Coventry Health Care reports net earnings of $97.3 million for first-quarter 2010

Coventry Health Care, Inc. (NYSE: CVH) today reported consolidated operating results for the quarter ended March 31, 2010. Operating revenues totaled $2.9 billion for the quarter with net earnings of $97.3 million, or $0.66 earnings per diluted share (EPS). Excluding the favorable impact of Medicare Advantage Private Fee-for-Service (MA-PFFS) results in the quarter, operating revenues totaled $2.9 billion for the quarter with net earnings of $71.9 million, or $0.49 EPS.

“Coventry will continue to focus on our seven core businesses and strive to improve our cost structure which we feel best positions us for future success.”

"While it is still early in the year, I am pleased with our first quarter financial results particularly given the challenging macroeconomic operating environment," said Allen F. Wise, chairman and chief executive officer of Coventry. "Coventry will continue to focus on our seven core businesses and strive to improve our cost structure which we feel best positions us for future success."

Consolidated Highlights

• Commercial risk membership of 1,501,000, up from 1,418,000 at year-end
  • Sequential organic membership growth in small group products
  • Closed Preferred Health Systems, Inc. acquisition on February 1, 2010
• Continued sequential membership growth in Medicare Advantage Coordinated Care Plans (MA-CCP) and Medicaid
• Awarded Medicaid services contract with the State of Nebraska effective August 1, 2010
• Commenced Medicaid operations in the Pennsylvania Southeast Region effective April 1, 2010
• GAAP cash flows from operations were ($186.9) million
  • Excluding the impact of MA-PFFS, cash flows from operations were $110.9 million
• Approximately $450 million of deployable free cash at the parent at quarter-end
• Increasing full year EPS guidance to a range of $2.35 to $2.50 from the prior range of $2.10 to $2.25
  • EPS guidance range of $2.18 to $2.33 excluding the $0.17 first quarter impact from MA-PFFS as well as any impact from MA-PFFS for the remainder of the year

Selected First Quarter 2010 Highlights

• Health Plan Commercial Group Risk Highlights. Reported commercial group risk premium yields rose to $312.05 PMPM (per member per month) in the quarter, an increase of 5.3% from the prior year quarter. The health plan commercial group risk MLR was 80.2% in the quarter, a decrease of 70 basis points from the prior year quarter.
• Medicare Advantage Highlights. As of March 31, 2010, MA-CCP membership was 190,000, an increase of 14,000 members from the prior year quarter. The MA-CCP MLR was 85.7% in the quarter. During the first quarter, the MA-PFFS product line contributed $0.17 EPS largely due to favorable medical cost experience during the claims run-out process. As previously announced, the Company did not renew this product line effective January 1, 2010.
• Medicare Part D Highlights. As of March 31, 2010, Medicare Part D membership was 1,600,000, an increase of 99,000 members from the prior year quarter. The Medicare Part D MLR was 95.3% in the quarter, a decrease of 650 basis points from the prior year quarter.
• Medicaid Highlights. As of March 31, 2010, Medicaid membership was 406,000, an increase of 31,000 members from the prior year quarter. The Medicaid MLR was 84.0% in the quarter, a decrease of 430 basis points from the prior year quarter.

2010 Full Year Guidance

• Risk revenue of $10.00 billion to $10.35 billion
• Management services revenue of $1.130 billion to $1.175 billion
• Consolidated revenue of $11.130 billion to $11.525 billion
• Consolidated MLR of 82.4% to 83.0%
• Cost of sales expense of $235.0 million to $245.0 million
• Selling, general, and administrative expense (SG&A) of $1.94 billion to $1.98 billion
• Depreciation and amortization expense of $137.0 million to $145.0 million
• Other income of $78.0 million to $84.0 million
• Interest expense of $80.0 million to $86.0 million
• Tax rate of 37.0% to 38.0%
• Diluted share count of 146.5 million to 148.0 million
• EPS of $2.35 to $2.50
  • EPS guidance range of $2.18 to $2.33 excluding the $0.17 first quarter impact from MA-PFFS as well as any impact from MA-PFFS for the remainder of the year

SOURCE Coventry Health Care