Coventry Health Care Announces Fourth Quarter and Year-End Results; Continued Growth and Margin Expansion.Business Editors/Medical Writers BETHESDA Bethesda, city, United States Bethesda, uninc. city (1990 pop. 62,936), Montgomery co., W central Md., an affluent residential and commercial suburb of Washington, D.C. The area was settled in the late 17th cent. , Md.--(BUSINESS WIRE)--Feb. 24, 2000 Coventry Health Care Coventry Health Care, Inc. (Coventry) (NYSE: CVH) is a managed health care company in the United States. On February 8th of 2007 Coventry agreed to acquire Concentra's Workers Compensation Managed Care Services Businesses. External links
Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. totaled $572.8 million for the quarter and net earnings were $15.0 million, or $0.24 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. As previously announced, Coventry's fourth quarter results include a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. gain of $6.3 million resulting from the settlement of AHERF-related disputes and a one-time charge of $2.0 million related to the Company's exit from Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). . Excluding non-recurring items, fourth quarter net earnings were $12.4 million, or $0.19 per diluted share, a 125% increase over fourth quarter 1998 earnings of $5.5 million, or $0.09 per diluted share. For the year, 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. had operating revenues of $2.2 billion and net earnings of $43.4 million, or $0.69 per diluted share. Excluding non-recurring items, 1999 net earnings were $40.8 million, or $0.65 per diluted share. "We are pleased with our results for the quarter and the year. Our strategy of executing on the fundamentals continues to translate (1) To change one language into another; for example, assemblers, compilers and interpreters translate source language into machine language. (2) In computer graphics, to move an image on screen without rotating it. into improved financial performance," said Allen Al·len , Edgar 1892-1943. American anatomist who is noted for his studies of hormones and for the discovery (1923) of estrogen. F. Wise, president and chief executive officer of Coventry. "We were able to grow membership through acquisitions and continued enrollment, obtain required price increases, and continue to control SG&A costs. These activities led to increases in both the top and bottom lines, expanded margins, and significant cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses ." Core business results: -- Membership. As of December 31, 1999, Coventry had at total of 1.5 million members, a 7% increase from the prior quarter. The Company's at-risk at-risk adj. Being endangered, as from exposure to disease or from a lack of parental or familial guidance and proper health care: efforts to make the vaccine available to at-risk groups of children. membership of 1.2 million in continuing operations increased 9% over the prior quarter, 7% from acquisitions in North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. and 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. and 2% from new sales in all markets. On a product basis, at-risk membership increased most significantly in the Commercial and 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. product groups, which grew 9% and 17% over the prior quarter, respectively. 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. membership grew 2% due to enrollment growth in the Kansas City Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). market. The Company also experienced strong sales and renewals for January January: see month. , adding about 30,000 members to December results. Commercial membership grew by about 12,000 members despite pricing actions in most markets. Medicare membership was essentially flat, even though the Company exited three counties in 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 and reduced benefits and increased premiums in remaining service areas. Medicaid membership increased by about 17,000 members, primarily as a result of a competitor's exit in the Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). market. -- Rate Increases. Coventry achieved rate increases of over 14% on fourth quarter renewals, representing 67,000 members. Based on continued strength in the pricing environment, the Company now expects rate increases for the first quarter of 2000 to be at the upper end of the previously communicated 8-10% range. -- Medical Loss Ratio (MLR). MLR was 87.1% for the quarter, 1.3% higher than the prior quarter, but 0.10% lower than fourth quarter 1998. The sequential increase in MLR was due to a combination of factors. First, the loss ratio on membership acquired in the fourth quarter averaged 94%, which increased the overall ratio by 0.40%. Second, the Company experienced higher than expected inpatient utilization in December, due to the unusually severe flu season and its related impact on inpatient days and physician visits. Third, December pharmacy expenses were $2.5 million higher than the monthly average for 1999 as a result of the flu season, as well as stockpiling of prescriptions to avoid potential Y2K problems. While some of these higher medical cost levels continued into January, utilization towards the end of January and early February indicates more favorable trends that are in-line with expectations. -- Selling, General & Administrative (SG&A) Expenses. Excluding the Indiana charge, SG&A expenses were 12.2% of operating revenues for the fourth quarter, a 1.7% improvement from the third quarter's SG&A rate of 13.9%. The improvement in SG&A is attributable to continued cost reductions in all areas, the favorable impact of head count reductions, and normal revisions to annual accrual estimates. The Company currently expects that its SG&A rate for the first quarter of 2000 will be approximately 13.0%. "Despite a spike A burst of extra voltage in a power line that lasts only a few nanoseconds. See power surge, power swell, sag and surge suppression. (jargon) spike - To defeat a selection mechanism by introducing a (sometimes temporary) device that forces a specific result. in utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be in December, we continue to perform on plan and meet expectations," said Mr. Wise in closing. "As I look at the fundamentals of our business in total, I am pleased with the progress we made in 1999 and am optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that we can build on our current momentum and continue our profitable growth." Coventry Health Care is a managed health care company operating health plans under the names Coventry Health Care, HealthAmerica, HealthAssurance, HealthCare USA, Group Health Plan, Southern Health, SouthCare and Carelink Health Plans. The Company provides a full range of managed care products and services including 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, , PPO PPO abbr. preferred provider organization PPO Managed care Preferred provider organization, see there Infectious disease Pleuropneumonia-like organism, see there , POS (1) See point of sale and packet over SONET. (2) "Parent over shoulder." See digispeak. POS - point of sale , Medicare Risk and Medicaid to 1.5 million members in a broad cross section of employer and government-funded groups in 15 markets throughout the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians , Mid-Atlantic Adj. 1. mid-Atlantic - of a region of the United States generally including Delaware; Maryland; Virginia; and usually New York; Pennsylvania; New Jersey; "mid-Atlantic states" middle Atlantic and Southeast United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . More information on Coventry is available on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.cvty.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements relate to future events or future financial performance and may be significantly impacted by certain risks and uncertainties described herein and in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 1998 filed with the Securities and Exchange Commission.
COVENTRY HEALTH CARE, INC.
MEMBERSHIP
December 31, September 30, December 31,
1999 1999 1998(1)
------------ ------------- ------------
Membership by Market:
At-risk membership in
continuing operations:
Carolinas 48,205 19,139 21,575
Delaware 56,700 57,048 54,329
Georgia 27,485 26,314 20,273
Iowa 76,205 76,703 79,306
Kansas City 66,753 64,148 51,993
Louisiana 37,837 36,267 39,730
Nebraska 26,927 26,686 34,598
Pennsylvania 376,416 369,815 402,178
Richmond 53,333 52,302 55,259
St. Louis 314,298 311,893 320,179
West Virginia(2) 78,968 21,824 24,999
Wichita 39,177 39,976 35,342
------------ ------------- ------------
Total at-risk membership
by market 1,202,304 1,102,115 1,139,761
Self-funded membership 237,635 237,903 217,523
============ ============= ============
Total membership in
continuing operations 1,439,939 1,340,018 1,357,284
============ ============= ============
Total membership in
non-continuing operations :
Indiana 23,434 23,985 28,030
Total membership: 1,463,373 1,364,003 1,385,314
============ ============= ============
Membership by Product:
At-risk membership in
continuing operations:
Commercial 987,181 909,764 971,651
Medicare 68,632 67,493 65,367
Medicaid 146,491 124,858 102,743
------------ ------------- ------------
Total at-risk membership
by product 1,202,304 1,102,115 1,139,761
Self-funded membership 237,635 237,903 217,523
============ ============= ============
Total membership in
continuing operations 1,439,939 1,340,018 1,357,284
============ ============= ============
Total membership in
non-continuing operations :
Indiana 23,434 23,985 28,030
Total membership: 1,463,373 1,364,003 1,385,314
============ ============= =============
(1) Membership does not include markets where the Company no longer
has operations.
(2) Due to the acquisition of Carelink Health Plans, the Company will
now report West Virginia as a separate market. Prior period
membership for Pennsylvania has been reclassified to reflect this
change.
COVENTRY HEALTH CARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
1999 1998 1999 1998(1)
-------- -------- -------- --------
Operating revenues:
Managed care premiums $552,987 $579,549 $2,082,075 $2,033,372
Management services 19,818 23,543 80,297 77,011
-------- -------- -------- --------
Total operating revenues 572,805 603,092 2,162,372 2,110,383
Operating expenses:
Health benefits 481,848 505,560 1,792,652 1,767,374
Selling, general and
administrative 69,951 85,483 297,922 291,919
Depreciation and
amortization 7,126 7,649 28,205 25,793
-------- -------- -------- --------
Operating expenses
before non-recurring
items 558,925 598,692 2,118,779 2,085,086
Non-recurring
Items:
Indiana shutdown expense 2,020 --- 2,020 ---
AHERF reserves (6,282) --- (6,282) 55,000
Merger costs --- (1,288) --- 6,492
-------- -------- -------- --------
Total operating expenses 554,663 597,404 2,114,517 2,146,578
Operating earnings (loss) 18,142 5,688 47,855 (36,195)
Other income, net of
interest expense 7,567 5,572 28,145 18,685
-------- -------- -------- --------
Earnings (loss) before
income taxes 25,709 11,260 76,000 (17,510)
Provision for (benefit
from) income taxes 10,684 5,020 32,565 (5,769)
-------- -------- -------- --------
Net earnings (loss) $15,025 $6,240 $43,435 ($11,741)
======== ======== ======== ========
Net earnings (loss) per
share, basic $0.25 $0.11 $0.74 ($ 0.22)
======== ======== ======== ========
Net earnings per share,
diluted $0.24 $0.11 $0.69 ---
======== ======== ======== ========
Net earnings per share,
basic
(excluding non-recurring
items) $0.21 $0.09 $0.69 $0.50
======== ======== ======== ========
Net earnings per share,
diluted
(excluding non-recurring
items) $0.19 $0.09 $0.65 $0.49
======== ======== ======== ========
Weighted average common
shares outstanding, basic 59,180 58,833 59,025 52,477
Weighted average common
shares outstanding,
diluted 63,892 59,307 64,159 53,363
(1) Coventry Health Care's results reflect the combined results of
Principal Health Care and Coventry Corporation, which merged on
April 1, 1998. Results prior to that time reflect Coventry
results only.
COVENTRY HEALTH CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
December 31, December 31,
1999 1998
------------ ------------
ASSETS:
Current assets:
Cash and short-term investments $ 307,253 $ 401,735
Florida & Illinois cash and
short-term investments(1) 21,188 50,302
Other current assets 154,964 139,168
------------ ------------
Total current assets 483,405 591,205
Long-term investments 286,162 162,546
Other long-term assets 312,016 337,477
------------ ------------
TOTAL ASSETS $1,081,583 $ 1,091,228
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Medical claim liabilities $ 306,808 $ 276,824
Florida & Illinois medical
claim liabilities(1) 1,287 53,919
Other current liabilities 214,791 235,210
------------ ------------
Total current liabilities 522,886 565,953
Long-term liabilities:
Deferred tax liability 29,464 32,909
Convertible exchangeable
subordinated notes --- 45,538
Other long-term liabilities 5,088 10,290
------------ ------------
Total long-term liabilities 34,552 88,737
Total liabilities 557,438 654,690
Stockholders' equity 524,145 436,538
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,081,583 $ 1,091,228
============ ============
(1) The Company sold its Florida and Illinois health plan operations
in the fourth quarter of 1998.
COVENTRY HEALTH CARE, INC.
CONDENSED CONSOLIDATED CHANGES IN CASH AND INVESTMENTS
(Amounts in thousands)
(Unaudited)
December 31, 1999
Quarter Year
----------- ----------
Cash Flows from Operating Activities:
Net Earnings $ 15,025 $ 43,435
Depreciation and Amortization 7,126 28,205
Changes in Working Capital:
Accounts Receivable, Net (1,369) (9,707)
Medical Claim Liabilities 26,367 29,984
Florida & Illinois Medical Claim
Liabilities(1) (1,005) (52,632)
Accounts Payable and Accrued
Liabilities 9,019 (5,566)
Deferred Revenue 29,540 3,500
Changes in Other Working Capital (5,768) (29,616)
----------- -----------
Total Cash Flows from Operating
Activities 78,935 7,603
----------- -----------
Cash Flows from Investing Activities:
Change in Fixed Assets (3,619) (12,627)
Payments for Acquisitions (10,133) (10,133)
Proceeds from Sale of Renewal
Rights Agreement, Net - 12,850
----------- -----------
Total Cash Flows from Investing
Activities (13,752) (9,910)
----------- -----------
Cash Flows from Financing Activities:
Change in Stock (206) 3,156
Changes in Notes Payable and Other
Long-term Debt(2) - (829)
----------- -----------
Total Cash Flows from Financing
Activities (206) 2,327
----------- -----------
Change in Cash and Investments for
Current Period, Net 64,977 20
Cash and Investments at Beginning
of Period 549,626 614,583
----------- -----------
Cash and Investments at End of Period $ 614,603 $ 614,603
=========== ===========
(1) The Company sold its Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and and 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. health plan operations in the fourth quarter of 1998. (2) On June June: see month. 15, 1999 the Company converted $4.7 million of notes into 500,000 shares of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and on September September: see month. 3, 1999 the Company converted $42.5 million of notes into 4.2 million shares of preferred stock. These were non-cash transactions and therefore not included in the statement of change in cash and investments. |
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