UPDATE 2-Health Net shifts management, posts weak profit

* CEO to focus on strategy, COO on operations

* Q3 EPS of 35 cents vs 88-cent estimate

* Lowers 2008 EPS view to $1.85-$1.89

* Sees 2009 EPS at $2.25-$2.40

* Shares fall 23 percent (Recasts, adds details on results, forecast, analyst comment)

By Lewis Krauskopf

NEW YORK, Nov 4 (Reuters) - Health Net Inc (HNT.N) shuffled its top management on Tuesday as the insurer posted a disappointing third-quarter profit, slashed its full-year outlook, and forecast 2009 profit below targets, sending shares down 23 percent.

Health Net's board directed CEO Jay Gellert to focus on the company's strategy, forgoing any operational duties, while Chief Operating Officer James Woys will expand his responsibilities to all operational matters.

"Health Net's board is very concerned about the company's recent financial performance," Chairman Roger Greaves said in a statement. "We believe that by refocusing management resources, we can address our challenges with greater intensity."

Through Monday, Health Net shares had already fallen 72 percent this year, amid several reductions to its 2008 outlook.

Net income totaled $18.5 million, or 17 cents per share, compared with a net loss of $103.8 million, or 93 cents per share, a year earlier when results were hurt by charges for legal settlements.

The 2008 quarter included charges for severance payments and other expenses stemming from a cost-cutting plan, and for impairments in its investment holdings.

Excluding the charges, earnings were 35 cents per share, far below the 88 cents per share expected on average by analysts, according to Reuters Estimates.

Higher-than-expected hospital costs from claims that carried over from earlier this year hurt results, while healthcare costs in the third quarter also were greater than expected, Health Net said.

Health Net's overall membership stood at 3.7 million at the end of the quarter, down 4,000 from a year ago. The company saw declines of 145,000 members in its commercial plans for employers for which it assumes full insurance risk, a particularly lucrative area for health plans.

It blamed the weak economy and competition for its membership declines.