Coventry Health Care Announces Second Quarter Results; 17% Year over Year Revenue Growth; 45% Year over Year Net Earnings Growth.Business Editors/Health & 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)--Aug. 1, 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
Operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. totaled $621.1 million for the quarter, a 17% increase over second quarter 1999 revenues of $531.8 million. Net earnings were $13.3 million, or $0.21 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, a 45% increase over the prior year's second quarter earnings of $9.2 million, or $0.15 per diluted share. Excluding the Principal fee income that ended December December: see month. 31, 1999, diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the second quarter 2000 were a 200% increase over second quarter 1999. "We are proud to report that the second quarter was our eighth consecutive quarter of earnings growth. Our efforts in pricing, medical management, and controlling administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. are producing results," 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 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. . "Our sales momentum is improving as we enter the third quarter and our technology initiatives are on track. We will continue to focus on executing the basics with strong financial discipline. Although there are still many areas where we can improve, overall Coventry Health Care is performing well and on track to grow profitably into the future." Core business results: -- Membership. As of June 30, 2000, Coventry had a total of 1.5 million members in continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , an increase of 4,000 members over 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 1.3 million was 4,000 members higher than the prior quarter. -- Rate Increases. Coventry achieved commercial rate increases in excess of 13% on second quarter renewals, representing 94,000 members. Based on continued strength in the pricing environment, the Company now expects commercial rate increases for the third quarter of 2000 to be in excess of 12% on approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 15% of Commercial membership. -- Medical Loss Ratio (MLR MLR mixed lymphocyte reaction. MLR Myocardial laser revascularization, see there ). MLR was 85.6% for the quarter, a 0.3% improvement from the second quarter 1999. Days in Claims Payable for the quarter of 55 are flat with the first quarter of 2000. Claims inventories were down 32% for the quarter from 308,000 at the end of the first quarter to 208,000 at the end of the second quarter. The Company had 4 days of claims inventory on hand at the end of the second quarter. -- Selling, General & Administrative (SG&A) Expenses. SG&A expenses were 12.8% of operating revenues for the quarter, a 0.4% improvement from first quarter 2000 SG&A rate of 13.2%. The Company has made progress more quickly than expected in controlling SG&A costs, and expects the SG&A rate to be under 13% for the remainder of the year. Coventry Health Care is a managed health care company operating under the names Coventry Health and Life, 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 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 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. 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 Southeast or south east is the ordinal direction halfway between south and east. It the opposite of northwest. Southeast or South East can refer to: 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, 1999 filed with the Securities and Exchange Commission.
COVENTRY HEALTH CARE, INC. MEMBERSHIP
June 30, March 31, June 30,
2000 2000 1999
--------- --------- ---------
Membership by Market:
At-risk membership in continuing
operations:
Carolinas 37,236 38,972 19,874
Delaware 78,721 74,414 58,784
Georgia 30,221 29,217 25,206
Iowa 74,332 75,155 77,908
Kansas City 79,293 77,068 60,006
Louisiana 41,920 40,649 37,486
Nebraska 25,721 25,898 27,794
Pennsylvania 369,578 367,325 372,684
Richmond 54,866 55,402 52,284
St. Louis 345,260 346,610 331,371
West Virginia 91,095 93,990 22,802
Wichita 42,720 42,411 40,508
--------- --------- ---------
Total at-risk membership by
market 1,270,963 1,267,111 1,126,707
Self-funded membership 240,969 240,301 242,839
--------- --------- ---------
Total membership in continuing
operations 1,511,932 1,507,412 1,369,546
--------- --------- ---------
Total membership in
non-continuing operations:
Indiana 980 10,703 25,022
--------- --------- ---------
Total membership: 1,512,912 1,518,115 1,394,568
========= ========= =========
Membership by Product:
At-risk membership in continuing
operations:
Commercial 1,023,831 1,023,762 942,993
Medicare 67,284 67,462 63,439
Medicaid 179,848 175,887 120,275
--------- --------- ---------
Total at-risk membership by
product 1,270,963 1,267,111 1,126,707
Self-funded membership 240,969 240,301 242,839
--------- --------- ---------
Total membership in continuing
operations 1,511,932 1,507,412 1,369,546
--------- --------- ---------
Total membership in
non-continuing operations:
Indiana 980 10,703 25,022
--------- --------- ---------
Total membership: 1,512,912 1,518,115 1,394,568
========= ========= =========
COVENTRY HEALTH CARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
Operating
revenues:
Managed care
premiums $ 610,102 $ 511,597 $1,216,439 $1,019,273
Management
services 11,092 20,234 22,165 40,405
---------- ---------- ---------- ----------
Total
operating
revenues 621,194 531,831 1,238,604 1,059,678
Operating
expenses:
Health Benefits 522,255 439,490 1,040,226 873,130
Selling,
General and
Administrative 79,546 75,641 161,031 154,172
Depreciation
and
Amortization 6,621 7,074 13,424 14,045
---------- ---------- ---------- ----------
Total
operating
expenses 608,422 522,205 1,214,681 1,041,347
Operating
earnings 12,772 9,626 23,923 18,331
Other income,
net of interest
expense 9,339 6,788 18,335 12,773
---------- ---------- ---------- ----------
Earnings before
income taxes 22,111 16,414 42,258 31,104
Provision for
income taxes 8,857 7,257 17,262 13,654
---------- ---------- ---------- ----------
Net earnings $ 13,254 $ 9,157 $ 24,996 $ 17,450
========== ========== ========== ==========
Net earnings per
common and
common
equivalent
share, basic $ 0.23 $ 0.16 $ 0.43 $ 0.30
========== ========== ========== ==========
Net earnings per
common and
common
equivalent
share, diluted $ 0.21 $ 0.15 $ 0.39 $ 0.29
========== ========== ========== ==========
Weighted average
number of
common shares
outstanding,
basic 58,593 58,952 58,721 58,902
Weighted average
number common
shares
outstanding,
diluted 64,198 64,302 64,006 64,193
COVENTRY HEALTH CARE, INC.CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
June 30, December 31,
2000 1999
----------- -----------
Assets:
Current assets:
Cash $ 202,140 $ 240,076
Short-term investments 110,749 88,365
Accounts receivable, net 51,527 53,173
Other receivables 55,397 42,304
Deferred income taxes 56,249 56,157
Other current assets 7,121 3,330
----------- -----------
Total current assets 483,183 483,405
Long-term investments 336,037 286,162
Property and equipment, net 36,135 37,863
Goodwill and intangible assets,
net 265,848 268,289
Other long-term assets 6,527 5,864
----------- -----------
Total assets $1,127,730 $1,081,583
=========== ===========
Liabilities and Stockholders'
Equity:
Current liabilities:
Medical claim liabilities $ 317,886 $ 308,095
Other medical liabilities 54,053 54,691
Accounts payable and accrued
liabilities 120,382 110,186
Deferred revenue 53,437 49,914
----------- -----------
Total current liabilities 545,758 522,886
Long-term liabilities 32,488 31,217
----------- -----------
Total liabilities 578,246 554,103
Redeemable convertible
preferred stock 47,095 47,095
Stockholders' equity 502,389 480,385
----------- -----------
Total liabilities and
stockholders' equity $1,127,730 $1,081,583
=========== ===========
COVENTRY HEALTH CARE, INC.
CONSOLIDATED CHANGES IN CASH AND INVESTMENTS
(Amounts in thousands)
(Unaudited)
June 30, 2000
------------------------
Quarter Year-to-Date
------------------------
Cash Flows from Operating
Activities:
Net Earnings $ 13,254 $ 24,996
Depreciation and Amortization 6,621 13,424
Changes in Working Capital -
Increase/(Decrease)
Accounts Receivable, Net 9,630 2,259
Medical Claim Liabilities 2,093 6,245
Other Medical Liabilities (5,696) (638)
Accounts Payable and Accrued
Liabilities 11,409 10,032
Deferred Revenue (3,091) 3,350
Changes in Other Working
Capital (8,436) (15,199)
--------- ---------
Total Cash Flows from
Operating Activities 25,784 44,469
--------- ---------
Cash Flows from Investing
Activities:
Change in Fixed Assets (2,921) (6,539)
Purchase Price of Acquisitions (121) (1,871)(A)
Payments for Net Worth and
Transaction Costs, Net (279) 2,497 (B)
--------- ---------
Total Cash Flows from
Investing Activities (3,321) (5,913)
--------- ---------
Cash Flows from Financing
Activities:
Change in Stock 599 (4,233)
--------- ---------
Total Cash Flows from
Financing Activities 599 (4,233)
--------- ---------
Change in Cash and Investments
for Current Period, Net 23,062 34,323
Cash and Investments at
Beginning of Period 625,864 614,603
--------- ---------
Cash and Investments at End
of Period $ 648,926 $ 648,926
========= =========
(A) Represents $1.25 million for PrimeONE, $0.5 million for
Prudential Medicaid membership in St. Louis, and a $121,000 payment
for Kaiser transferred members as of 1/1/2000 in excess of close date
payment.
(B) Represents PrimeONE cash and investments of $5.5 million less
statutory net worth of $2.2 million and transaction costs of $0.8
million.
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