8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 8, 2015 (July 1, 2015)

Health Net, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-12718	95-4288333
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

21650 Oxnard Street, Woodland Hills, California	91367
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 676-6000

(Former Name or Former Address, if Changed Since Last Report): N/A

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry Into a Material Definitive Agreement.

Amendment No. 1 to Amended and Restated Master Services Agreement

On July 1, 2015, Health Net, Inc., a Delaware corporation (“Health Net” or the “Company”), entered into an amendment (the “Cognizant Amendment”) to its Amended and Restated Master Services Agreement, dated as of November 21, 2014 (the “Cognizant Agreement”) with Cognizant Healthcare Services, LLC, a Delaware limited liability company and indirect wholly owned subsidiary of Cognizant Technology Solutions Corporation, a Delaware corporation (“Cognizant”). The Cognizant Amendment suspends efforts towards, and defers the occurrence of, the BPaaS Services Commencement Date (as defined in the Cognizant Agreement) by, among other things, extending the Pre-BPaaS Services Commencement Date Termination (as defined in the Cognizant Agreement) period, or the period of time during which the Company may terminate the Cognizant Agreement for a break-up fee of $10 million, until after the closing of the Company’s previously-announced merger with Centene Corporation (“Centene”) pursuant to the terms of an Agreement and Plan of Merger dated as of July 2, 2015. Until the closing of the merger, Cognizant will continue to provide certain application and business processing services described in the Cognizant Agreement.

The Company and Cognizant have agreed to exercise good faith efforts to negotiate and enter into a new definitive agreement relating to certain services provided pursuant to the Cognizant Agreement, which new definitive agreement shall survive the closing of the merger.

The Cognizant Amendment is attached as Exhibit 10.1 and is incorporated by reference. The foregoing summary of the Cognizant Amendment does not purport to be complete and is qualified in its entirety by the terms and conditions of the Cognizant Amendment.

Forward Looking Statements

This Current Report on Form 8-K 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.

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.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibit is filed as part of this report.

Exhibit No.	Description
10.1	Amendment No. 1 to Amended and Restated Master Services Agreement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 8, 2015

HEALTH NET, INC.
By:	/s/ James E. Woys
	Name: James E. Woys
	Title:   Executive Vice President, Chief Financial and Operating Officer and Interim Treasurer

EXHIBIT INDEX

Exhibit No.	Description
10.1	Amendment No. 1 to Amended and Restated Master Services Agreement

EX-10.1

Exhibit 10.1

AMENDMENT NO. 1 TO

AMENDED AND RESTATED MASTER SERVICES AGREEMENT

This Amendment 1 to the Amended and Restated Master Services Agreement (“Amendment 1”) is made by and among Cognizant Healthcare Services, LLC (“Supplier”), Cognizant Technology Solutions U.S. Corporation (“Supplier Affiliate”), and Health Net, Inc. (“Health Net”) effective as of July 1, 2015 (“Amendment 1 Effective Date”) with reference to the following:

A. On September 30, 2008, Supplier Affiliate and Health Net entered into a Master Services Agreement for applications services (as previously amended, the “AO Agreement”);

B. On January 23, 2009, Supplier Affiliate and Health Net entered a Master Services Agreement for business processing services (as previously amended, the “BPO Agreement”);

C. On November 21, 2015, Supplier and Health Net entered into an Amended and Restated Master Services Agreement for business process as a service and information technology outsourcing services (the “BPaaS Agreement”);

D. Concurrent with entering into the BPaaS Agreement, Supplier and Health Net entered into an Asset Purchase Agreement that provides for the sale to Supplier of various intellectual property assets owned by Health Net (the “APA”);

E. Health Net has not received the Regulatory approvals necessary to proceed with the transactions contemplated by the BPaaS Agreement and, as a result, the BPaaS Services Commencement Date has not been triggered;

F. Under the BPaaS Agreement (Section 16.1(n)), Health Net has the ability and right to terminate the entire BPaaS Agreement in advance of the BPaaS Services Commencement Date by paying to Supplier the Breakup Fee of $10,000,000.

G. Unrelated to any of the foregoing, Health Net has received a merger proposal from another entity (“Buyer”) and intends to sign an Agreement and Plan of Merger (“Merger Agreement”) with the Buyer; and

H. Supplier and Health Net now wish to suspend efforts towards, and defer the occurrence of, the BPaaS Services Commencement Date, as well as to modify the AO and BPO Agreements to provide for the continuation of applications and business processing services provided under the AO and BPO Agreements and to provide time for Supplier, Buyer and Health Net to work together to identify other potential business opportunities while Health Net and Buyer work to satisfy the necessary conditions to close the Merger Agreement.

NOW, THEREFORE, in consideration of the mutual promises, covenants, agreements and other undertakings set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1. Definitions: Defined terms used in this Amendment 1, including the recitals above, shall have the same meaning as in the BPaaS Agreement unless otherwise specifically defined herein.

2. Section 16.1 (n) is deleted in its entirety and replaced with the following:

“(n) Pre-BPaaS Services Commencement Date Termination. Health Net shall have the right to terminate this Agreement by sending written notice to Supplier and paying to Supplier the Breakup Fee up until and including the later of (i) the date that

is ten (10) Business Days after the close of the Merger Agreement; and (ii) the date that is ten (10) Business Days after Health Net’s receipt of the last required approval from the Regulators to proceed with the transactions contemplated by this Agreement.”

3. If the BPaaS Services Commencement Date occurs any time after July 31, 2015, such occurrence will constitute a material Change to the Services, which will trigger the Change Control Process for both Phase 2 and Phase 3.

4. Effective immediately, but subject to Supplier’s satisfaction of the condition precedent set forth in Section 5 below, Health Net grants to Supplier a world-wide, fully paid-up, royalty-free, non-exclusive license to Use the Acquired Assets (as defined in the APA), but specifically excluding any right to Use the DOFR Capabilities and/or the Capitation Capabilities (each as defined below). Unless properly revoked by Health Net, such license shall continue (i) in perpetuity if Health Net terminates the BPaaS Agreement prior to the occurrence of the BPaaS Services Commencement Date, or (ii) until the occurrence of the BPaaS Services Commencement Date, in which case the license shall terminate automatically upon the occurrence of the BPaaS Services Commencement Date and Supplier will proceed to acquire the Acquired Assets from Health Net pursuant to the APA. If the Acquired Assets are acquired by Supplier pursuant to the APA, the terms and conditions of the APA (and wherever applicable, the BPaaS Agreement) shall comprise the entirety of the parties’ rights and obligations concerning the Acquired Assets. The specific terms and conditions of the license granted to Supplier to Use the Acquired Assets (excluding the DOFR Capabilities and the Capitation Capabilities) shall be negotiated in good faith by Supplier, Health Net and Buyer and memorialized in a definitive license agreement between Health Net and Supplier within thirty (30) Business Days after the execution of the Merger Agreement. Such definitive license agreement will contain terms and conditions similar to those customarily included in perpetual license agreements for commercially available software, but its terms and conditions shall not conflict with this Section 4. When executed by Health Net and Supplier, the definitive license agreement will supersede this Section 4. The license granted herein and in the definitive license agreement shall be revocable by Health Net if, and only if, Supplier commits a material breach of the license terms and conditions and does not cure the breach within fifteen (15) days after receiving written notice of the breach from Health Net. As used in this Amendment 1, “DOFR Capabilities” means the functions and features contained within or enabled by the Pega DOFR - Claims DOFR Engine asset listed in row 13 of Schedule 1.1(b) - Configurations of the APA, and “Capitation Capabilities” means the functions and features contained within or enabled by those portions of the ABS Software and Configurations that perform capitation payment calculations and processing, including the Health Net-specific rules for processing capitation claims and accumulating capitation information by Participating Provider Group.

5. Supplier shall not have the right to exercise the licensed Use rights granted under Section 4 until Supplier has (a) created a Commercial ABS Version in the manner described in Section 4.7 of the APA, (b) in the course of creating such Commercial ABS Version, removed or permanently disabled all DOFR Capabilities and Capitation Capabilities that would otherwise be present in the Commercial ABS Version, and (c) received Seller’s (Health Net’s) approval of the Commercial ABS Version as contemplated by Section 4.7 of the APA.

6. Supplier and Health Net shall exercise good faith efforts to explore and, if both parties agree to proceed, to negotiate and enter into a new stand-alone agreement within sixty (60) days after the Amendment 1 Effective Date for the IT Services described in Statement of Work #4 to the BPaaS Agreement (including the exact scope, pricing, service levels, etc.), except that such IT Services shall be modified to approximate the scope of services described in the IBM Agreement,

excluding the network services provided by AT&T pursuant to the IBM Agreement. The purpose of such new contract is to provide for Supplier to perform IT services for Health Net that will replace those currently provided under the IBM Agreement, even if the BPaaS Agreement is terminated. Notwithstanding the foregoing, neither party is bound, nor intends to be bound, to a contract for IT Services unless and until the parties execute such new separate agreement as contemplated by this Section 6. Supplier acknowledges that Health Net cannot enter into any such agreement unless it has first consulted with, and obtained the consent of, Buyer.

7. Except as amended and modified by this Amendment 1, all of the terms and conditions of all of the agreements referenced above shall remain in full force and effect. This Amendment 1 may not be modified except in writing signed by both parties hereto. This Amendment 1, the BPaaS Agreement and exhibits and schedules thereto constitute the entire agreement of the parties with respect to the subject matter contained therein and supersede any and all prior and contemporaneous agreements between the parties, whether oral or written, concerning the subject matter contained therein.

IN WITNESS WHEREOF, the parties hereto by their duly authorized representatives have executed this Amendment 1, effective as of the Amendment 1 Effective Date.

HEALTH NET, INC.		COGNIZANT HEALTHCARE SERVICES, LLC
By	/s/ James E. Woys	By	/s/ Frank Marty
Name	James E. Woys	Name	Frank Marty
Title	CFO & COO	Title	Authorized Person
Date	July 1, 2015	Date	July 1, 2015
		COGNIZANT TECHNOLOGY SOLUTIONS U.S. CORPORATION
		By	/s/ Frank Marty
		Name	Frank Marty
		Title	Chief Counsel Strategic Deals
		Date	July 1, 2015