BETHESDA, Md.–(BUSINESS WIRE)–Coventry Health Care, Inc. (NYSE: CVH) today reported consolidated operating results for the quarter ended March 31, 2011. Operating revenues totaled $3.0 billion for the quarter with net earnings of $110.2 million, or earnings per diluted share (EPS) of $0.74. These results include EPS of $0.08 from the Medicare Advantage Private Fee-for-Service (MA-PFFS) product.
“We are pleased to report a strong start to the year with performance across all seven of our core businesses meeting or exceeding our expectations,” said Allen F. Wise, chairman and chief executive officer of Coventry. “In addition, today we are increasing our 2011 EPS guidance driven by an improved revenue outlook coupled with SG&A leverage.”
First Quarter 2011 Consolidated Highlights
- Revenues up 6.6% from the prior year quarter
- EPS up 12.1% from the prior year quarter
- Commercial risk membership of 1,636,000, an increase of 135,000 members from the prior year quarter
- Approximately $750 million of deployable free cash at the parent at quarter-end
- $150.5 million payment into escrow for potential litigation settlement(1) made in February
- Repurchased 1.7 million shares for $50.2 million during the quarter
- Increased share repurchase authorization by 7.5 million shares
- Total remaining share repurchase authorization of 11.0 million shares at quarter-end
Selected First Quarter 2011 Highlights
- Health Plan Commercial Risk. As of March 31, 2011, health plan commercial risk membership was 1,636,000, an increase of 135,000 members from the prior year quarter. The health plan commercial group risk medical loss ratio (MLR) of 80.2% in the quarter was unchanged from the MLR reported in the prior year quarter.
- Medicare Advantage. As of March 31, 2011, Medicare Advantage Coordinated Care Plan (MA-CCP) membership was 219,000, an increase of 29,000 members from the prior year quarter, largely driven by the acquisition of Mercy Health Plans which closed on October 1, 2010. The MA-CCP MLR was 84.2% in the quarter, a decrease of 150 basis points (bps) from the prior year quarter. During the first quarter, the MA-PFFS product line contributed $0.08 EPS. As previously announced, the Company did not renew this product line effective January 1, 2010.
- Medicare Part D. As of March 31, 2011, Medicare Part D membership was 1,159,000, a decrease of 441,000 members from the prior year quarter. The Medicare Part D MLR was 95.8% in the quarter, an increase of 50 bps from the prior year quarter.
- Medicaid. As of March 31, 2011, Medicaid membership was 468,000, an increase of 62,000 members from the prior year quarter, largely driven by entry into new markets in Nebraska and Pennsylvania during 2010. The Medicaid MLR was 86.0% in the quarter, an increase of 200 bps from the prior year quarter.
2011 FULL YEAR GUIDANCE
- Risk revenue of $10.50 billion to $10.90 billion
- Management services revenue of $1.175 billion to $1.195 billion
- Consolidated revenue of $11.675 billion to $12.095 billion
- Consolidated MLR of 81.9% to 82.5%
- Cost of sales expense of $264.0 million to $271.0 million
- Selling, general, and administrative expense (SG&A) of $2.00 billion to $2.04 billion
- Depreciation and amortization expense of $136.0 million to $140.0 million
- Other income of $74.0 million to $78.0 million
- Interest expense of $95.0 million to $102.0 million
- Includes projected interest expense that would result from any refinancing activities that the Company may pursue in advance of 2012 debt maturities
- Tax rate of 36.0% to 37.0%
- Diluted share count of 147.0 million to 149.0 million
- EPS of $2.65 to $2.85
Mr. Allen F. Wise, chairman and chief executive officer of Coventry, will host a conference call at 8:30 a.m. ET on Friday, April 29, 2011. To listen to the call, dial toll-free at (800) 316-8317 or, for international callers, (719) 325-2443. Callers will be asked to identify themselves and their affiliations. The conference call will also be webcast from Coventry’s Investor Relations site at www.coventryhealthcare.com. Coventry asks participants on both the call and webcast to review and be familiar with its filings with the Securities and Exchange Commission. 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 7228999.