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Coventry Health Care Q4 Profit Tops View, But Revenues Miss

Coventry Health Care Q4 Profit Tops View, But Revenues Miss

Managed healthcare company Coventry Health Care, Inc. (CVH: Quote), which is being acquired by health insurer Aetna, Inc. (AET: Quote), reported Wednesday a profit for the fourth quarter that increased from last year, reflecting improved operating margins amid lower expenses and revenue growth. Earnings per share for the quarter topped analysts' expectations, while quarterly revenues missed their view.

"I am very pleased with the Company's strong fourth quarter and full year 2012 results, significantly exceeding our previous guidance. We continue to make progress in our Kentucky Medicaid business as evidenced by the sequential improvement in fourth quarter results," Chairman and CEO Allen Wise said in a statement.

The Bethesda, Maryland-based company reported net earnings of $119.34 million or $0.88 per share for the fourth quarter, higher than $85.70 million or $0.60 per share in the prior-year quarter.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.67 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Total operating revenues for the quarter grew 10 percent to $3.45 billion from $3.13 billion in the same quarter last year, but missed eleven Wall Street analysts' consensus estimate of $3.51 billion by a whisker.

However, total membership decreased to 5.36 million from 5.37 million at the end of the year-ago quarter.

Operating earnings margin for the quarter improved 40 basis points to 5.2 percent from last year's 4.8 percent as SG&A expense declined 120 basis points as a percentage of total revenue.

For fiscal 2012, the company reported net earnings of $487.06 million or $3.52 per share, lower than $543.11 million or $3.67 per share in the prior year. Analysts expected the company to report earnings of $2.78 per share for fiscal 2012.

Total operating revenues for the full year grew 16 percent to $14.11 billion from $12.19 billion in the previous year. Street was looking for full-year 2012 revenues of $14.10 billion.

"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," Wise added.

Aetna agreed in August 2012 to acquire Coventry Health Care for $7.3 billion, including assumption of debt. The deal will position Aetna as a major player in the government-financed health care business. Under Obama's healthcare reform law, Medicaid is set to expand from 2014.

The deal is expected to close in mid-2013, and Coventry shareholders overwhelmingly approved the deal on November 21, 2012.

CVH closed Tuesday's regular trading session at $46.40, up $0.07 on a volume of 0.54 million shares. In the past 52-week period, the stock has been trading in a range of $27.72 to $46.58.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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