Read Larry Connors' blog – Short Term Trading Strategies
Excluding the impact of the FHSC divestiture, the Company is increasing its full year 2009 adjusted EPS guidance to a range of $2.01 to $2.03, an increase of $0.12 from the midpoint of the prior EPS range of $1.85 to $1.95. GAAP EPS for the full year is now expected to be in a range of $1.45 to $1.47 as the Company has recorded a largely non-cash full year charge of $0.56 per diluted share as a result of the FHSC divestiture, as outlined on page two.
"I continue to be pleased with the Company's financial and operational results for 2009 including today's increase to full year EPS guidance," said Allen F. Wise, chairman and chief executive officer of Coventry. "In the face of a challenging environment, we feel confident that focusing on our seven core businesses and driving a low cost structure will best position Coventry for the future."
Third Quarter Consolidated Highlights
-- Revenues from continuing operations increased 17.7% from the prior year quarter
-- Continued growth in Medicare products -- Medicare Coordinated Care Product (CCP) membership growth of 38% from the prior year quarter
-- Medicare Part D membership growth of 81,000 from the prior quarter
-- Health plan commercial group risk medical loss ratio of 82.1%
-- GAAP cash flows from operations were $314.3 million
-- Excellent liquidity position -- Approximately $570 million of deployable free cash at the parent at quarter-end
-- Debt repayment of $98 million during the quarter
-- Share buyback of 1.5 million shares at the end of the quarter
-- Investment portfolio in a net unrealized gain position at quarter-end
1) Adjusted earnings of $0.66 per diluted share include earnings from continuing operations of $0.68 per diluted share and a loss of $0.02 per diluted share from FHSC operations during the quarter. The Company believes that adjusting earnings to exclude the unfavorable impact of the non-recurring FHSC divestiture-related charges provides a more meaningful measure of its operating results in comparison to prior and future periods (and to previously announced guidance). See page two for further details.
Selected Third Quarter Highlights
-- Health Plan Commercial Group Premium Yield & Medical Loss Ratio (MLR). Reported commercial group risk premium yields rose to $304.13 PMPM (per member per month) in the quarter, an increase of 6.1% from the prior year quarter. The health plan commercial group risk MLR was 82.1% in the quarter, a decrease of 20 basis points from the prior year quarter.
-- Medicare Advantage Membership & MLR. As of September 30, 2009, Medicare Advantage membership was 521,000, an increase of 141,000 members year-to-date. Medicare Advantage CCP membership was 185,000, an increase of 48,000 members year-to-date. The Medicare Advantage MLR was 89.4% in the quarter, a sequential decrease of 100 bps driven by favorable results in Medicare Advantage Private Fee-for-Service (PFFS). The Medicare Advantage PFFS MLR improvement in the third quarter compared to the first half of 2009 contributed approximately $0.07 per diluted share in the quarter. As previously announced, the Company will exit the Medicare Advantage PFFS product effective January 1, 2010.
-- Medicare Part D Membership & MLR. As of September 30, 2009, Medicare Part D membership was 1,636,000, an increase of 81,000 members from the prior quarter and 705,000 members year-to-date. The Medicare Part D MLR was 79.4% in the quarter and 91.9% year-to-date, compared to the third quarter 2008 year-to-date MLR of 91.5%.
-- Medicaid Membership. As of September 30, 2009, Medicaid membership was 391,000, an increase of 6,000 members from the prior quarter. The Medicaid MLR was 86.1% in the quarter.
-- First Health Services Corporation Divestiture. The previously announced divestiture of FHSC closed on July 31, 2009. In accordance with GAAP, the historical FHSC results of operations are classified as discontinued operations and are excluded from consolidated continuing operations for each period presented. In addition to the results of FHSC operations, the discontinued operations for the third quarter and year-to-date periods of 2009 include charges to reflect the impact of the FHSC divestiture. Consistent with previous guidance, in the third quarter of 2009 the Company recorded a primarily non-cash net charge of $0.18 per diluted share to complete the divestiture. When combined with the loss of $0.02 per diluted share generated from FHSC operating results in the quarter, the total EPS from discontinued operations was a loss of $0.20 for the third quarter. Including the previously disclosed $0.38 per diluted share charge recorded in the second quarter, the total year-to-date charge on the FHSC divestiture was $0.56 per diluted share, which is consistent with the lower end of the Company's prior estimate of $0.55 to $0.60 per diluted share. When combined with the $0.06 of EPS generated from FHSC year-to-date operating results, the total EPS from discontinued operations was a loss of $0.50 for the nine months ended September 30, 2009.
Mr. Allen F. Wise, chairman and chief executive officer of Coventry, will host a conference call at 8:30 a.m. ET on Friday, October 30, 2009. To listen to the call, dial toll-free at (888) 352-6803 or, for international callers, (719) 325-2474. 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 (888) 203-1112 or, for international callers, (719) 457-0820. The access code is 3147061.
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, 2008 and Coventry's Form 10-Q for the quarter ended June 30, 2009. Coventry undertakes no obligation to update or revise any forward-looking statements.
Coventry Health Care (www.coventryhealthcare.com) is a diversified national managed healthcare company based in Bethesda, Maryland, operating health plans, insurance companies, network rental and workers' compensation services companies. Coventry provides a full range of risk and fee-based managed care products and services to a broad cross section of individuals, employer and government-funded groups, government agencies, and other insurance carriers and administrators.
COVENTRY HEALTH CARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(unaudited)
Quarters Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Operating revenues:
Managed care premiums $ 3,153,142 $ 2,627,345 $ 9,595,872 $ 7,891,701
Management services 290,968 298,376 879,507 865,785
Total operating revenues 3,444,110 2,925,721 10,475,379 8,757,486
Operating expenses:
Medical costs 2,661,131 2,200,405 8,261,102 6,630,950
Cost of sales 62,384 54,289 178,280 139,038
Selling, general, administrative 527,173 478,973 1,607,142 1,411,163
Depreciation and amortization 40,660 35,617 110,309 109,401
Total operating expenses 3,291,348 2,769,284 10,156,833 8,290,552
Operating earnings 152,762 156,437 318,546 466,934
Operating earnings percentage of total revenues 4.4% 5.3% 3.0% 5.3%
Interest expense 20,697 22,523 64,603 70,545
Other income, net 18,012 (9,904) 69,773 52,292
Earnings before income taxes 150,077 124,010 323,716 448,681
Provision for income taxes 49,638 45,032 117,462 168,027
Income from continuing operations 100,439 78,978 206,254 280,654
(Loss) income from discontinued operations, net of tax (29,810) 6,496 (73,033) 13,000
Net earnings $ 70,629 $ 85,474 $ 133,221 $ 293,654
Net earnings per share:
Basic earnings per share from continuing operations $ 0.68 $ 0.54 $ 1.40 $ 1.88
Basic (loss) earnings per share from discontinued operations (0.20) 0.04 (0.50) 0.09
Total basic earnings per share $ 0.48 $ 0.58 $ 0.90 $ 1.96
Diluted earnings per share from continuing operations $ 0.68 $ 0.53 $ 1.40 $ 1.86
Diluted (loss) earnings per share from discontinued operations (0.20) 0.04 (0.50) 0.09
Total diluted earnings per share $ 0.48 $ 0.58 $ 0.90 $ 1.94
Weighted average shares outstanding, basic 147,062 146,652 146,956 149,591
Weighted average shares outstanding, diluted 147,784 147,802 147,569 151,229
COVENTRY HEALTH CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
September 30, June 30, December 31,
2009 2009 2008
(unaudited) (unaudited)
Assets:
Current assets:
Cash and cash equivalents $ 1,691,847 $ 1,712,152 $ 1,123,114
Short-term investments 355,417 112,677 338,129
Accounts receivable, net 259,775 280,292 293,636
Other receivables, net 501,348 607,359 524,803
Other current assets 156,837 186,651 130,808
Total current assets 2,965,224 2,899,131 2,410,490
Long-term investments 1,888,670 1,762,120 1,709,878
Property and equipment, net 270,153 292,690 308,016
Goodwill 2,535,718 2,622,479 2,695,025
Other intangible assets, net 491,164 513,209 546,168
Other long-term assets 33,949 34,430 57,821
Total assets $ 8,184,878 $ 8,124,059 $ 7,727,398
Liabilities and Stockholders' Equity:
Current liabilities:
Medical liabilities $ 1,702,855 $ 1,752,969 $ 1,446,391
Accounts payable and accrued liabilities 630,190 499,602 474,561
Deferred revenue 107,172 122,294 104,823
Total current liabilities 2,440,217 2,374,865 2,025,775
Long-term debt 1,708,935 1,806,842 1,902,472
Other long-term liabilities 433,077 416,286 368,482
Total liabilities 4,582,229 4,597,993 4,296,729
Stockholders' equity 3,602,649 3,526,066 3,430,669
Total liabilities and stockholders' equity $ 8,184,878 $ 8,124,059 $ 7,727,398
COVENTRY HEALTH CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
Quarter Ended Nine Months Ended
September 30, 2009 September 30, 2009
Cash flows from operating activities:
Net earnings $ 70,629 $ 133,221
Adjustments to earnings:
Depreciation and amortization 40,981 112,570
Amortization of stock compensation 13,552 37,332
Loss on disposal of FHSC 26,738 81,557
Gain on repurchase of debt (41) (8,371)
Changes in assets and liabilities:
Accounts receivable, net (1,868) 11,476
Medical liabilities (50,036) 256,542
Accounts payable and other accrued liabilities 93,173 131,467
Deferred revenue (11,640) 5,831
Other operating activities 132,851 27,218
Net cash flows from operating activities 314,339 788,843
Cash flows from investing activities:
Capital expenditures, net (11,623) (34,795)
Payments for investments, net of sales and maturities (331,469) (115,791)
Proceeds from acquisition settlements 112 10,197
Proceeds from FHSC disposal, net 115,437 115,437
Net cash flows from investing activities (227,543) (24,952)
Cash flows from financing activities:
Proceeds from issuance of stock 615 1,094
Payments for repurchase of stock (10,018) (11,745)
Repayment of debt (97,910) (184,930)
Excess tax benefit from stock compensation 212 423
Net cash flows from financing activities (107,101) (195,158)
Net change in cash and cash equivalents for current period (20,305) 568,733
Cash and cash equivalents at beginning of period 1,712,152 1,123,114
Cash and cash equivalents at end of period $ 1,691,847 $ 1,691,847
Cash and Investments:
Cash and cash equivalents $ 1,691,847 $ 1,691,847
Short-term investments 355,417 355,417
Long-term investments 1,888,670 1,888,670
Total cash and investments $ 3,935,934 $ 3,935,934
COVENTRY HEALTH CARE, INC.
SELECTED OPERATING STATISTICS
(Unaudited)
Q3 2009 Q2 2009 Q1 2009 Total Q4 2008 Q3 2008
2008
Membership by Product (000s)
Health Plan Commercial Risk 1,431 1,477 1,501 1,575 1,587
Health Plan Commercial ASO 689 697 702 714 720
Medicare Advantage CCP 185 182 176 137 134
Medicaid Risk 391 385 375 371 386
Health Plan Total 2,696 2,741 2,754 2,797 2,827
Medicare Advantage PFFS 336 329 318 243 243
Other National Risk 5 15 21 24 27
Other National ASO 567 571 575 633 641
Total Medical Membership 3,604 3,656 3,668 3,697 3,738
Medicare Part D 1,636 1,555 1,501 931 910
Total Membership 5,240 5,211 5,169 4,628 4,648
Revenues by Product Type (000s)
Commercial Risk $ 1,279,571 $ 1,310,645 $ 1,327,221 $ 5,421,984 $ 1,364,232 $ 1,362,956
Commercial Management Services 81,661 83,675 83,810 352,369 97,108 86,672
Medicare Advantage 1,268,592 1,224,011 1,161,590 3,177,244 847,231 825,504
Medicaid Risk 281,146 263,039 260,838 1,087,189 259,926 260,060
Total Health Plan and Medical Services Businesses 2,910,970 2,881,370 2,833,459 10,038,786 2,568,497 2,535,192
Medicare Part D 316,654 397,090 484,123 847,702 191,899 170,483
Other Premiums 23,568 23,746 23,957 64,783 22,916 18,937
Other Management Services(2) 211,769 215,468 210,893 826,321 210,406 213,799
Total Specialized Managed Care Businesses(2) 551,991 636,304 718,973 1,738,806 425,221 403,219
Total Premiums 3,169,531 3,218,531 3,257,729 10,598,902 2,686,204 2,637,940
Total Management Services(2) 293,430 299,143 294,703 1,178,690 307,514 300,471
Other/Eliminations (18,851) (19,300) (19,537) (43,365) (16,976) (12,690)
Total Revenue(2) $ 3,444,110 $ 3,498,374 $ 3,532,895 $ 11,734,227 $ 2,976,742 $ 2,925,721
Consolidated Coventry
Operating Income % of Revenues(2) 4.4% 2.9% 1.8% 5.0% 4.0% 5.3%
SGA % of Revenues(2) 15.3% 15.3% 15.4% 16.5% 17.8% 16.4%
Total Medical Liabilities (000s) $ 1,428,766 $ 1,413,243 $ 1,416,735 $ 1,243,620 $ 1,209,560
Days in Claims Payable (DCP) 54.78 54.07 55.11 54.75 54.94
Total Debt (millions) $ 1,708.9 $ 1,806.8 $ 1,902.6 $ 1,902.5 $ 1,472.3
Total Capital (millions) $ 5,311.6 $ 5,332.9 $ 5,402.8 $ 5,333.1 $ 4,779.3
Debt to Capital 32.2% 33.9% 35.2% 35.7% 30.8%
2) Operating statistics excluding discontinued operations.
COVENTRY HEALTH CARE, INC.
SELECTED REVENUE AND MEDICAL COST STATISTICS
(Unaudited)
Q3 2009 Q2 2009 Q1 2009 Total Q4 2008 Q3 2008
2008
Revenue PMPM
Health Plan Commercial Group Risk $304.13 $299.79 $296.36 $286.30 $289.71 $286.73
Medicare Advantage(3) $853.90 $857.05 $860.46 $862.60 $862.79 $856.90
Medicare Part D(4) $84.63 $85.27 $ 84.35 $ 88.34 $ 89.16 $ 85.64
Medicaid Risk $239.22 $230.27 $231.93 $208.50 $228.33 $226.08
MLR %
Consolidated Total 84.4% 86.4% 87.4% 84.0% 83.8% 83.8%
Health Plan Commercial Group Risk 82.1% 81.7% 80.9% 81.7% 83.2% 82.3%
Medicare Advantage 89.4% 90.4% 90.5% 89.0% 90.9% 88.4%
Medicare Part D 79.4% 89.9% 101.8% 84.1% 58.8% 78.5%
Medicaid Risk 86.1% 90.2% 88.3% 85.3% 85.9% 84.2%
3) Revenue PMPM excludes the impact of revenue ceded to external
parties.
4) Revenue PMPM excludes the impact of CMS risk-share premium
adjustments and revenue ceded to external parties.
SOURCE: Coventry Health Care, Inc.
Coventry Health Care Shawn M. Guertin Chief Financial Officer 301-581-5701 or Drew Asher SVP, Corporate Finance 301-581-5717
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.