Coventry Health Care to Sell Illinois Health Plan.

BETHESDA, Md.--(BW HealthWire)--Oct. 5, 1998--Coventry Health Care, Inc. (Nasdaq/NM:CVTY) today announced that it has signed a definitive stock purchase agreement with First American Group of Companies, Inc., the parent of American Health Care Providers, Inc. (AHCP), providing for AHCP's acquisition of Coventry's subsidiary, Principal Health Care of Illinois (PHC of Illinois). The terms of the transaction were not disclosed.

Consummation of the transaction will be subject to regulatory approval and other conditions and is currently anticipated to occur in the fourth quarter of 1998. PHC of Illinois serves more than 57,500 risk members and 2,600 non-risk members in Chicago and surrounding counties. Coventry Health Care acquired the plan in April 1998 as part of its merger with Principal Health Care, which acquired the plan, formerly named FHP of Illinois, Inc., from Pacificare Health Systems, Inc in 1997.

"When we merged with Principal Health Care this past April, we knew that we would need to focus our resources in fewer markets. Our market-by-market review targeted the Chicago area as a highly competitive market where we had small market share and limited opportunity," said Dale B. Wolf, chief financial officer of Coventry. "American Health Care is based in Chicago and is committed to growing its market share. We believe that they are positioned to continue to provide our members with quality health care services."

Coventry Health Care is a managed health care company that provides a full range of managed care products and services including HMO, PPO, POS, Medicare Risk and Medicaid to 1.5 million members in a broad cross section of employer and government-funded groups in 21 markets throughout the Midwest, Mid-Atlantic and Southeast United States.

This press release contains forward-looking information. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act 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 filed with the Securities and Exchange Commission for the year ended December 31, 1997.