Exhibit 99.1

Contacts: David Olson

818.676.6978

david.w.olson@health.net

Michael Engelhard

818.676.7620

michael.engelhard@health.net

HEALTH NET REPORTS FIRST QUARTER 2004 INCOME OF

$.13 PER DILUTED SHARE

$64 Million in Expenses Related to Prior Periods Drive Health Care Costs Higher;

Enrollment Climbs as Administrative Ratio Falls;

TRICARE Margins Rise

LOS ANGELES, May 4, 2004 – Health Net, Inc. (NYSE:HNT) today announced 2004 first quarter income from operations per diluted share of $.13 compared with $.60 in the first quarter of 2003.

Health Net reported net income of $15,012,000 in the first quarter of 2004. This includes a $1,875,000 pretax gain related to the sale of its subacute care subsidiaries.

Net income in the first quarter of 2003 amounted to $72,135,000. The year-over-year decline in net income was primarily the result of health care costs for prior periods that were higher than previously estimated and recognized in the first quarter of 2004.

“Prior period health care costs resulted in us falling short of previous earnings expectations for the first quarter of 2004, and indicate that we underestimated the underlying health care cost trend for the first quarter of 2004 and for the full year. These prior period costs resulted primarily from a large number of hospital claims paid in March 2004 for dates of service that occurred in 2003 and before,” said Jay Gellert, president and chief executive officer of Health Net. “In light of these higher costs, we have already started raising commercial premiums for the balance of the year.

“On a positive note, TRICARE performance continues to be strong with margins expanding in the first quarter of 2004, and we believe we can show significant improvement as we move through the balance of the year,” Gellert added.

Key developments of the first quarter of 2004 included:

• Commercial Health Plan enrollment increased by approximately 82,000 members, or 3 percent, compared with the end of the first quarter of 2003 and by 25,000 members, or 1 percent, compared to the fourth quarter of 2003. Large Group enrollment increased from the end of the fourth quarter of 2003 by approximately 28,000 members, or 2 percent, as the California health plan added several new accounts;

• Health Net’s Administrative Ratio was 10.0 percent, a 60 basis point improvement compared to the first quarter of 2003, and 60 basis points lower than the fourth quarter of 2003, consistent with the company’s expectations;

• A Debt-to-Total Capital ratio of 23.9 percent, below the company’s stated target of 30 percent and up from 23.6 percent at the end of the fourth quarter of 2003. This is the ninth consecutive quarter this ratio has been below the company’s target; and

• The repurchase of an additional 880,100 shares of the company’s common stock. The company has repurchased a total of 17,679,355 shares through March 31, 2004, under its stock repurchase program announced in May 2002, as amended in August 2003, to add an additional $200 million in repurchase authorization.

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“We have approximately $97 million in remaining authorization, and ample cash capacity, so we look forward to resuming our repurchase of shares,” Gellert added.

Revenues

Health Net’s total revenues rose 7.7 percent in the first quarter of 2004 to $2,924,752,000 from $2,715,685,000 in the first quarter of 2003. Health plan services revenue climbed 7.5 percent to $2,404,355,000 in the first quarter of 2004 compared to $2,237,328,000 in the first quarter of 2003.

Health plan services revenue gains were the result of higher commercial and Medicare premium yields across the company’s health plans. The overall premium yield per member per month (PMPM) in the first quarter of 2004 rose 6.2 percent compared to the same period in 2003.

“Premium yields on our commercial business in the major plans were up between 8 and 9 percent, adjusted for geographic differences, product and benefit mix changes and a substantial benefit change at our largest Northeast account,” Gellert explained.

Small Group and Individual enrollment was up 10.0 percent in the first quarter of 2004 compared with the first quarter of 2003. Continued strong relationships with the distribution system and product innovation drove this growth. The company expects this rate of growth to decrease in coming quarters.

In the first quarter of 2004, Health Net’s Government contracts revenue rose 11.1 percent from the first quarter of 2003, reaching $503,948,000. This increase was largely due to the effects on the TRICARE program from the nation’s ongoing heightened military activity. The company noted that an increased number of TRICARE enrollees continued to seek care in the private sector. As more care is provided to TRICARE enrollees in the private sector, contract costs and revenues rise.

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“We are very pleased with the ongoing strong performance of our TRICARE operations as the margin expanded in the first quarter. The implementation work on our new TRICARE contract for the North region is on schedule. We expect to end health care delivery for our smallest existing contract in the second quarter of 2004, and to begin health care delivery in the North region on July 1,” Gellert noted.

Other income decreased by $10,574,000 in the first quarter of 2004 compared to the first quarter of 2003, primarily due to lost revenue from the sale of the company’s Employer Services division.

In the first quarter of 2004, net investment income was $15,201,000, an increase of $2,222,000 from the first quarter of 2003. Net investment income in the first quarter of 2004 increased by $989,000 from the fourth quarter of 2003.

Health Care Costs

Overall PMPM health plan health care costs rose by 11.8 percent in the first quarter of 2004 compared with the first quarter of 2003.

“These health care cost increases include increases in reserve estimates for prior periods,” Gellert said. “Our physician and pharmacy cost increases were somewhat better than expected, but hospital costs, including increases in prior period costs, rose sharply in the first quarter of 2004.”

The Government contracts cost ratio improved by 15 basis points to 95.4 percent compared to the first quarter of 2003. Continued diligent management of utilization and careful oversight of administrative expenses resulted in the ratio’s improvement.

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Administrative Expenses

In the first quarter of 2004, Health Net’s administrative ratio (G&A plus depreciation) was 10.0 percent, a 60 basis point improvement compared to the first quarter of 2003. Total general, administrative and depreciation expenses were $241,468,000 in the first quarter of 2004. The administrative ratio was lower in the first quarter of 2004, as compared to the first quarter of 2003 due to the divestiture of the company’s Employer Services division.

In order to enhance efficiency and reduce administrative costs, the company will commence a reduction in force in the second quarter of 2004 and expects to record a charge for severance and related benefit expenses of approximately $15 million pretax in the second quarter.

Further, the company has intentionally postponed completion of its systems consolidation project, known as Health Net One, to the first half of 2005. “We are intentionally delaying the final claims processing implementation of Health Net One to make absolutely certain that our processes, especially our claims payment processes, are as efficient and effective as they can possibly be,” Gellert explained. “Other facets of the project are moving forward.”

Health Net’s selling expenses increased by $8,441,000 to $63,577,000 in the first quarter of 2004 compared with $55,136,000 in the same period in 2003, consistent with the growth in broker-driven segments such as Small Group. The selling costs ratio was 2.6 percent for the first quarter of 2004, an increase of 18 basis points over the same period last year.

Balance Sheet Highlights

Cash and investments as of March 31, 2004 were $1,726,803,000 compared with $1,943,660,000 as of December 31, 2003.

The TRICARE receivable increased by $30,109,000 from the end of the fourth quarter of 2003 to $121,037,000 at March 31, 2004, consistent with seasonal patterns.

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Debt increased by $7,640,000 from the fourth quarter of 2003 as the company entered into an interest rate swap contract in the first quarter of 2004. Interest expense was $1,400,000 lower in the quarter compared to the fourth quarter of 2003, with the majority of the reduction a result of the swap arrangement.

Reserves for claims and other settlements increased by $44,697,000 to $1,069,247,000 as of the end of the first quarter of 2004 versus the end of the fourth quarter of 2003. Days claims payable declined to 45.2 days at the end of the first quarter of 2004, compared with 49.4 days at the end of the prior quarter.

“We paid $120 million more in claims in the first quarter of this year compared to the fourth quarter of last year. That is the largest factor behind the decline in days claims payable,” Gellert said.

Cash Flow

Cash flows used in operations in the first quarter of 2004 amounted to $154,575,000 compared to cash flow provided by operations of $90,194,000 in the first quarter of 2003. The negative cash flow was due primarily to receiving only two CMS payments for Medicare in the first quarter of 2004, a scheduled Medi-Cal payment for March that was received in April, and the increase in the government contracts receivable balance. Normalized for the timing issues, cash flow would have been slightly positive in the first quarter of this year.

Health Net repurchased 880,100 shares of its common stock in the first quarter of 2004. Since the announcement of its stock repurchase program in May 2002, Health Net has repurchased 17,679,355 shares at an average price of $27.22 through March 31, 2004.

Outlook

The company now believes that earnings within a range of $2.15 to $2.50 per diluted share for the full year of 2004 and $.45 to $.55 per diluted share in the second quarter of 2004 are

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achievable. This new guidance excludes the impact of $0.08 per diluted share of the severance and related benefit charges anticipated to be recorded in the second quarter of 2004. Including the impact of the charges, guidance for the second quarter would be $.37 to $.47 per diluted share and $2.07 to $2.42 per diluted share for the full year.

Certain matters discussed in this release contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, that involve risks and uncertainties. All statements other than statements of historical information provided herein may be deemed to be forward-looking statements. These statements are based on management’s analysis, judgment, belief and expectation only as of the date hereof, and are subject to uncertainty and changes in circumstances. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “may,” “should,” “could,” “estimate,” “intend” and other similar expressions are intended to identify forward-looking statements. Actual results could differ materially due to, among other things, rising health care costs, trends in medical care ratios, operational issues, health care reform and general business conditions. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included within the company’s most recent Annual Report on Form 10-K filed with the SEC and the risks discussed in the company’s other periodic filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements. The company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this release.

As previously announced, Health Net will discuss the company’s first quarter results during a conference call with investors on Tuesday, May 4, 2004, at approximately 12:00 noon EDT. To listen to the call, please dial 719.457.2661, code 499368. A live webcast and replay of the

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conference call also will be available at www.health.net. The conference call webcast is open to all interested parties. A replay of the conference call will be available following the call on Tuesday, May 4, 2004 through Saturday, May 8, 2004, by dialing 719.457.0820, code 499368. Anyone listening to the company’s conference call will be presumed to have read Health Net’s Annual Report on Form 10-K for the year ended December 31, 2003.

Health Net, Inc. is among the nation’s largest publicly traded managed health care companies. Its mission is to help people be healthy, secure and comfortable. The company’s HMO, POS, insured PPO and government contracts subsidiaries provide health benefits to approximately 5.3 million individuals in 14 states through group, individual, Medicare, Medicaid and TRICARE programs. Health Net’s subsidiaries also offer managed health care products related to behavioral health and prescription drugs, and offer managed health care product coordination for multi-region employers and administrative services for medical groups and self-funded benefits programs.

For more information on Health Net, Inc., please visit the company’s Web site at www.health.net.

#    #    #

[Five pages of tables follow]

8

Health Net, Inc.

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share data)

	First Quarter Ended March 31, 2003			Second Quarter Ended June 30, 2003			Third Quarter Ended September 30, 2003			Fourth Quarter Ended December 31, 2003			First Quarter Ended March 31, 2004
REVENUES:
Health plan services premiums	$	2,237,328		$	2,259,867		$	2,300,807		$	2,295,217		$	2,404,355
Government contracts		453,556			465,727			482,276			464,214			503,948
Net investment income		12,979			14,364			17,777			14,212			15,201
Other income		11,822			12,704			15,863			5,989			1,248
Total revenues		2,715,685			2,752,662			2,816,723			2,779,632			2,924,752
EXPENSES:
Health plan services		1,861,190			1,888,966			1,890,408			1,876,274			2,107,087
Government contracts		433,517			443,549			464,295			448,162			480,905
General and administrative		224,052			219,942			236,723			231,814			231,485
Selling		55,136			56,800			62,562			59,021			63,577
Depreciation		15,011			14,453			13,561			12,878			9,983
Amortization		669			669			669			767			606
Interest		9,762			9,769			9,763			9,841			8,438
		2,599,337			2,634,148			2,677,981			2,638,757			2,902,081
Asset impairments		—			—			—			16,409	(b)		—
Gain on sale of businesses		—			—			—			(18,901	)(c)		(1,875	)(d)
Total expenses		2,599,337			2,634,148			2,677,981			2,636,265			2,900,206
Income from continuing operations before income taxes		116,348			118,514			138,742			143,367			24,546
Income tax provision		44,213			43,730			51,930			54,018			9,534
Income from continuing operations		72,135			74,784			86,812			89,349			15,012
Discontinued operations:
Loss on settlement from disposition, net of tax		—			—			(89,050	)(a)		—			—
Net income (loss)	$	72,135		$	74,784		$	(2,238	)	$	89,349		$	15,012
Basic earnings (loss) per share:
Income from continuing operations	$	0.61		$	0.64		$	0.75		$	0.79		$	0.13
Loss on settlement from disposition, net of tax		—			—			(0.77	)		—			—
Net	$	0.61		$	0.64		$	(0.02	)	$	0.79		$	0.13
Diluted earnings (loss) per share:
Income from continuing operations	$	0.60		$	0.63		$	0.74		$	0.77		$	0.13
Loss on settlement from disposition, net of tax		—			—			(0.76	)		—			—
Net	$	0.60		$	0.63		$	(0.02	)	$	0.77		$	0.13
Weighted average shares outstanding:
Basic		118,972			116,446			115,122			113,515			112,600
Diluted		120,577			118,631			117,827			115,943			114,342
Ratios:
Health plan services MCR		83.2	%		83.6	%		82.2	%		81.7	%		87.6	%
Government contracts cost ratio		95.6	%		95.2	%		96.3	%		96.5	%		95.4	%
Administrative ratio ((G&A+Dep) / (HP serv rev + Other income))		10.6	%		10.3	%		10.8	%		10.6	%		10.0	%
Selling costs ratio (Selling costs / HP serv rev)		2.5	%		2.5	%		2.7	%		2.6	%		2.6	%
Days claims payable		51.5			52.6			50.4			49.4			45.2
BS		1,105,241			1,079,748			990,333			1,024,550			1,069,247
BS		1,025,269			1,105,241			1,079,748			990,333			1,024,550
HHC		1,065,255			1,092,495			1,035,041			1,007,442			1,046,899
		1			1			1			1			0
		90			91			92			92			91
		51.5			52.6			50.4			49.4			45.2
0.04031		—			—			—			—			—

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Health Net, Inc.

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands, except per share data)

	First Quarter Ended March 31, 2003			Second Quarter Ended June 30, 2003			Third Quarter Ended September 30, 2003			Fourth Quarter Ended December 31, 2003			First Quarter Ended March 31, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	72,135		$	74,784		$	(2,238	)	$	89,349		$	15,012
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization and depreciation		15,680			15,122			14,230			13,645			10,589
Gain on sale of businesses		—			—			—			(18,901	)		(1,875	)
Asset impairments		—			—			—			16,409			—
Other changes		1,675			1,842			1,351			270			(898	)
Changes in assets and liabilities, net of the effects of dispositions:
Premiums receivable and unearned premiums		(62,506	)		(59,631	)		54,531			87,769			(130,211	)
Other assets		19,094			(28,065	)		16,942			27,944			4,718
Amounts receivable/payable under government contracts		(48,532	)		51,000			(22,475	)		43,603			(52,787	)
Reserves for claims and other settlements		79,972			(24,974	)		(89,415	)		37,154			42,962
Accounts payable and other liabilities		12,676			(134	)		106,722			(117,256	)		(42,085	)
Net cash provided by (used in) operating activities		90,194			29,944			79,648			179,986			(154,575	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of investments		27,520			107,591			127,622			32,243			125,015
Maturities of investments		193,664			113,105			143,532			121,944			112,345
Purchases of investments		(161,339	)		(249,283	)		(306,732	)		(259,912	)		(186,289	)
Purchases of property and equipment		(13,529	)		(15,060	)		(13,891	)		(12,435	)		(5,853	)
Cash received from the sale of businesses		—			—			—			90,316			11,026
Purchases of restricted investments and other		(16,526	)		(14,317	)		4,650			(4,685	)		(49,279	)
Net cash provided by (used in) investing activities		29,790			(57,964	)		(44,819	)		(32,529	)		6,965
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and employee stock purchases		6,931			15,187			7,414			12,798			4,785
Proceeds from other financing arrangements		—			5,680			—			—			—
Repurchases of common stock		(90,319	)		(68,092	)		(103,146	)		(26,761	)		(33,264	)
Repayment of debt and other noncurrent liabilities		(49	)		(5,799	)		(16	)		—			—
Net cash used in financing activities		(83,437	)		(53,024	)		(95,748	)		(13,963	)		(28,479	)
Net increase (decrease) in cash and cash equivalents		36,547			(81,044	)		(60,919	)		133,494			(176,089	)
Cash and cash equivalents, beginning of period		832,793			869,340			788,296			727,377			860,871
Cash and cash equivalents, end of period	$	869,340		$	788,296		$	727,377		$	860,871		$	684,782

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Health Net, Inc.

Condensed Consolidated Balance Sheets

(Amounts in thousands, except per share data)

	March 31, 2003			June 30, 2003			September 30, 2003			December 31, 2003			March 31, 2004
ASSETS
Current Assets
Cash and cash equivalents	$	869,340		$	788,296		$	727,377		$	860,871		$	684,782
Investments - available for sale		907,918			955,401			1,001,840			1,082,789			1,042,021
Premiums receivable, net		130,325			184,239			137,485			144,968			186,178
Amounts receivable under government contracts		142,805			92,982			135,570			90,928			121,037
Reinsurance and other receivables		104,242			114,327			127,562			105,074			94,469
Deferred taxes		61,001			60,081			89,367			43,008			40,827
Other assets		78,103			95,654			80,963			84,842			92,404
Total current assets		2,293,734			2,290,980			2,300,164			2,412,480			2,261,718
Property and equipment, net		197,823			198,502			198,848			190,900			186,700
Goodwill, net		762,066			762,066			762,066			729,506			723,595
Other intangible assets, net		21,734			21,129			20,524			19,918			19,313
Deferred taxes		14,202			15,270			21,289			44,769			41,409
Other noncurrent assets		172,923			168,077			148,067			151,703			214,894
Total Assets	$	3,462,482		$	3,456,024		$	3,450,958		$	3,549,276		$	3,447,629
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Reserves for claims and other settlements	$	1,105,241		$	1,079,748		$	990,333		$	1,024,550			1,069,247
Health care and other costs payable under government contracts		235,758			236,935			257,048			256,009			233,331
Unearned premiums		79,622			73,905			81,682			178,115			95,614
Accounts payable and other liabilities		290,728			281,732			435,176			315,031			272,000
Total current liabilities		1,711,349			1,672,320			1,764,239			1,773,705			1,670,192
Senior notes payable		398,856			398,892			398,928			398,963			406,603
Other noncurrent liabilities		60,181			63,246			65,893			82,383			78,958
Total Liabilities		2,170,386			2,134,458			2,229,060			2,255,051			2,155,753
Stockholders’ Equity
Common stock and additional paid-in capital		740,296			760,430			770,514			789,392			794,602
Restricted common stock		5,070			6,229			5,885			5,885			6,027
Unearned compensation		(4,617	)		(5,278	)		(4,507	)		(3,995	)		(3,624	)
Treasury Class A common stock, at cost		(347,825	)		(413,918	)		(517,064	)		(549,102	)		(577,484	)
Retained earnings		889,881			964,665			962,427			1,051,776			1,066,788
Accumulated other comprehensive income		9,291			9,438			4,643			269			5,567
Total Stockholders’ Equity		1,292,096			1,321,566			1,221,898			1,294,225			1,291,876
Total Liabilities and Stockholders’ Equity	$	3,462,482		$	3,456,024		$	3,450,958		$	3,549,276		$	3,447,629
Debt-to-Total Capital Ratio		23.6	%		23.2	%		24.6	%		23.6	%		23.9	%

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Health Net, Inc.

Notes to Condensed Consolidated Statements of Operations

Notes:

(a) Pretax impairment charges for write-off of investment in MedUnite of $12.4 million and the impairment of IT assets of $35.8 million. Loss on settlement from disposition of discontinued operations of $89.1 million, net of tax of $47.9 million, related to the settlement of a lawsuit arising from our 1998 sale of certain of our workers’ compensation subsidiaries.

(b) Pretax impairment charges for buildings held for sale of $2.6 million and our investment in CSMS IPA connectivity services of $13.8 million.

(c) Pretax $18.9 million gain on the sales of our Employer Services, Dental and Vision subsidiaries.

(d) Pretax $1.9 million gain on the sales of our subacute subsidiaries.

12

HEALTH NET, INC.

Medical Covered Lives at March 31, 2004

(in Thousands)

	Commercial - Large Group				Commercial - Small Group & Individual				Commercial Risk Subtotal
	03/04	12/03		03/03	03/04	12/03		03/03	03/04	12/03		03/03
Arizona	70	67		70	52	52		44	122	119		115
California	1,156	1,112		1,111	561	559		498	1,718	1,671		1,609
Connecticut	202	208		228	44	46		52	246	254		280
New Jersey	133	141		149	147	154		140	279	294		290
New York	157	155		144	114	116		110	271	271		254
Oregon	90	93		80	31	27		17	121	120		97
Pennsylvania	—	4		32	—	—		—	—	4		32
Total	1,808	1,780		1,814	949	954		863	2,758	2,733		2,676
Year over Year		(0	)%			10	%			3	%
Sequential		2	%			(0	)%			1	%

	ASO				Commercial Subtotal
	03/04	12/03		03/03	03/04	12/03		03/03
Arizona	—	—		—	122	119		115
California	3	2		2	1,721	1,673		1,611
Connecticut	52	57		58	298	311		339
New Jersey	18	19		19	297	313		308
New York	7	10		10	277	281		264
Oregon	—	—		—	121	120		97
Pennsylvania	—	—		—	—	4		32
Total	79	88		89	2,837	2,821		2,766
Year over Year		(11	)%			3	%
Sequential		(10	)%			1	%

	Medicare Risk				Medicaid				Health Plan Total
	03/04	12/03		03/03	03/04	12/03		03/03	03/04	12/03		03/03
Arizona	36	36		37	—	—		—	158	156		152
California	98	99		102	691	702		721	2,510	2,475		2,434
Connecticut	27	27		28	98	98		108	423	436		475
New Jersey	—	—		—	44	45		48	341	358		356
New York	5	6		6	—	—		—	283	287		270
Oregon	3	0		0	—	—		—	124	121		97
Pennsylvania	—	—		—	—	—		—	—	4		32
Total	169	169		173	833	846		877	3,840	3,836		3,815
Year over Year		(2	)%			(5	)%			1	%
Sequential		0	%			(1	)%			0	%

	03/04	03/03	Year Over Year
TRICARE*
Active Duty Dependents	671	630	7	%
Retirees	812	816	0	%
Total TRICARE	1,483	1,446	3	%

* Best estimate based on available government data

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