Coventry Health Care Inc.
) reported first-quarter 2013 operating earnings per share of
$1.00, which surpassed the Zacks Consensus Estimate of 79 cents
as well as the prior-year earnings of 62 cents.
Including the impact of Medicare Advantage Risk Adjustment
Data Validation (RADV) prior period reserve release of 58 cents
in the year-ago quarter, Coventry reported a net income of $135.4
million or $1.00 per share compared with $170.7 million or $1.20
per share in the prior-year quarter.
Operating revenues of Coventry in the reported quarter
declined 4.7% year over year to $3.5 billion, lagging the Zacks
Consensus Estimate of $3.68 billion. Managed care premiums
declined 4.4% year over year to $3.24 billion, while revenues
from management services declined 7.2% to $283.6 million.
Coventry's total operating expenses declined 3.3% year over
year to $3.30 billion. Additionally, medical costs, the major
component of operating expenses, declined to $2.69 billion from
$2.81 billion in the prior-year quarter.
Likewise, Coventry's cost of sales declined to $59.49 million
from $67.95 million in the first quarter of 2012. However,
selling, general and administrative (SG&A) expenses increased
to $520.3 million from $502.9 million recorded a year ago, while
depreciation and amortization (D&A) expenses increased to
$37.6 million from $36.3 million in the year-ago quarter.
Total membership of Coventry witnessed a decline of 90,000
from the first quarter of 2012 to 5,172,000 in the reported
The Commercial Risk membership for the reported quarter was
2,182,000, down 22,000 members from the prior-year quarter.
Commercial Risk Medical Loss Ratio (MLR) in the reported quarter
came in at 77.9%.
Medicare Advantage Coordinated Care Plans
Coventry reported MA-CCP membership of 309,000, showing an
increase of 59,000 members from the first quarter of 2012. The
MA-CCP MLR came in at 84.6%.
Medicare Part D:
Medicare Part D membership stood at 1,450,000 at the end of the
reported quarter, down 8,000 members from the prior-year quarter.
The Medicare Part D MLR in the quarter came in at 93.4%.
The Medicaid membership at the end of the reported quarter stood
at 892,000, down 32,000 members over the first quarter of 2012.
The Medicaid MLR in the quarter came in at 86.4%.
Balance Sheet and Capital Structure
Coventry ended the reported quarter with approximately $1.53
billion in cash and cash equivalents, up from $1.40 billion at
the end of 2012. Deployable cash at the parent company stood at
$950 million at the end of Mar 2013. Operating cash flow totaled
$222.2 million in the reported quarter.
As of Mar 31, 2013, Coventry had total assets of $8.96 billion
and shareholders' equity of $4.84 billion. The company exited the
reported quarter with $1.59 billion in long-term debt, in line
with 2012 end.
Results at Other HMOs
Another health maintenance organization (HMO),
) reported first-quarter 2013 adjusted income of $2.94 per share,
beating the Zacks Consensus Estimate of $2.37. Adjusted income
also surpassed the year-ago earnings of $2.34 per share by
Health Net Inc.
) first-quarter 2013 operating income came in at $8.2 million or
10 cents per share, rebounding from the year-ago loss of $8.1
million or 10 cents per share. Operating income, however, lagged
the Zacks Consensus Estimate of 41 cents per share.
UnitedHealth Group Inc.
) reported first-quarter 2013 earnings of $1.16 per share, in
line with the Zacks Consensus Estimate. Earnings, however,
declined 11.4% on a year-over-year basis.
Coventry carries a Zacks Rank #2 (Buy).
COVENTRY HLTHCR (CVH): Free Stock Analysis
HEALTH NET INC (HNT): Free Stock Analysis
UNITEDHEALTH GP (UNH): Free Stock Analysis
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