FINANCIAL HIGHLIGHTS

Our diverse business base produced solid results in 2010. For the year, we earned $2.06 per diluted
share on a GAAP basis, while our Western Region and Government Contracts segments combined
achieved $2.60 in earnings per diluted share. Improved commercial margins were the primary driver
of our earnings performance.

Our strong earnings performance supported solid operating cash flow of $271 million for the full year,
more than 1.3 times net income – what we believe is an important measure of earnings quality.

The cash flow performance, combined with additional proceeds from the 2009 sale of our Northeast
operations, gave us the resources to repurchase 9.1 million shares for approximately $237 million in
2010. At this time, we believe that share repurchase remains the best use of excess capital to
improve stockholder value.

We continued to strengthen our balance sheet in 2010, and two important metrics bear this out.
Debt-to-total capital declined by 7 percentage points to 19 percent at the end of 2010, down from
26 percent at the end of 2009. In addition, days in claims payable (DCP) increased by 7.5 days from
December 31, 2009 to December 31, 2010. We believe that this increase in DCP underscores our
appropriately solid reserve position given health care reform, the growth of our tailored network
products and other factors.

Our risk-based capital levels are above 400 percent of authorized control levels, providing
additional affirmation of our strong 2010 financial performance.

HEALTH CARE REFORM

The world of health care changed substantively in 2010 when, in March, President Barack Obama
signed the Affordable Care Act (ACA). Its provisions represent the most sweeping changes to health
care since the establishment of Medicare and Medicaid in 1965.

© 2011 Health Net, Inc. All Rights Reserved

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