Coventry Health Care Reports Record Third Quarter Earnings of $0.66 Per Diluted Share; EPS Up 106% 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)--Oct. 28, 2002 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 September September: see month. 30, 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 $892.0 million for the quarter, a 12.2% increase over the third quarter of 2001. Net earnings were $40.2 million, or $0.66 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, an 85.6% increase over net earnings for the third quarter of 2001 and 106.3% 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 88.6% over the third quarter of 2001. For the nine months ended September 30, 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 $2.63 billion and net earnings of $105.2 million, or $1.71 per diluted share. "I am pleased to report another quarter of record earnings 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. "These earnings, the result of a focused business strategy we have followed for 5 years, are further proof that our model works. Our emphasis on disciplined pricing, managing patient care, and providing superior, cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. service to our customers will continue to drive strong results for our shareholders. Our commercial organic growth, coupled with our recently announced 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). , further evidence the outstanding opportunities for Coventry Health Care." Third Quarter Highlights: -- Membership. As of September 30, 2002, Coventry had a total of 1.88 million members, an increase of 27,835 members, or 1.5%, over the prior year and a decrease of 43,885 members, or 2.3%, over the prior quarter due to the previously announced exit of the Delaware Medicaid business, representing 42,895 members. Commercial organic growth was 16,123 members, or 1.3%, during the quarter. Offsetting the organic growth was the loss of 9,060 commercial members in the Virginia QualChoice acquisition due to pricing actions. Coventry reaffirms its previous guidance for total organic growth at the lower end of the 1% to 3% range for 2002. -- Commercial Rate Increases. Coventry achieved commercial rate increases of approximately 13.5% on third quarter renewals, representing approximately 12% of commercial risk membership. The Company continues to expect commercial rate increases in excess of 15% for the entire year of 2002. -- Medical Loss Ratio (MLR). MLR was 82.6% for the quarter, a 60 basis point improvement over the second quarter of 2002 and a 330 basis point improvement over the prior year third quarter. Commercial MLR of 81.9% was a 320 basis point improvement over the prior year quarter and is the main driver of overall MLR improvement. Total Commercial acute inpatient days per thousand in the third quarter of 218 were 2.3% lower than the prior year quarter. -- Selling, General & Administrative (SG&A) Expenses. SG&A expenses were 12.2% of operating revenues for the quarter, flat to the prior quarter and an increase of 20 basis points over the prior year. The increase was more than totally driven by distribution cost increases associated with higher new sales. -- Balance Sheet. Cash and investments grew to $1.06 billion during the quarter, up $111.0 million from the prior year-end. Total days in medical claim liabilities of 59.9 were flat to the prior quarter. -- Cash Flow. Cash flow from operations was $73.5 million for the third quarter, well in excess of net income plus depreciation and amortization of $45.1 million. Cash flow from operations for the nine months ended September 30, 2002 is $141.6 million as reported and $172.0 million when adjusted for the timing of CMS payments for Medicare+Choice beneficiaries. -- Effect of Accounting Rule Changes. Effective January 1, 2002, the Company adopted FAS 142 which requires companies to cease amortization of goodwill. For the year ended December 31, 2001, goodwill amortization averaged approximately $1.9 million per quarter. -- Share Repurchase. During the third quarter, the Company repurchased 502,300 shares under its existing share repurchase program. The Company will continue to opportunistically repurchase shares under its existing program, with outstanding authority of 3.7 million shares. -- Investor Day. Coventry will host an investor day and simultaneous webcast in New York City on Wednesday, November 20, 2002. For information or an invitation, please contact John Stelben at 301/581-5729 or email at InvestorDay@cvty.com. Mr. Wise will host a conference call at 9:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on Tuesday Tuesday: see week. , October October: see month. 29. To listen to the call, dial 800/967-7184, or for international callers, 719/457-2633. 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 751918. 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, 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 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, 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 1.9 million members in a broad cross section of employer and government-funded groups in 12 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 December: see month. 31, 2001 filed with the Securities and Exchange Commission.
COVENTRY HEALTH CARE, INC.
MEMBERSHIP
Sept. 30, June 30, Sept. 30,
2002 2002 2001
--------- --------- ---------
Membership by Market:
Carolinas 104,423 99,752 134,790
Delaware 105,249 154,923 154,139
Georgia 81,561 79,853 54,218
Iowa 84,232 85,507 90,526
Kansas 186,546 188,450 185,712
Louisiana 68,015 70,408 60,298
Nebraska 37,919 41,628 44,507
Pennsylvania 628,815 614,917 485,798
St. Louis 365,713 366,775 387,518
Virginia 138,165 145,711 165,146
West Virginia 79,007 75,606 89,158
--------- --------- ---------
Total membership 1,879,645 1,923,530 1,851,810
========= ========= =========
Membership by Product:
At-risk membership:
Commercial 1,210,145 1,203,082 1,260,942
Medicare 58,992 59,219 52,017
Medicaid 261,617 306,661 219,609
--------- --------- ---------
Total at-risk
membership 1,530,754 1,568,962 1,532,568
Self-funded membership 348,891 354,568 319,242
--------- --------- ---------
Total membership 1,879,645 1,923,530 1,851,810
========= ========= =========
COVENTRY HEALTH CARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
---------------------- ----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Operating revenues:
Managed care
premiums $874,402 $778,562 $2,577,558 $2,285,646
Management
services 17,551 16,120 53,057 47,146
---------- ---------- ---------- ----------
Total
operating
revenues 891,953 794,682 2,630,615 2,332,792
Operating expenses:
Medical costs 721,985 668,844 2,150,004 1,967,390
Selling,
general and
administrative 109,173 95,048 322,511 281,892
Depreciation and
amortization 4,812 6,574 14,187 19,409
---------- ---------- ---------- ----------
Total
operating
expenses 835,970 770,466 2,486,702 2,268,691
Operating earnings 55,983 24,216 143,913 64,101
Senior notes interest
expense, net 3,667 0 9,779 0
Other income, net 9,986 10,703 29,005 33,988
---------- ---------- ---------- ----------
Earnings before
income taxes 62,302 34,919 163,139 98,089
Provision for
income taxes 22,117 13,269 57,915 37,430
Cumulative gain from
change in accounting
principle- SFAS 133,
net of tax 0 0 0 878
---------- ---------- ---------- ----------
Net earnings $40,185 $21,650 $105,224 $61,537
========== ========== ========== ==========
Net earnings per
share, basic $ 0.68 $ 0.33 $ 1.77 $ 0.95
Net earnings per
share, diluted $ 0.66 $ 0.32 $ 1.71 $ 0.91
Net earnings per
share, basic
(excluding change in
accounting principle) $ 0.68 $ 0.33 $ 1.77 $ 0.93
Net earnings per
share, diluted
(excluding change in
accounting principle) $ 0.66 $ 0.32 $ 1.71 $ 0.89
Weighted average shares
outstanding, basic 58,980 64,969 59,510 64,951
Weighted average shares
outstanding, diluted 60,740 68,086 61,659 67,795
COVENTRY HEALTH CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
Sept. 30, June 30, Dec. 31,
2002 2002 2001
-------------------------------------
Assets: (unaudited) (unaudited)
Current assets:
Cash and cash equivalents $173,426 $196,572 $312,364
Short-term investments 61,972 102,706 87,515
Accounts receivable, net 70,373 71,816 63,486
Other receivables, net 60,663 70,195 65,291
Deferred income taxes 43,509 43,509 43,509
Other current assets 7,559 8,960 6,353
-------------------------------------
Total current assets 417,502 493,758 578,518
Long-term investments 828,110 715,417 552,612
Property and equipment, net 31,931 33,235 34,327
Goodwill, net 243,746 243,746 237,392
Other intangible assets, net 25,489 26,140 24,719
Other long-term assets 31,469 32,242 23,705
-------------------------------------
Total assets $1,578,247 $1,544,538 $1,451,273
=====================================
Liabilities and Stockholders'
Equity
Current liabilities:
Medical claims liabilities $470,234 $477,091 $460,489
Other medical liabilities 63,608 64,892 62,365
Accounts payable and accrued
liabilities 159,096 189,233 165,697
Deferred revenue 47,879 31,845 62,994
-------------------------------------
Total current
liabilities 740,817 763,061 751,545
Senior notes 175,000 175,000 0
Other long-term liabilities 22,432 15,432 10,649
-------------------------------------
Total liabilities 938,249 953,493 762,194
-------------------------------------
Stockholders' Equity 639,998 591,045 689,079
-------------------------------------
Total liabilities
and stockholders'
equity $1,578,247 $1,544,538 $1,451,273
=====================================
COVENTRY HEALTH CARE, INC.
CONDENSED CONSOLIDATED CHANGES IN CASH AND INVESTMENTS
(Amounts in thousands)
(unaudited)
Sept. 30, 2002
--------------------------
Quarter YTD
----------- -----------
Cash and investment flows from operating
activities:
Net earnings $ 40,185 $ 105,224
Depreciation and amortization 4,925 14,487
Changes in working capital
Accounts receivable, net 1,443 (5,954)
Medical claims liabilities (6,857) 2,568
Other medical liabilities (1,284) 1,237
Accounts payable and accrued
liabilities (11,770) 4,393
Interest payable on senior notes (4,107) 1,817
Deferred revenue 16,034 (20,081)
Changes in other working capital 34,962 37,868
----------- -----------
Total cash and investment
flows from operating
activities 73,531 141,559
----------- -----------
Cash and investment flows from
investing activities:
Changes in fixed assets (2,778) (8,937)
Purchase price of acquisitions (100) (7,000)
Payment for net worth and
transaction costs, net 0 10,474
----------- -----------
Total cash and investment
flows from investing
activities (2,878) (5,463)
----------- -----------
Cash and investment flows from
financing activities:
Proceeds from issuance of stock 3,362 11,287
Proceeds from issuance of senior
notes, net of issuance costs 0 170,500
Net payments for repurchase of shares (25,202) (206,866)
----------- -----------
Total cash and investment
flows from financing
activities (21,840) (25,079)
----------- -----------
Net change in cash and investments
for current period 48,813 111,017
Cash and investments at beginning
of period 1,014,695 952,491
----------- -----------
Cash and investments at end of period $ 1,063,508 $ 1,063,508
=========== ===========
Reconciliation of `Changes in
Cash and Investments' to `Changes
in Cash'
Net change in cash and investments
for current period $ 48,813 $ 111,017
Amortization of premium on
investments - operating 1,227 3,185
Unrealized gain on investments -
operating (21,037) (25,552)
Investments acquired - investing 0 (12,861)
Purchases of investments - investing (247,909) (600,103)
Sales of investments - investing 195,760 385,376
----------- -----------
Net change in cash for current period $ (23,146) $ (138,938)
=========== ===========
COVENTRY HEALTH CARE, INC.
SELECTED OPERATING STATISTICS
(Excluding charges)
Total
Q3 2002 Q2 2002 Q1 2002 2001 Q4 2001 Q3 2001 Q2 2001
-----------------------------------------------------------
Revenue
PMPM
Commercial 186.48 181.33 178.31 163.05 167.20 163.77 161.24
Medicare 596.91 593.39 594.17 565.70 569.31 573.21 563.94
Medicaid 129.16 138.52 144.62 144.80 141.40 148.64 146.69
Management
Fees 16.82 18.08 17.91 18.30 18.30 18.52 19.02
Medical
PMPM
Commercial 152.67 150.02 149.99 140.03 142.31 139.39 139.67
Medicare 513.58 486.26 528.32 505.84 537.20 517.99 504.13
Medicaid 107.95 119.70 119.87 120.93 116.15 128.78 117.25
MLR %
Commercial 81.9% 82.7% 84.1% 85.9% 85.1% 85.1% 86.6%
Medicare 86.0% 81.9% 88.9% 89.4% 94.4% 90.4% 89.4%
Medicaid 83.6% 86.4% 82.9% 83.5% 82.1% 86.6% 79.9%
------------------------------------------------------------
Total 82.6% 83.2% 84.5% 86.0% 85.8% 85.9% 86.1%
SGA % of
revenues 12.2% 12.2% 12.3% 12.0% 12.0% 12.0% 12.1%
SGA PMPM 19.55 19.30 19.47 17.90 17.86 17.96 18.06
Claims
Statistics
Claims
Inventory 162,294 193,413 194,865 248,171 225,180 200,260
Inventory
Days on
Hand 2.5 2.8 2.8 3.7 3.0 3.0
Total
Medical
Liabilities
(000's) $533,842 $541,983 $545,810 $522,854 $503,760 $456,656
Days in
Claims
Payable 59.92 59.86 61.55 61.98 60.99 56.06
Days in
Other
Medical
Liabilities 8.10 8.14 8.34 8.39 8.30 6.55
Total Days
in Medical
Liabilities 68.02 68.00 69.89 70.37 69.29 62.61
Member Growth
(a)
Same
Store (35,250) 74,618 (25,194) (8,615) 30,452 (15,770) 14,399
Acquisition(8,635) 43,601 (10,221) 136,307 (41,536) 88,695 39,909
(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.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion