity On Top of Cognizant Savings |
 9 Critical Mass: Leader in High Quality Affordable Plans Health Net Centene Common States Medicaid: 5.7 million Specialty / Government: 3.1 million Commercial / Exchanges: 1.3 million Medicare: 275,000 Duals: 40,000 Total 10.4 million Pro Forma Membership as of 3/31/15 Note: Map excludes Health Net’s TRICARE North Region membership |
 10 Diversifying and Setting the Stage for 2016 and Beyond + Commercial / Exchanges Medicaid Medicare Specialty / Government Duals 2015E Pro Forma Revenue: $37 billion 2015E Revenue: $16 billion 2015E Revenue: $21 billion Note: Estimate of revenue represents Premium and Service revenue and excludes health insurer fee revenue, premium taxes and
investment income 64%
16% 8% 8% 4% 39% 34% 19% 4% 4% 83% 2% 0.7% 11% 4% |
 11 Significant and Real Growth Opportunities Increased Medicare Advantage Presence 4 Star Plans Centene States Enhanced Opportunity for Targeted Exchange Populations Leader in Quality Affordable Plans Value Based Networks Additional Government Health Programs VA TRICARE Leverage Specialty Platform Depth and Breadth of Integrated Specialty Products Leader in Medicaid National Presence Leadership Position Introduces Commercial Group Business Harnesses strong distribution channels Provides opportunities on private exchanges |
 Increased Addressable Segments by
Product 12 Medicaid & CHIP Medicare Correctional Healthcare Health Insurance Marketplace $612B $612B $689B $689B $104B $104B $9B $9B $1.4 trillion $1.4 trillion |
 US
Health Care – Public Financing
13 134 million (42% of Americans) 172 million (52% of Americans) 191 million (56% of Americans) Source: HMA, 2014 Millions of Beneficiaries 2014 2019 2024 72 91 93 50 62 72 7 14 21 5 5 5 CHIP Exchange Medicare Medicaid |
 Current Pipeline
14 Medicaid & CHIP Medicare (Duals) Correctional Healthcare Health Insurance Marketplace $140 billion (Note: this figure does not include additional Medicare Advantage in CNC States)
$140 billion (Note: this figure does not include additional Medicare Advantage in CNC States)
Opportunity for Deeper Penetration in Segment
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 Centene Has Delivered Growth Since 2008 15 States 70 Solutions 8 Government Solutions AZ IN OH TX Low-Income Medicaid CHIP ABD (non duals) ABD (dual-eligible) or Dual Demonstrations Long-Term Services and Supports Foster Care Medicare Special Needs Plan Specialty Health Solutions Pharmacy Benefits Behavioral & Specialty Therapies Life & Health Management Managed Vision FL SC WI HEALTHCARE COVERAGE SOLUTIONS GA Telehealth |
 Combination Creates Increased Product Diversity
Across a Broader Footprint (Pro Forma
2015) 16
23 States
237 Solutions
Government Solutions
AZ AR CA FL GA IL IN KS LA MA MI MN MS MO NH OH OR 1 SC TN TX VT WA WI TANF Medicaid Expansion CHIP ABD (non-duals) ABD (Medicaid only dual-eligibles) Dual Demonstrations Intellectually/Developmentally Disabled Long-Term Services and Supports Foster Care Medicare Advantage Medicare Special Needs Plan Health Insurance Marketplace Correctional Healthcare Specialty Health Solutions Pharmacy Benefits Behavioral & Specialty Therapies Life & Health Management Primary Care Solutions for Complex Populations Managed Vision Telehealth (Nurse Triage and Education Line) 1 Entry underway with acquisition of Agate Resources anticipated to close in Q3 2015.
2 Centene is in process of transitioning dental services from external vendors to our new dental benefit management
subsidiary. 3
Does not include HNT’s Group Commercial and TRICARE lines of
business. Dental Benefits
2 |
 17 Enhanced Capabilities for Delivering High Quality, Affordable Healthcare Scale in Government Programs Leading position in Government programs: Medicaid, Medicare, VA and TRICARE
PF 2015E Premium & Service Revenue of $37B and Adj. EBITDA in excess of
$1.5B Opportunity to leverage specialty programs
Increased Capabilities Provides scale and expertise in Medicare Strong quality position with 4 Star plan Innovative capabilities for value based Exchange & consumer products
Platform for Expanded Growth Significant growth opportunity in Medicare, Exchanges & other Gov’t programs
Leadership in CA, FL and TX
Expanded growth pipeline
Compelling Financial Profile In first year, GAAP EPS accretion of >10% and Adjusted EPS accretion > 20%
Prudent capital structure with debt to capital of ~40%
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 Centene + Health Net |