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Coventry 2Q profit tumbles, beats expectations
BETHESDA — Coventry Health Care Inc.’s second-quarter net income plunged 59 percent compared with a year ago when the health insurer recorded a gain tied to a litigation settlement. The latest results still beat Wall Street expectations.
The Bethesda, Md., company reported net income of $91.7 million, or 65 cents per share, in the three months that ended June 30, down from $224.5 million, or $1.50 per share, in the previous year’s quarter, when the insurer recorded a gain of 68 cents because it set aside more money than it needed for the settlement.
In the latest quarter, Coventry recorded a $7.7 million charge due to a Kansas Medicaid contract that is not being renewed. Earnings totaled 68 cents per share not counting that charge.
Revenue climbed 16 percent to $3.52 billion from $3.03 billion a year ago.
Analysts surveyed by FactSet expected, on average, earnings of 64 cents per share on $3.51 billion in revenue.
Coventry said its Medicare Advantage membership climbed 16 percent to 253,000 in the quarter compared to last year, and Medicaid enrollment doubled to about 1.5 million people.
Medicare Advantage plans are privately run versions of the government’s Medicare program for the elderly and disabled people. Medicaid is the state-federal program that provides coverage for the needy, aged and disabled.
The insurer also said its medical costs climbed 23 percent to $2.76 billion in the quarter.
Coventry reaffirmed its 2012 forecast of earnings ranging from $3.10 to $3.30 per share. It also raised its expected revenue range slightly to between $14.065 billion and $14.265 billion.
Not counting a one-time gain, the forecast amounts to $2.52 to $2.72 per share. Leerink Swann analyst Jason Gurda said in a research note he expects annual earnings of $2.72 per share.
Analysts forecast, on average, earnings of $2.85 per share on $14.15 billion in revenue.
Coventry shares fell 28 cents to $30.44 in premarket trading.
