UPDATE 2-Health Net cuts outlook again, shares fall

(Adds details, analyst comment, updates shares)

NEW YORK, Aug 5 (Reuters) - Health insurer Health Net Inc (HNT.N) cut its full-year forecast sharply on Tuesday for the second time since April, blaming higher patient costs and enrollment losses due to the weakening U.S. economy, and its shares fell nearly 10 percent.

The company, which also posted second-quarter earnings that met expectations, has reduced its 2008 earnings-per-share forecast by about 30 percent in three months.

Health Net expects a steeper decline in its commercial plans for employers than it previously projected. It also expects higher costs for both its commercial plans and Medicare plans for seniors.

The forecast from California-based Health Net, the seventh-largest U.S. health insurer by market value, marked a sour end to a mostly positive reporting season for the sector that has seen its shares rebound somewhat after a brutal 2008 first half.

Wachovia analyst Matt Perry said Health Net was not large enough to serve as an indicator that other insurers would further cut their forecasts.

"If anything, we think Health Net is lagging in addressing and identifying problems that other companies addressed more effectively" in the first and second quarters, said Perry in a research note.

Indeed, shares of rival health insurers, including Cigna Corp (CI.N) and Humana Inc (HUM.N), traded higher on Tuesday.

For the quarter, net income fell to $76.7 million, or 71 cents per share, compared with $92 million, or 80 cents per share, a year earlier.

Excluding items, earnings of 74 cents per share were in line with the average estimate of analysts, according to Reuters Estimates.

Membership in its commercial plans for employers for which it assumes full insurance risk fell 2.6 percent to 2.1 million members.

Revenue rose 10.9 percent to $3.84 billion.

The company said it expects 2008 earnings of between $2.85 and $2.95 per share, excluding charges. It previously had forecast $3.45 to $3.55 on that basis -- a projection which itself had been revised from a range of $4.14 to $4.17.

Analysts had looked for $3.17.

Health Net shares fell $2.75, or 9.7 percent, to $25.55 in morning trading on the New York Stock Exchange.

Shares of Health Net are down about 48 percent this year, steeper than the 32 percent decline for the Morgan Stanley Healthcare Payor index .HMO. (Reporting by Lewis Krauskopf; Editing by Brian Moss and Dave Zimmerman)