Coventry Health Care Reports Third Quarter Earnings

Coventry Health Care, Inc. (NYSE: CVH) today reported consolidated operating results for the quarter ended September 30, 2010. Operating revenues totaled $2.8 billion for the quarter with net earnings of $189.9 million, or $1.29 earnings per diluted share (EPS). These results include a favorable impact from the Medicare Advantage Private Fee-for-Service (MA-PFFS) product of $0.05 EPS. Excluding the impact of MA-PFFS results ⁽¹⁾, earnings for the quarter were $183.2 million, or $1.24 EPS. Additionally, the Company has increased guidance for full year 2010 as detailed on page 3.

“I am pleased with the fundamental performance of our businesses which will serve as a foundation to successfully compete in a changing landscape,” said Allen F. Wise, chairman and chief executive officer of Coventry. “In addition, our two recent acquisitions are off to a good start both operationally and financially and more importantly we are collaborating with creative hospital systems to create products and models to better care for our members and their patients.”

Consolidated Highlights

• Commercial risk membership of 1,533,000, an organic increase of 11,000 members sequentially
• Medicaid membership of 462,000, an organic increase of 49,000 members sequentially
  • Commenced operations with the Nebraska Department of Health & Human Services on August 1 ^st
• Closed the previously announced Mercy Health Plans acquisition on October 1 ^st
• GAAP cash flows from operations were $287.3 million, or 151% of net income in the quarter
• Approximately $650 million of deployable free cash at the parent at quarter-end after deducting the Mercy Health Plans acquisition payment on October 1 ^st

(1)

The Company did not renew the MA-PFFS product line effective January 1, 2010 and is in the process of paying claims liabilities related to prior dates of service. The Company believes that disclosing adjusted earnings figures which exclude the 2010 impact of the MA-PFFS results provides a more meaningful measure of its operating results for comparison to future periods and previously announced guidance.

Selected Third Quarter 2010 Highlights

• Health Plan Commercial Group Risk . Reported commercial group risk premium yields rose to $315.82 per member per month (PMPM) in the quarter, an increase of 3.8% from the prior year quarter. Reported commercial group risk premium yields rose to $313.95 PMPM year-to-date, an increase of 4.6% from the prior year-to-date. The health plan commercial group risk MLR was 76.8% in the quarter.
• Medicare Advantage. As of September 30, 2010, Medicare Advantage Coordinated Care Plan (MA-CCP) membership was 193,000, an increase of 8,000 members from the prior year quarter. The MA-CCP MLR was 77.0% in the quarter. During the third quarter, the MA-PFFS product line contributed $0.05 EPS largely due to favorable medical cost experience during the claims run-out process. When combined with the $0.35 EPS contribution reported through the second quarter, the total year-to-date contribution from the MA-PFFS product line was $0.40 EPS. As previously announced, the Company did not renew this product line effective January 1, 2010.
• Medicare Part D. As of September 30, 2010, Medicare Part D membership was 1,618,000, a decrease of 18,000 members from the prior year quarter. The Medicare Part D MLR was 79.0% in the quarter, a decrease of 40 basis points from the prior year quarter. The Medicare Part D MLR was 89.2% year-to-date, a decrease of 270 basis points from the third quarter 2009 year-to-date.
• Medicaid. As of September 30, 2010, Medicaid membership was 462,000, an increase of 71,000 members from the prior year quarter. Coventry commenced operations in Nebraska during the third quarter which contributed 47,000 new members. The Medicaid MLR was 89.0% in the quarter.

2010 Full Year Guidance

• Risk revenue of $10.300 billion to $10.500 billion
• Management services revenue of $1.165 billion to $1.180 billion
• Consolidated revenue of $11.465 billion to $11.680 billion
• Consolidated MLR of 79.6% to 80.1%
• Cost of sales expense of $245.0 million to $255.0 million
• Selling, general, and administrative expense (SG&A) of $1.94 billion to $1.96 billion
• Charge for provider class action of $278.0 million
• Depreciation and amortization expense of $139.0 million to $143.0 million
• Other income of $75.0 million to $79.0 million
• Interest expense of $79.0 million to $83.0 million
• Tax rate of 36.0% to 36.5%
• Diluted share count of 147.0 million to 147.5 million
• EPS of $2.74 to $2.84

GUIDANCE PROGRESSION TABLE
		Guidance Provided as of:
		April 30, 2010			July 30, 2010			September 30, 2010
GAAP EPS range		$2.35 - $2.50			$1.72 - $1.87			$2.74 - $2.84
Remove unfavorable impact of litigation charge (2)		-			$1.18			$1.18
Adjusted EPS range excluding litigation charge		$2.35 - $2.50			$2.90 - $3.05			$3.92 - $4.02
Remove favorable impact of MA-PFFS (1)		($0.17)			($0.35)			($0.40)
Adjusted core EPS range		$2.18 - $2.33			$2.55 - $2.70			$3.52 - $3.62

Mr. Allen F. Wise, chairman and chief executive officer of Coventry, will host a conference call at 8:30 a.m. ET on Friday, November 5, 2010. To listen to the call, dial toll-free at [phone] or, for international callers, [phone]. Callers will be asked to identify themselves and their affiliations. The conference call will also be webcast from Coventry’s Investor Relations site at www.coventryhealthcare.com. Coventry asks participants on both the call and webcast to review and be familiar with its filings with the Securities and Exchange Commission. A replay of the call will be available for one week at [phone] or, for international callers, [phone]. The access code is 5680841.

This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are defined as statements that are not historical facts and include those statements relating to future events or future financial performance. Actual performance may be significantly impacted by certain risks and uncertainties including those described in Coventry’s Annual Report on Form 10-K for the year ended December 31, 2009 and Coventry’s Form 10-Q for the quarter ended June 30, 2010. Coventry undertakes no obligation to update or revise any forward-looking statements.

1 2 3 Next › Last »