COVENTRY CORPORATION REPORTS YEAR-END RESULTS; FOCUS ON COST REDUCTIONS EXPECTED TO IMPROVE 1996 PERFORMANCE.NASHVILLE Nashville, city (1990 pop. 487,969), state capital, coextensive with Davidson co., central Tenn., on the Cumberland River, in a fertile farm area; inc. as a city 1806, merged with Davidson co. 1963. , Tenn.--(BUSINESS WIRE)--Feb. 27, 1996-- YEAR-END year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. HIGHLIGHTS: -- During 1995, Pittsburgh Pittsburgh (pĭts`bərg), city (1990 pop. 369,879), seat of Allegheny co., SW Pa., at the confluence of the Allegheny and the Monongahela rivers, which there form the Ohio River; inc. 1816. market was faced with higher medical and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. and increased competition -- January January: see month. to January enrollment increased by 28.0% -- Membership increased by 170,565, bringing total January membership to 780,775 -- Successful entry into Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. risk market -- Continued enrollment success in Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. program -- Emphasis on controlling costs to improve earnings performance Coventry Coventry, city, England Coventry (kŏv`əntrē, kŭv`–), city (1991 pop. 318,718) and metropolitan district, central England. Coventry is an industrial center noted for its automobile production. Corporation (Nasdaq/NM:CVTY) reported operating results for the fourth quarter and year ended December December: see month. 31, 1995. Lawrence Lawrence. 1 City (1990 pop. 26,763), Marion co., central Ind., a residential suburb of Indianapolis, on the West Fork of the White River. It has light manufacturing. 2 City (1990 pop. 65,608), seat of Douglas co., NE Kans. N. Kugelman, interim president and chief executive officer of Coventry Corporation, said, "Like many managed care companies during this past year, we have seen increased competition and pricing pressures in each of our markets. When I became interim president and chief executive officer in December, we initiated a thorough review of Coventry's operations. As a result of that review, we have implemented aggressive programs specifically focused on (1) controlling medical costs, including reducing the fixed cost structure of our health centers, (2) reducing administrative costs at the individual health plans and corporate office, (3) expanding the introduction of our Medicaid and Medicare products and (4) concentrating development and growth efforts in existing and contiguous Adjacent or touching. Contrast with fragmentation. See contiguous file. markets. "In the past, the Company relied heavily on increases in premium and enrollment growth to create operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ; however, we are now taking aggressive action to improve Coventry's cost competitiveness in this cost-oriented, managed care environment. Our actions include an all-encompassing emphasis on controlling medical costs, including more effective, risk-based contracting with providers, narrowing startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. development activities, improving efficiencies in the operations of our health care centers, and reducing administrative expenses in each of our markets and at the corporate level. Certain of these actions involve fourth quarter charges and writeoffs." Financial Information During the fourth quarter, charges related primarily to the elimination of several of its new market development areas, as well as personnel reductions in the operations and increases in medical reserves, were recognized. As a result of the review of capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. cost for new geographic startups, most of which were incurred within the last 18 months, and reserves for litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and other contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. , the Company charged $6.5 million to earnings in the fourth quarter. Fourth quarter charges related to personnel terminations and related severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when totaled approximately $2 million. Additionally, in the fourth quarter, the Company increased medical reserves, primarily for the Pittsburgh market, attributable to the Company's quarterly process for adjusting for settlements of prior quarters. The total increase to medical reserves was approximately $13 million. As a result of these charges, for the fourth quarter ended December 31, 1995, Coventry incurred a net loss of $13.5 million, or $0.42 per share, compared with net earnings of $6.1 million, or $0.19 per share, for the same period in 1994. Revenues totaled $221.4 million, a 12.6% gain over the prior year's $196.7 million. Management believes that fourth quarter results are not indicative of the Company's continuing performance. For the year ended December 31, 1995, net earnings were $18,000, or $0.00 per share, compared with net earnings of $29.3 million, or $0.93 per share, for the same period in 1994. Revenues were $849.2 million, up 9.7% over prior year revenues of $774.4 million. Further, Coventry anticipates an additional charge in the first quarter of 1996 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc personnel reductions in Pittsburgh and St. Louis medical office operations and administrative functions, resulting in substantial reductions for the remainder of 1996 in operating costs operating costs npl → gastos mpl operacionales of the Company. Enrollment Growth The Company announced that the January 1, 1996, enrollment in the Company's health plans increased by 170,565 members, or 28.0% over the prior year, to 780,775 while, during the same period, HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, and at-risk enrollment grew by 105,349, or 19.6%. Mr. Kugelman said, "We are very pleased to begin 1996 with the momentum of a 28.0% membership increase. This confirms our positioning in each of our markets as number one or two in enrollment and this position in each market will further facilitate our efforts to leverage and reduce medical costs." Medicaid/Medicare Success Coventry continues to benefit from its commitment to and focus on the development of its Medicaid program. During the fourth quarter of 1995, the Company enrolled 49,000 Medicaid members in its St. Louis market, capturing 32% market share as one of seven contractors in that program. Currently, the second region in Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. , mid-Missouri (40,000 eligible
participants), is enrolling Medicaid numbers for an effective date of
April 1, 1996. At this date, the Company is capturing approximately 50%
of the eligible enrollees. The Company will receive a Medicaid license
in the Pittsburgh market (268,000 eligible participants) with the
Partners acquisition, which is expected to close on or about March 15,
1996. Likewise, Richmond (118,000 eligible participants) and Central
Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York (120,000 eligible participants) will introduce Medicaid
products in the second quarter of 1996.
The Company has received approval for its Medicare risk product in St. Louis and Pittsburgh. The St. Louis market began enrolling Medicare risk members in the fourth quarter of 1995 and currently has over 5,000 members. The Pittsburgh market received approval in January 1996 and began enrolling Medicare risk members this month. Future Performance Mr. Kugelman added, "During 1995, our Pittsburgh market was faced with problems throughout the year, including high medical expenses and administrative costs, and increased competition causing pressure on premium yield. As we move into 1996, we believe the initiatives we have begun during the past 60 days will enhance the operating performance of Pittsburgh and all our managed care plans and position Coventry as a strong competitor for the remainder of the decade. "In that regard, we expect fiscal 1996 to show in excess of $1 billion in revenues, driven in large part by increases in enrollment and in the number of markets in which we offer Medicaid and Medicare risk products. In addition, we also expect our uncompromising emphasis on all issues relating to cost control to improve earnings sequentially throughout 1996." In closing, Mr. Kugelman said, "We believe that our focus on cost reductions, the stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders of medical cost trends, the streamlining of management infrastructure, and the growth of our presence in Medicaid and Medicare will provide the foundation for strong growth in 1996 and beyond." Coventry Corporation, headquartered in Nashville, Tennessee “Nashville” redirects here. For other uses, see Nashville (disambiguation). Nashville is the capital and the second most populous city of the U.S. state of Tennessee, after Memphis. , is a managed health care company that provides a wide range of health benefits and services to a broad cross section of employer and government-funded groups in Pennsylvania, Ohio, West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. , Missouri, Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). and Florida. The Company operates from regional headquarters in Pittsburgh and Harrisburg, Pennsylvania This article is about the capital city of the Commonwealth of Pennsylvania. For other places named Harrisburg, see Harrisburg (disambiguation). Harrisburg is the capital of the Commonwealth of Pennsylvania, a state of the United States of America. ; St. Louis, Missouri; Richmond, Virginia Richmond IPA: [ɹɯʒmɐnɖ] is the capital of the Commonwealth of Virginia, in the United States. ; and Jacksonville, Florida “Jacksonville” redirects here. For other uses, see Jacksonville (disambiguation). Jacksonville is the largest city in the state of Florida and the county seat of Duval County. . -0-
COVENTRY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except per share data)
Three months ended Year ended
December 31, December 31,
1995 1994 1995 1994
Operating revenues:
Managed care premiums $ 218,266 $ 194,755 $ 842,071 $ 767,360
Management services 3,160 1,978 7,136 7,036
------- ------- ------- -------
221,426 196,733 849,207 774,396
Operating expenses:
Health benefits 200,024 152,144 713,226 614,143
Selling, general and
administrative 40,812 26,167 120,339 92,437
Depreciation and
amortization 4,000 2,845 14,667 9,437
Merger costs - 2,896 2,250 3,355
244,836 184,052 850,482 719,372
Operating earnings (loss) (23,410) 12,681 (1,275) 55,024
Other income, net of
interest expense 506 685 2,824 2,271
Earnings (loss) before
income taxes and
minority interest (22,904) 13,366 1,549 57,295
Provision (benefit) for
income taxes (9,426) 6,965 1,530 24,426
Minority interest 45 280 1 3,581
Net earnings (loss) $ (13,523) $ 6,121 $ 18 $ 29,288 Net earnings (loss) per common and common equivalent share, primary and fully diluted $ (0.42) $ 0.19 $ 0.00 $ 0.93 Weighted average number of common and common equivalent shares outstanding 32,416 31,804 32,164 31,425
COVENTRY CORPORATION
UNAUDITED FINANCIAL HIGHLIGHTS
December 31,
1995 1994 % Change
Total enrollment by market:
Western Pennsylvania 252,153 235,185 7.2%
Central Pennsylvania 158,760 137,000 15.9%
St. Louis(1) 189,647 134,829 40.7%
Richmond 68,765 47,800 43.9%
Jacksonville 26,162 26,143 0.1%
Total 695,487 580,957 19.7%
Risk enrollment by market:
Western Pennsylvania 221,176 216,724 2.1%
Central Pennsylvania 120,369 100,237 20.1%
St. Louis(1) 177,752 123,050 44.5%
Richmond 57,796 47,800 20.9%
Jacksonville 26,162 26,143 0.1%
Total 603,255 513,954 17.4%
Non-risk enrollment 92,232 67,003 37.7%
Total 695,487 580,957 19.7%
January 1,
1996 1995 % Change
Total enrollment by market:
Western Pennsylvania(2) 281,834 247,976 13.7%
Central Pennsylvania 209,563 146,130 43.4%
St. Louis 196,795 138,414 42.2%
Richmond 68,371 50,075 36.5%
Jacksonville 24,212 27,615 (12.3%)
Total 780,775 610,210 28.0%
Risk enrollment by market: Western Pennsylvania(2) 237,999 223,465 6.5% Central Pennsylvania 139,029 110,690 25.6% St. Louis 185,096 126,481 46.3% Richmond 57,339 50,075 14.5% Jacksonville 24,212 27,615 (12.3%) Total 643,675 538,326 19.6% Non-risk enrollment 137,100 71,884 90.7% Total 780,775 610,210 28.0%
(1) St. Louis enrollment includes Medicaid enrollment.
(2) Western Pennsylvania enrollment includes 15,800 members from the Aetna
Health Plans' acquisition, which will be finalized in the first
quarter of 1996.
COVENTRY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
December 31, December 31,
1995 1994
ASSETS:
Current assets: Cash and short term investments $ 85,843 $ 83,675 Other current assets 57,593 39,636 Total current assets 143,436 123,311 Long-term assets 242,239 220,460 TOTAL ASSETS $ 385,675 $ 343,771 LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Medical costs payable $ 92,160 $ 70,424 Other current liabilities 64,103 69,870 Total current liabilities 156,263 140,294 Long-term liabilities 75,561 69,353 Total liabilities 231,824 209,647 Stockholders' equity 153,851 134,124 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 385,675 $ 343,771 CONTACT: Coventry Corporation, Nashville Richard H. Jones, 615/391-2440 |
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