Coventry Health Care Inc.
) reported fourth-quarter 2012 operating earnings per share of 88
cents, which surpassed the Zacks Consensus Estimate of 67 cents
as well as the prior-year earnings of 60 cents. Coventry reported
net income of $119.3 million compared with $85.7 million in the
Operating revenues in the reported quarter increased 10% year
over year to $3.4 billion, lagging the Zacks Consensus Estimate
of $3.51 billion. Managed care premiums increased 11% year over
year to $3.17 billion, while revenues from management services
declined 1% to $284 million.
Coventry's total operating expenses expanded 9.6% year over
year to $3.27 billion. Additionally, medical costs, the major
component of operating expenses, increased to $2.61 billion from
$2.33 billion in the prior-year quarter.
Likewise, Coventry's selling, general and administrative
(SG&A) expenses increased to $551.8 million from $539.7
million recorded a year ago, while depreciation and amortization
(D&A) expenses increased to $36.5 million from $34.7 million
in the year-ago quarter. However, cost of sales declined to $65.4
million from $73.9 million in the fourth quarter of 2011.
Total membership witnessed a decline of 12,000 from the third
quarter of 2012 to 5,362,000 in the reported quarter.
The Commercial Risk membership for the reported quarter was
1,474,000, down 15,000 members from the prior quarter. Commercial
Risk Medical Loss Ratio (MLR) in the reported quarter came in at
Medicare Advantage Coordinated Care Plans
Coventry reported MA-CCP membership of 259,000, showing an
increase of 37,000 members from the fourth quarter of 2011. The
MA-CCP MLR came in at 83.9%.
Medicare Part D:
Medicare Part D membership stood at 1,578,000 at the end of the
reported quarter, up 435,000 members from the prior-year quarter.
The Medicare Part D MLR in the quarter came in at 70.7%.
The Medicaid membership at the end of the reported quarter stood
at 974,000, up 282,000 members over the fourth quarter of 2011.
The Medicaid MLR in the quarter came in at 90.4%.
Full-Year 2012 Highlights
For full-year 2012, Coventry reported operating income of
$3.52 per share against $3.67 in 2011. Earnings per share
surpassed the Zacks Consensus Estimate of $2.80. Reported net
income came in at $487.1 million against $543.1 million in
Coventry's operating revenue amounted to $14.11 billion in
2012, showing a year-over-year increase from $12.19 billion,
while staying in line with the Zacks Consensus Estimate.
Additionally, total expenses increased to $13.35 billion from
Balance Sheet and Capital Structure
Coventry ended the reported quarter with approximately $1.40
billion in cash and cash equivalents, down from $1.58 billion at
the end of 2011. Deployable cash at the parent company stood at
$950 million at the end of 2012. Operating cash flow totaled
$249.4 million in the reported quarter and $470.6 million in
As of Dec 31, 2012, Coventry had total assets of $8.75 billion
and shareholders' equity of $4.72 billion. The company exited
2012 with $1.59 billion in long-term debt, inching up from $1.58
billion at 2011 end.
Share Repurchase Update
Coventry spent $328 million to repurchase 9.9 million shares
On Jan 7, 2013, Coventry paid a quarterly cash dividend of
12.5 cents per share to shareholders of record as of Dec 21,
Results at Other HMOs
Another health maintenance organization (HMO),
) reported fourth-quarter 2012 adjusted income of $1.03 per
share, beating the Zacks Consensus Estimate of 95 cents. Adjusted
income also surpassed the year-ago earnings of 99 cents per share
UnitedHealth Group Inc.
) reported fourth-quarter 2012 earnings of $1.20 per share, in
line with the Zacks Consensus Estimate. Earnings, however,
increased 2.6% on a year-over-year basis.
Coventry carries a Zacks Rank #4 (Sell). Another HMO,
Health Net Inc.
), carrying a Zacks Rank #2 (Buy), is worth considering.
COVENTRY HLTHCR (CVH): Free Stock Analysis
HEALTH NET INC (HNT): Free Stock Analysis
UNITEDHEALTH GP (UNH): Free Stock Analysis
WELLPOINT INC (WLP): Free Stock Analysis
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