Coventry Health Care Announces Second Quarter Results; Continued Earnings Growth and Margin Expansion.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)--August 3, 1999-- 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 $531.8 million for the quarter, a 5.7% increase over second quarter 1998 revenues of $502.9 million from 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 . Net earnings were $9.2 million, or $0.15 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, compared to second quarter 1998 earnings of $11.0 million or $0.17 per diluted share, excluding non-recurring items. Including non-recurring items, second quarter 1998 losses were $27.7 million or $0.47 per share. "We are pleased with our results, which show continued earnings improvement and margin expansion over last quarter," 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 fundamentals and financial performance are progressing on plan with our expectations. We're we're Contraction of we are. we're we are making steady progress on increasing rates and reducing SG&A, and we are seeing positive results from our medical cost initiatives." Core business results: - Membership. As of June 30, 1999, Coventry had 1.4 million members, 1.2 million of whom were 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. members. Total membership was essentially flat compared to the prior quarter. 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. , which continues to make excellent margins for the Company, grew by 10,300 members from in the second quarter, offsetting a similar decline in commercial membership resulting from continued pricing discipline. The Company anticipates flat total membership growth in 1999, not including the impact of acquisitions. - Rate Increases. The Company achieved in excess of 15% in rate increases on second quarter renewals, representing approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 5% of the Company's commercial membership. The Company will continue to be diligent dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d in obtaining required price increases and expects commercial rates to increase 8% to 10% during the remainder of 1999. - Medical Loss Ratio (MLR MLR mixed lymphocyte reaction. MLR Myocardial laser revascularization, see there ). MLR was 85.9% for the quarter, as compared to 85.4% for the first quarter of 1999. Actual inpatient inpatient /in·pa·tient/ (in´pa-shent) a patient who comes to a hospital or other health care facility for diagnosis or treatment that requires an overnight stay. in·pa·tient n. 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 March of this year was higher than anticipated, resulting in an increase in claims reserves (and MLR) in the second quarter. With the exception of March, inpatient utilization trends were favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. in the first half of the year. - Selling, General & Administrative (SG&A) Expenses. SG&A expenses were 14.2% of operating revenues for the second quarter, a decrease from 14.9% in the first quarter of the year. The Company is committed to reducing SG&A to under 14% by the end of this year as it continues to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. its service operations and target other expense reduction initiatives. In closing, Mr. Wise said, "We continue to make significant progress toward achieving our goals. Strategically, we added scale in one of our smaller health plans by acquiring additional membership in Charlotte, North Carolina “Charlotte” redirects here. For other uses, see Charlotte (disambiguation). Charlotte is the largest city in the state of North Carolina and the 20th largest city in the United States. . Operationally, our service center consolidation is on schedule, SG&A is declining, and claims payment and service are improving. Financially, we grew both the top and bottom lines. We will continue to emphasize these initiatives, while at the same time improving our sales results." Coventry Health Care is a managed health care company operating health plans under the names Principal Health Care, HealthAmerica, HealthAssurance, HealthCare USA, Group Health Plan and Southern Health. 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 to 1.4 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 December: see month. 31, 1998 filed with the Securities and Exchange Commission. -0-
COVENTRY HEALTH CARE, INC.
Unaudited Financial Highlights
(In thousands, except per share data)
Three Six
Months Ended Months Ended
June 30, June 30,
---------------- -----------------
1999 1998 1999 1998 (1)
------ ------ ------ ------
Operating revenues $ 531,831 $ 583,804 $1,059,678 $ 914,013
Operating earnings
(excluding
non-recurring items) 9,626 11,542 18,331 18,720
Non-recurring Items --- 62,780 --- 62,780
Operating earnings (loss) 9,626 (51,238) 18,331 (44,060)
Net earnings
(excluding non-recurring items)9,157 11,011 17,450 15,718
Net earnings (loss) 9,157 (27,756) 17,450 (23,049)
Earnings (loss) per share,
basic 0.16 (0.47) 0.30 (0.50)
Earnings per share, diluted 0.15 --- 0.29 ---
Earnings per share, basic
(excluding non-recurring items) 0.16 0.19 0.30 0.34
Earnings per share, diluted
(excluding non-recurring items) 0.15 0.17 0.29 0.30
Weighted average common
shares outstanding, basic 58,952 58,592 58,902 45,970
Weighted average common
shares outstanding, diluted 64,302 64,765 64,193 51,703
(1) Coventry Health Care's June 30, 1999 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.
MEMBERSHIP
June 30, %
1999 1998 (2) Change
--------- --------- ----------
Membership by Market:
At-risk membership
in continuing
operations:
Carolinas 19,874 21,317 (6.8%)
Delaware 58,784 53,442 10.0%
Georgia 25,206 16,602 51.8%
Indiana 24,621 27,684 (11.1%)
Iowa 77,908 80,431 (3.1%)
Kansas City 60,006 43,819 36.9%
Louisiana 37,486 39,435 (4.9%)
Nebraska 27,794 33,110 (16.1%)
Pennsylvania 395,486 416,564 (5.1%)
Richmond 52,284 58,573 (10.7%)
St. Louis 331,371 309,226 7.2%
Wichita 40,508 32,621 24.2%
--------------- -------------- -----------
Total at-risk
membership by
market 1,151,328 1,132,824 1.6%
Self-funded
membership 243,240 220,125 10.5%
=============== ============== ===========
Total membership
by market in
continuing
operations 1,394,568 1,352,949 3.1%
=============== ============== ===========
Membership by Product:
At-risk membership
in continuing
operations:
Commercial 966,886 977,693 (1.1%)
Medicare risk 63,439 54,724 15.9%
Medicare cost 728 2,471 (70.5%)
Medicaid 120,275 97,936 22.8%
--------------- -------------- -----------
Total at-risk
membership
by product 1,151,328 1,132,824 1.6%
Self-funded
membership 243,240 220,125 10.5%
=============== ============== ===========
Total membership
by product
in continuing
operations 1,394,568 1,352,949 3.1%
=============== ============== ===========
(2) Membership does not include markets where the Company no longer has
operations.
COVENTRY HEALTH CARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1999 1998 1999 1998 (3)
------- ------- ------ -------
Operating revenues:
Managed care premiums $ 511,596 $ 561,145 $1,019,273 $ 885,898
Management services 20,235 22,659 40,405 28,115
---------- --------- ---------- ----------
Total operating revenues 531,831 583,804 1,059,678 914,013
Operating expenses:
Health Benefits 439,490 480,985 873,130 756,299
Selling, General and
Administrative 75,641 83,390 154,172 128,357
Depreciation and
Amortization 7,074 7,887 14,046 10,637
AHERF charge --- 55,000 --- 55,000
Merger costs --- 7,780 --- 7,780
---------- --------- ---------- ----------
Total operating expenses 522,205 635,042 1,041,347 958,073
Operating earnings (loss) 9,626 (51,238) 18,331 (44,060)
Other income, net
of interest expense 6,788 6,504 12,773 7,304
---------- --------- ---------- ----------
Earnings (loss)
before income taxes 16,414 (44,734) 31,104 (36,756)
Provision for
(benefit from)
income taxes 7,257 (16,978) 13,654 (13,707)
---------- --------- ---------- ----------
Net earnings (loss) $ 9,157 ($ 27,756) $ 17,450 ($ 23,049)
========== ========= ========== ==========
Net earnings (loss)
per share, basic $ 0.16 $ (0.47) $ 0.30 $ (0.50)
========== ========= ========== ==========
Net earnings
per share, diluted $ 0.15 --- $ 0.29 ---
========== ========= ========== ==========
Net earnings per share,
basic (excluding
non-recurring items) $ 0.16 $ 0.19 $ 0.30 $ 0.34
========== ========= ========== ==========
Net earnings per share,
diluted (excluding
non-recurring items) $ 0.15 $ 0.17 $ 0.29 $ 0.30
========== ========= ========== ==========
Weighted average common
shares outstanding, basic 58,952 58,592 58,902 45,970
Weighted average common
shares outstanding, diluted 64,302 64,765 64,193 51,703
(3) Coventry Health Care's June 30, 1999 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
(In thousands)
(Unaudited)
June 30, December 31,
1999 1998
----------------- -------------------
ASSETS:
Current assets:
Cash and short-term
investments $ 281,799 $ 401,735
Florida & Illinois cash
and short-term
investments(4) 18,820 50,302
Other current assets 157,875 139,168
----------------- -------------------
Total current assets 458,494 591,205
Long-term investments 226,691 162,546
Other long-term assets 312,543 337,477
----------------- -------------------
TOTAL ASSETS $ 997,728 $ 1,091,228
================= ===================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Medical claim
liabilities $ 271,735 $ 284,223
Florida & Illinois
medical claim liabilities(4) 8,134 53,919
Other current liabilities 176,998 227,811
----------------- -------------------
Total current
liabilities 456,867 565,953
Long-term liabilities 84,327 88,737
----------------- -------------------
Total liabilities 541,194 654,690
Stockholders' equity 456,534 436,538
----------------- -------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 997,728 $ 1,091,228
================= ===================
(4) The Company sold its Florida and Illinois health plan operations
in the fourth quarter of 1998.
COVENTRY HEALTH CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, 1999 June 30, 1999
Cash Flows from
Operating Activities:
Net Earnings $ 9,157 $ 17,450
Depreciation and
amortization 7,074 14,046
Changes in Working Capital -
Increase/(Decrease):
Accounts receivable, net 1,144 (6,240)
Medical claim liabilities (17,567) (12,488)
Florida & Illinois medical
claim liabilities(5) (11,667) (45,785)
Accounts payable and
accrued liabilities (9,383) (9,093)
Deferred revenue (2,244) (27,377)
Changes in other
working capital (21,037) (21,617)
------------- -------------
Total Cash Flows from
Operating Activities (44,523) (91,104)
------------- -------------
Cash Flows from
Investing Activities:
Change in Fixed Assets (2,516) (5,745)
Change in Investments (106,264) (78,339)
Net Proceeds from Sale of
Renewal Rights Agreement 12,850 12,850
------------- -------------
Total Cash Flows from
Investing Activities (95,930) (71,234)
------------- -------------
Cash Flows from
Financing Activities:
Change in Stock 1,411 1,457
Change in Notes Payable (781) (829)
------------- -------------
Total Cash Flows from
Financing Activities 630 628
------------- -------------
Net Change in Cash for
Current Period (139,823) (161,710)
Cash and Cash Equivalents
at Beginning of Period 383,436 405,323
------------- -------------
Cash and Cash Equivalents
at End of Period $ 243,613 $ 243,613
============= =============
(5) The Company sold its Florida and Illinois health plan operations
in the fourth quarter of 1998.
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