Coventry Health Care Reports Record Fourth Quarter Earnings of $0.67 Per Diluted Share; EPS Up 97% Over Prior Year.Business Editors 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. 5, 2003 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
See: New York Stock Exchange :CVH CVH Helicopter Carrier CVH Compound-valve-angle Hemispherical Combustion-chamber (Ford cylinder head design and family of engines) CVH Compound Valve Angle Hemispheral Combustion Chamber CVH continuous venous hemodialysis ) today reported operating results for the quarter ended December December: see month. 31, 2002. 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 $946.3 million for the quarter, a 16.2% increase over the fourth quarter of 2001. Net earnings were $40.4 million, or $0.67 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 76.6% increase over net earnings for the fourth quarter of 2001 and 97.1% on a per share basis. On a FAS 142 comparative basis, EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. increased 86.1% over the fourth quarter of 2001. For the twelve months ended December 31, 2002, 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 total revenues of $3.58 billion and net earnings of $145.6 million, or $2.38 per diluted share. "By every measure, 2002 was an outstanding year for our shareholders," 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. "In addition to our impressive EPS growth, I am especially pleased about the balanced improvement we have made in all aspects of our business, including new business sales and customer service. We added two new health plans, New Alliance and Mid-America, during 2002, and are off to a good start in 2003 with the addition of PersonalCare on February February: see month. 1. While there are certainly challenges ahead, our continued focus on the details and operational excellence positions Coventry well for continued profitable growth." Financial Highlights -- 4th Quarter Operating Earnings Up 110% -- 4th Quarter Operating Margin of 6.0%, Up 270 basis points -- 4th Quarter FAS 142 EPS Up 86.1% -- 4th Quarter Annualized Return on Equity of 25.1% versus 13.5% in Q4 2001 -- Full Year Operating Earnings Up 120% -- Full Year Operating Margin of 5.6%, Up 270 basis points -- Full Year FAS 142 EPS Up 76.3% -- Full Year Return on Equity of 21.8% versus 13.1% in 2001 Fourth Quarter Highlights: -- Membership. As of December 31 2002, excluding network rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. members, Coventry had a total of 2.03 million members, an increase of 194,190 members, or 10.5%, over the prior year and an increase of 155,271 members, or 8.3%, over the prior quarter due to organic growth of 36,952 members and the acquisition of Mid-America Health Partners in 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). for 118,319 members. For the year, Coventry had total organic growth of 51,126 members, or 2.8% - at the high end of the Company's previous guidance. -- Network Rental Membership. Coventry has not previously reported membership figures for its network rental business where Coventry rents its provider networks to various third parties. Coventry acquired this line of business in its 1998 merger with Principal Health Care. Coventry will now report these figures in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with its recent acquisition of Mid-America Health Partners and its significant network rental business. As of December 31, 2002, Coventry had 787,551 network rental members, including 127,954 from the Mid-America acquisition. Total revenues related to the network rental business were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $8.6 million in 2002. -- Commercial Rate Increases. Coventry achieved commercial rate increases exceeding 15.5% on fourth quarter renewals, representing approximately 11% of commercial risk membership. The Company expects commercial rate increases, net of benefit buydowns, to be in the range of 13% to 15% in 2003. -- Medical Loss Ratio (MLR MLR mixed lymphocyte reaction. MLR Myocardial laser revascularization, see there ). MLR was 83.0% for the quarter including the impact of the Mid-America acquisition which closed on December 1, 2002. Excluding the Mid-America results, MLR was 82.6%, a 320 basis point improvement over the prior year fourth quarter. Commercial MLR of 82.5% was a 260 basis point improvement over the prior year quarter and is the main driver of overall MLR improvement. -- Selling, General & Administrative (SG&A) Expenses. SG&A expenses were 12.2% of operating revenues for the quarter, flat to the prior quarter. -- Balance Sheet. Cash and investments grew to $1.12 billion during the quarter, up $166.6 million from the prior 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. . Premium Accounts Receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying of $71.0 million represent 6.9 days of sales, a 4% improvement over the prior year. Total Days in Medical Claim Payables Payables Related: Accounts payable (DCP DCP - definitional constraint programming ) were 59.5. Excluding the impact of the Mid-America acquisition, DCP was 58.0, a decrease of 1.9 days from the prior quarter. The decrease in DCP is due to the timing of pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. invoice An itemized statement or written account of goods sent to a purchaser or consignee by a vendor that indicates the quantity and price of each piece of merchandise shipped. A consular invoice is one used in foreign trade. payments for 0.6 days, with the remainder due to faster claims payment and reduced claim inventory levels. -- Cash Flow. 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 for the fourth quarter was $86.1 million as reported and $53.0 million when adjusted for the timing of CMS (1) See content management system and color management system. (2) (Conversational Monitor System) Software that provides interactive communications for IBM's VM operating system. payments for 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. +Choice beneficiaries compared to net income plus depreciation and amortization of $45.2 million. Cash flow from operations for the twelve months ended December 31, 2002 is $227.7 million versus net income plus depreciation of $164.9 million. -- Effect of Accounting Rule Changes. Effective January January: see month. 1, 2002, the Company adopted FAS 142 which required companies to cease amortization of goodwill. For the year ended December 31, 2001, goodwill amortization averaged approximately $1.9 million per quarter. -- Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . During the fourth quarter, the Company repurchased 1,180,300 shares under its existing share repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. program. The Company will continue to opportunistically repurchase shares under its existing program, with outstanding authority of 2.5 million shares. Mr. Wise will host a conference call at 9:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on Thursday Thursday: see week. , February 6. To listen to the call, dial (800) 946-0719, or for international callers, (719) 457-2645. Callers will be asked to identify themselves and their affiliations. The conference call will also be broadcast over the internet at www.cvty.com. Coventry asks participants on both the call and webcast to review and be familiar with its filings with the SEC. 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 580941. Coventry Health Care is a managed health care company based in Bethesda, Maryland Bethesda is an urbanized, but unincorporated, area in southern Montgomery County, Maryland, just Northwest of Washington, D.C. It takes its name from a church located there, the Bethesda Presbyterian Church, built in 1820 and rebuilt in 1850, which in turn took its name from operating health plans and insurance companies under the names Coventry Health Care, Coventry Health and Life, Carelink Health Plans, Group Health Plan, HealthAmerica, HealthAssurance, HealthCare USA, PersonalCare, Southern Health and WellPath. 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+Choice, 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 2.9 million members in a broad cross section of employer and government-funded groups in 13 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: 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 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, 2001 filed with the Securities and Exchange Commission.
COVENTRY HEALTH CARE, INC.
MEMBERSHIP
December 31, September 30, December 31,
2002 2002 2001
------------ ------------- ------------
Membership by Market:
North Carolina 109,146 104,423 97,508
Delaware 104,686 105,249 156,547
Georgia 79,739 81,561 55,188
Iowa 84,783 84,232 90,741
Kansas 306,675 186,546 187,131
Louisiana 71,050 68,015 59,529
Nebraska 39,500 37,919 43,466
Pennsylvania 640,271 628,815 516,755
St. Louis 375,948 365,713 382,712
Virginia 140,235 138,165 162,159
West Virginia 82,883 79,007 88,990
------------ ------------- ------------
Total membership 2,034,916 1,879,645 1,840,726
============ ============= ============
Membership by Product:
At-risk membership:
Commercial 1,282,812 1,210,145 1,210,739
Medicare 82,115 58,992 53,543
Medicaid 274,501 261,617 257,916
------------ ------------- ------------
Total at-risk
membership 1,639,428 1,530,754 1,522,198
Self-funded membership 395,488 348,891 318,528
------------ ------------- ------------
Total membership 2,034,916 1,879,645 1,840,726
============ ============= ============
Network rental membership 787,551 674,845 730,045
COVENTRY HEALTH CARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -----------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
(unaudited) (unaudited)
Operating revenues:
Managed care
premiums $926,657 $797,179 $3,504,215 $3,082,825
Management
services 19,632 17,274 72,690 64,420
----------- ----------- ----------- -----------
Total operating
revenues 946,289 814,453 3,576,905 3,147,245
Operating expenses:
Medical costs 769,494 683,603 2,919,499 2,650,993
Selling, general
and administrative 115,339 97,342 437,851 379,234
Depreciation and
amortization 4,698 6,501 18,885 25,910
----------- ----------- ----------- -----------
Total
operating
expenses 889,531 787,446 3,376,235 3,056,137
Operating earnings 56,758 27,007 200,670 91,108
Senior notes interest
expense, net 3,667 0 13,446 0
Other income, net 9,512 9,585 38,517 43,574
----------- ----------- ----------- -----------
Earnings before income
taxes 62,603 36,592 225,741 134,682
Provision for income
taxes 22,224 13,722 80,138 51,153
Cumulative gain from
change in accounting
principle-
SFAS 133, net of tax 0 0 0 878
----------- ----------- ----------- -----------
Net earnings $40,379 $22,870 $145,603 $84,407
=========== =========== =========== ===========
Net earnings per share,
basic $0.69 $0.35 $2.46 $1.30
Net earnings per share,
diluted $0.67 $0.34 $2.38 $1.24
Net earnings per share,
basic (excluding
change in accounting
principle) $ 0.69 $ 0.35 $ 2.46 $ 1.29
Net earnings per share,
diluted (excluding
change in
accounting
principle) $ 0.67 $ 0.34 $ 2.38 $ 1.23
Weighted average shares
outstanding, basic 58,285 65,106 59,201 64,990
Weighted average shares
outstanding, diluted 60,007 68,114 61,244 67,875
COVENTRY HEALTH CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
December 31, September 30, December 31,
2002 2002 2001
---------------------------------------
Assets: (unaudited)
Current assets:
Cash and cash equivalents $186,768 $173,426 $312,364
Short-term investments 57,895 61,972 87,515
Accounts receivable, net 71,044 70,373 63,486
Other receivables, net 63,943 60,663 65,291
Deferred income taxes 36,861 43,509 43,509
Other current assets 7,764 7,559 6,353
---------------------------------------
Total current assets 424,275 417,502 578,518
Long-term investments 874,457 828,110 552,612
Property and equipment, net 34,045 31,931 34,327
Goodwill, net 243,746 243,746 237,392
Other intangible assets, net 25,687 25,489 24,719
Other long-term assets 41,230 31,469 23,705
---------------------------------------
Total assets $1,643,440 $1,578,247 $1,451,273
=======================================
Liabilities and Stockholders'
Equity
Current liabilities:
Medical claims liabilities $497,318 $470,234 $460,489
Other medical liabilities 61,281 63,608 62,365
Accounts payable and accrued
liabilities 178,577 159,096 165,697
Deferred revenue 63,536 47,879 62,994
---------------------------------------
Total current
liabilities 800,712 740,817 751,545
Senior notes 175,000 175,000 0
Other long-term liabilities 21,691 22,432 10,649
---------------------------------------
Total liabilities 997,403 938,249 762,194
---------------------------------------
Stockholders' Equity 646,037 639,998 689,079
---------------------------------------
Total liabilities and
stockholders' equity $1,643,440 $1,578,247 $1,451,273
=======================================
COVENTRY HEALTH CARE, INC.
CONDENSED CONSOLIDATED CHANGES IN CASH AND INVESTMENTS
(Amounts in thousands)
(unaudited)
December 31, 2002
----------------------
Quarter YTD
----------------------
Cash and investment flows from operating
activities:
Net earnings $40,379 $145,603
Depreciation and amortization 4,810 19,297
Changes in working capital
Accounts receivable, net 2,937 (3,017)
Medical claims liabilities 2,294 4,862
Other medical liabilities (1,695) (458)
Accounts payable and accrued
liabilities 14,410 17,003
Interest payable on senior notes 3,555 5,372
Deferred revenue 13,996 (6,084)
Changes in other working capital 5,431 45,098
----------------------
Total cash and investment flows
from operating activities 86,117 227,676
----------------------
Cash and investment flows from investing
activities:
Changes in fixed assets (4,096) (13,033)
Purchase price of acquisitions (13,011) (20,012)
Payment for net worth and transaction
costs, net 20,884 31,359
----------------------
Total cash and investment flows
from investing activities 3,777 (1,686)
----------------------
Cash and investment flows from financing
activities:
Proceeds from issuance of stock 698 11,984
Proceeds from issuance of senior notes, net
of issuance costs 0 170,500
Net payments for repurchase of shares (34,980) (241,845)
----------------------
Total cash and investment flows
from financing activities (34,282) (59,361)
----------------------
Net change in cash and investments for current
period 55,612 166,629
Cash and investments at beginning of period 1,063,508 952,491
----------------------
Cash and investments at end of period $1,119,120 $1,119,120
======================
Reconciliation of 'Changes in Cash and
Investments' to 'Changes in Cash'
Net change in cash and investments for current
period $55,612 $166,629
Amortization of premium on investments -
operating 1,254 4,438
Unrealized loss/(gain) on investments -
operating 2,204 (23,349)
Investments acquired - investing (39,360) (52,221)
Purchases of investments - investing (193,749) (793,851)
Sales of investments - investing 187,381 572,758
----------------------
Net change in cash for current period $13,342 $(125,596)
======================
COVENTRY HEALTH CARE, INC.
SELECTED OPERATING STATISTICS
(Excluding charges)
Total
2002 Q4 2002 Q3 2002 Q2 2002 Q1 2002
--------------------------------------------
Revenue PMPM
Commercial 183.80 188.63 186.48 181.33 178.31
Medicare 593.29 589.25 596.91 593.39 594.17
Medicaid 137.54 137.39 129.16 138.52 144.62
Management Fees 17.71 18.02 16.82 18.08 17.91
Medical PMPM
Commercial 152.12 155.54 152.67 150.02 149.99
Medicare 509.60 510.28 513.58 486.26 528.32
Medicaid 115.58 113.90 107.95 119.70 119.87
MLR %
Commercial 82.8% 82.5% 81.9% 82.7% 84.1%
Medicare 85.9% 86.6% 86.0% 81.9% 88.9%
Medicaid 84.0% 82.9% 83.6% 86.4% 82.9%
--------------------------------------------
Total 83.3% 83.0% 82.6% 83.2% 84.5%
SGA % of revenues 12.2% 12.2% 12.2% 12.2% 12.3%
SGA PMPM 19.56 19.91 19.55 19.30 19.47
Claims Statistics
Claims Inventory 146,842 162,294 193,413 194,865
Inventory Days on Hand 2.0 2.5 2.8 2.8
Total Medical Liabilities
(000's) $558,599 $533,842 $541,983 $545,810
Days in Claims Payable 59.46 59.92 59.86 61.55
Days in Other Medical
Liabilities 7.33 8.10 8.14 8.34
Total Days in Medical
Liabilities 66.79 68.02 68.00 69.89
Member Growth (a)
Same Store 51,126 36,952 (35,250) 74,618 (25,194)
Acquisition 143,064 118,319 (8,635) 43,601 (10,221)
Total
2001 Q4 2001
-----------------
Revenue PMPM
Commercial 163.05 167.20
Medicare 565.70 569.31
Medicaid 144.80 141.40
Management Fees 18.30 18.30
Medical PMPM
Commercial 140.03 142.31
Medicare 505.84 537.20
Medicaid 120.93 116.15
MLR %
Commercial 85.9% 85.1%
Medicare 89.4% 94.4%
Medicaid 83.5% 82.1%
-----------------
Total 86.0% 85.8%
SGA % of revenues 12.0% 12.0%
SGA PMPM 17.90 17.86
Claims Statistics
Claims Inventory 248,171
Inventory Days on Hand 3.7
Total Medical Liabilities
(000's) $522,854
Days in Claims Payable 61.98
Days in Other Medical
Liabilities 8.39
Total Days in Medical
Liabilities 70.37
Member Growth (a)
Same Store (8,615) 30,452
Acquisition 136,307 (41,536)
(a) Acquisition growth reflects initial acquisition and all changes to acquired entities during the first twelve months of operations. Membership activity subsequent to the initial twelve month period is reflected as same store growth. Membership growth excludes network rental membership. |
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