Bethesda, MD -(BusinessWire)- Coventry Health Care, Inc. (NYSE: CVH) recently reported consolidated operating results for the quarter and fiscal year ended December 31, 2012. Operating revenues totaled $3.4 billion for the quarter with net earnings of $119.3 million, or earnings per diluted share (EPS) of $0.88. For the year ended December 31, 2012, total operating revenues were $14.1 billion with net earnings of $487.1 million, or $3.52 EPS.
“I am very pleased with the Company’s strong fourth quarter and full year 2012 results, significantly exceeding our previous guidance,” said Allen F. Wise, chairman and chief executive officer of Coventry. “We continue to make progress in our Kentucky Medicaid business as evidenced by the sequential improvement in fourth quarter results. In addition, the Company recently completed the 2013 Medicare Annual Enrollment Period with an outstanding organic growth result in our Medicare Advantage Coordinated Care Plans. We look forward to combining our strengths with those of Aetna to further our shared commitment to improving the health and well-being of our members.”
Fourth Quarter and Full Year 2012 Consolidated Highlights
- Fourth quarter total revenues up 10% from the prior year quarter
- Full year 2012 total revenues up 16% from the prior year
- Total membership of 5,362,000, an increase of 597,000 members from the prior year, driven by growth across the Company’s Government Programs businesses in Medicare Advantage Coordinated Care Plans (MA-CCP), Medicare Part D, and Medicaid
- Sequential enrollment growth in MA-CCP and Medicare Part D
- Successful execution during the 2013 MA-CCP Annual Enrollment Period resulting in growth for January 2013 of approximately 48,000 members, or 18%
- Awarded Kentucky Region 3 Medicaid contract with implementation effective January 1, 2013, representing approximately 20,000 additional members
- Awarded four regions for the Florida Long-Term Care Program to be phased in during 2013 and 2014
- Reduced selling, general, and administrative (SG&A) expense as a percentage of total revenue from 16.5% in 2011 to 14.7% in 2012
- Fourth quarter SG&A expense of 16.0% of total revenue, a decline of 120 basis points (bps) from the prior year quarter, includes costs of $7.7 million, or $0.03 EPS, associated with the pending Aetna transaction
- GAAP cash flows from operations were $249.4 million, or 209% of net income in the quarter
Selected Fourth Quarter and Full Year 2012 Highlights
- As of December 31, 2012, MA-CCP membership was 259,000, an increase of 37,000 members, or 17%, from the prior year quarter and an increase of 3,000 members from the third quarter of 2012
- The MA-CCP Medical Loss Ratio (MLR) was 83.9% in the quarter and 81.1% for the full year
- Excluding the impact of the Risk Adjustment Data Validation (RADV) audit reserve reduction during the first quarter of 2012, the full year MLR was 83.5%
Medicare Part D
- As of December 31, 2012, Medicare Part D membership was 1,578,000, an increase of 435,000 members, or 38%, from the prior year quarter and an increase of 33,000 members from the third quarter of 2012
- The Medicare Part D MLR was 70.7% in the quarter and 85.4% for the full year
- Reduction in Coventry’s auto-assign footprint resulted in a loss of 143,000 members for January 2013 compared to year-end 2012
- As of December 31, 2012, Medicaid membership was 974,000, an increase of 282,000 members, or 41%, from the prior year quarter and a net decrease of 24,000 members from the third quarter of 2012 due to membership attrition during the Kentucky open enrollment period offset by growth in other markets
- The Medicaid MLR was 90.4% in the quarter, a decrease of 260 bps from the third quarter of 2012, and 94.1% for the full year
- The Company’s Kentucky Medicaid business produced an MLR of 96.7% in the fourth quarter, an improvement of 1,170 bps from the third quarter of 2012 and an improvement of 1,990 bps from the prior year quarter. The significant sequential improvement was driven by receipt of the Company’s contractual 2012 rate increase of 5.3% effective 10/1/12, implementation of member co-payments, and the impact of the Company’s ongoing medical cost initiatives.
- As of December 31, 2012, commercial risk membership was 1,474,000, a decrease of 15,000 members, or 1%, from the third quarter of 2012
- The commercial risk MLR was 82.2% in the quarter, a decrease of 150 bps from the prior year quarter, and 81.7% for the full year
- Investment portfolio in a net unrealized gain position of $111 million as of December 31, 2012, a decrease of $18 million from the third quarter of 2012
- Repurchased 9.9 million shares, or 7% of total shares outstanding, for $328.0 million during 2012
- $950 million in free cash at the parent at year-end
- Board of Directors approval of the Company’s fourth quarterly cash dividend paid on January 7, 2013
The complete earnings release is available here: Coventry Health Care Reports Fourth Quarter 2012 Earnings (PDF)
Coventry WCS is a WorkCompWire Advertising Partner.
This is not a paid placement.