Coventry Health Care Reports Second Quarter Results.BETHESDA, Md.--(BW HealthWire)--July 28, 1998--Coventry Health Care, Inc. (Nasdaq/NM:CVTY) today reported second quarter net income of $0.17 per share, exclusive of the previously announced non-recurring pre-tax charges of $7.8 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the merger with Principal Health Care (PHC PHC Primary health care, see there ) and $55.0 million associated with the Allegheny Health, Education and Research Foundation (AHERF AHERF Allegheny Health Education and Research Foundation ) bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most . Including the non-recurring charges, second quarter losses were $27.8 million, or $0.47 per share. Also, for the second quarter, revenue totaled $583.8 million on a membership base of 1.56 million members, including 1.33 million at-risk members. As a result of the above non-recurring charges, the Company is not in compliance with certain of the financial covenants in its $42.2 million bank loan agreement. Coventry is negotiating with its lenders to amend the agreements to waive To intentionally or voluntarily relinquish a known right or engage in conduct warranting an inference that a right has been surrendered. For example, an individual is said to waive the right to bring a tort action when he or she renounces the remedy provided by law for such such non-compliance and expects to be successful in this process. "The integration of PHC's plans and employees is substantially on track," 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. "PHC's core business is not where we want it to be, but is about what we expected, given that the merger is only three months old. Our initiatives related to expense reduction and sales results have begun to impact results. Overall, I believe we have the right people and the right resources in place to be successful." Core business results: -- Membership. As of June 30, 1998, Coventry had 1.56 million members, 1.33 million of which are at-risk members. -- Rate Increases. Rate increases in the former Coventry plans averaged in excess of 8.0% for the quarter, an improvement over first quarter results. The PHC plan pricing review completed this quarter suggests rate increases of 3-10% (excluding trend) are needed. Coventry has begun to implement these price increases immediately, subject to regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. . -- Medical Loss Ratio (MLR MLR mixed lymphocyte reaction. MLR Myocardial laser revascularization, see there ). MLR was 85.7% for the quarter. The Company has initiated a number of actions to reduce medical costs, including a new national 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. network, reduced prescription management service costs, national contracting for ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. services, and an intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: focus on 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. Notwithstanding these efforts, the MLR will likely increase in the third quarter primarily due to the AHERF bankruptcy. -- Sales, General & Administrative (SG&A) Expenses. SG&A was 14.3% of 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. for the quarter. Total headcount decreased slightly for the quarter with some staffing decreases being offset by strategic hires. Over the next 18 to 24 months, the Company plans to create regional customer service centers to centralize cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. certain plan-level operational functions and to consolidate systems. Both efforts are expected to lower SG&A expenses long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. . -- Management Team. Coventry continued its commitment to building a leading senior management team. As announced late yesterday, Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs McDonough was promoted to chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . In May, Francis S Francis, French prince, duke of Alençon and Anjou Francis, 1554–84, French prince, duke of Alençon and Anjou; youngest son of King Henry II of France and Catherine de' Medici. . Soistman, Jr. was appointed president and chief executive officer of HealthAmerica 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 , Inc., and in early July, James E. McGarry was appointed senior vice president overseeing all customer service operations. Wise concluded, "Although we still have a great deal of work ahead of us, our strong management team, the quality of our markets, and a reasonable competitive environment give us confidence that our fundamental operational approach is building a foundation for an even stronger company." 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
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 1.56 members, of which 1.33 million are risk members, in a broad cross section of employer and government-funded groups in 21 markets throughout the Midwest, Mid-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. . This press release contains forward-looking information. The 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. are 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. Forward-looking statements 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. filed with the Securities and Exchange Commission for the year ended December 31, 1997. -0-
Coventry Health Care, Inc.
Unaudited Financial Highlights (1)
(In thousands, except per share and membership data)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
-------- -------- -------- --------
Operating revenues $583,804 $301,081 $914,013 $600,426
Operating earnings (loss) (51,238) 1,997 (44,060) (6,024)
Operating earnings (loss)
(excluding non-recurring
items) 11,542 1,997 18,720 (6,024)
Non-recurring gains (2) -- 9,607 -- 15,561
Net earnings (loss) (27,756) 6,590 (23,049) 5,739
Net earnings (loss)
(excluding non-recurring
items) 11,011 808 15,718 (3,571)
Earnings (loss) per share (0.47) 0.20 (0.50) 0.17
Earnings (loss) per share,
basic (excluding non-recurring
items) 0.19 0.02 0.34 (0.11)
Earnings (loss) per share,
diluted (excluding non-recurring
items) 0.17 0.02 0.30 (0.10)
Weighted average number of common
and common equivalent shares
outstanding, basic 58,592 33,390 45,970 33,112
Weighted average number of common
and common equivalent shares
outstanding, diluted 64,765 35,461 51,703 34,334
(1) Coventry Health Care's June 30, 1998, results reflect the
combined results of PHC and Coventry Corporation which merged on
April 1, 1998. Results prior to that time reflect Coventry
results only.
(2) Amounts included in other income, net of interest expense
COVENTRY HEALTH CARE, INC.
MEMBERSHIP
June 30,
1998
--------
At-risk enrollment by market:
Carolinas 21,317
Illinois/Chicago 57,572
Delaware/Baltimore 53,442
Georgia 16,602
Indiana 27,684
Iowa 80,431
Kansas City 43,819
Louisiana 39,435
Nebraska 33,110
Richmond 58,573
Missouri 309,226
Wichita 32,621
Florida 139,335
Western Pennsylvania 249,851
Central Pennsylvania 166,713
---------
1,329,731
---------
Non-risk enrollment 228,410
---------
Total 1,558,141
=========
Total enrollment by product:
Commercial HMO 922,631
Commercial PPO/POS 243,991
Medicare risk 65,173
Medicaid 97,936
Non-risk 228,410
---------
Total 1,558,141
=========
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,
1998 1997 1998 1997
-------- -------- -------- --------
Operating revenues:
Managed care premiums $561,145 $295,934 $885,898 $591,453
Management services 22,659 5,147 28,115 8,973
-------- -------- -------- --------
Total operating
revenues 583,804 301,081 914,013 600,426
Operating expenses:
Health benefits 480,985 253,536 756,299 517,812
Selling, general and
administrative 83,390 42,284 128,357 81,605
Depreciation and
amortization 7,887 3,264 10,637 7,033
Non-recurring items 62,780 -- 62,780 --
-------- -------- -------- --------
Total operating
expenses 635,042 299,084 958,073 606,450
Operating earnings (loss) (51,238) 1,997 (44,060) (6,024)
Other income, net of interest
expense 6,504 8,982 7,304 15,617
-------- -------- -------- --------
Earnings (loss) before income
taxes and minority interest (44,734) 10,979 (36,756) 9,593
Provision for (benefit from)
income taxes (16,978) 4,391 (13,707) 3,837
Minority interest -- (2) -- 17
-------- -------- -------- --------
Net earnings (loss) $(27,756) $ 6,590 $(23,049) $ 5,739
======== ======== ======== ========
Net earnings (loss) per
common and common equivalent
shares, basic $ (0.47) $ 0.2 $ (0.50) $ 0.17
======== ======== ======== ========
Net earnings (loss) per share,
basic (excluding non-recurring
items) $ 0.19 $ 0.02 $ 0.34 $ (0.11)
======== ======== ======== ========
Net earnings (loss) per share,
diluted (excluding non-recurring
items) $ 0.17 $ 0.02 $ 0.30 $ (0.10)
======== ======== ======== ========
Weighted average number of common
and common equivalent shares
outstanding, basic 58,592 33,390 45,970 33,112
Weighted average number of common
and common equivalent shares
outstanding, diluted 64,765 35,461 51,703 34,334
(1) Coventry Health Care's June 30, 1998, results reflect the
combined results of PHC and Coventry Corporation which merged on
April 1, 1998. Results prior to that time reflect Coventry
results only.
COVENTRY HEALTH CARE, INC.(1)
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(Unaudited)
June 30, December 31,
1998 1997
---------- ----------
ASSETS:
Current assets:
Cash and short-term investments $ 314,504 $ 157,849
Other current assets 160,395 79,275
---------- ----------
Total current assets 474,899 237,124
Long-term investments 152,613 76,288
Other long-term assets 422,826 155,919
---------- ----------
TOTAL ASSETS $1,050,338 $ 469,331
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Medical claim liabilities $ 335,083 $ 118,022
Other current liabilities 229,190 142,839
---------- ----------
Total current liabilities 564,273 260,861
Long-term liabilities 62,166 90,652
---------- ----------
Total liabilities 626,439 351,513
Stockholders' equity 423,899 117,818
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,050,338 $ 469,331
========== ==========
(1) Coventry Health Care's June 30, 1998, results reflect the
combined financial position of PHC and Coventry Corporation which
merged on April 1, 1998. Results prior to that time reflect
Coventry results only.
CONTACT: Coventry Health Care Inc., Bethesda Dale B. Wolf, 301/581-0600, ext. 2209 or Investor Relations Investor relations The process by which the corporation communicates with its investors. , 301/581-0600, ext. 2778 |
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