By Melodie Warner
Coventry Health Care Inc.'s (CVH) third-quarter earnings fell
14% as the managed-care company spent more to cover patients'
bills, though increased membership helped to improve its
revenue.
The company also raised the low end of its full-year earnings
estimate by 15 cents to between $3.25 and $3.30 a share and trimmed
its revenue estimate to between $14.06 billion and $14.17 billion.
Its July forecast was for revenue of $14.065 billion to $14.265
billion.
The performance of Coventry's profit has been mixed over the
past year as higher claims costs and reduced membership have
partially offset the positive impact from consumers cutting back on
doctor visits amid a sluggish economy.
Coventry also was one of three insurers to win contracts last
year to cover Kentucky's Medicaid population. The health program
for the poor is jointly paid for by states and the federal
government. But Kentucky's high health-care costs have overwhelmed
incoming revenue from the state in recent quarters. Coventry has
said it could see a reasonable profit in Kentucky next year.
Meanwhile, Aetna Inc. (AET) agreed in August to acquire Coventry
in a $5.7 billion cash and stock deal that will make Aetna one of
the largest providers of government-financed health care. Known
more for commercial health insurance, Aetna on Thursday reported a
surprise 1.8% increase in third-quarter earnings as higher premiums
contributed to a 6% rise in revenue and masked a slight decline in
medical membership.
Coventry reported a profit of $105.3 million, or 78 cents a
share, down from $122.7 million, or 83 cents, a year earlier.
Revenue jumped 16% to $3.46 billion.
Analysts polled by Thomson Reuters most recently forecast
earnings of 73 cents on revenue of $3.5 billion.
Coventry's medical-expense ratio, or the percentage of premium
revenue used to pay patient bills, was 84.4%, up from 81.5% a year
earlier and down from 85.9% in the prior quarter. Total operating
expenses climbed 19%.
Total membership grew 1.8% to 5.37 million from 5.28 million in
the prior quarter.
Shares closed Thursday at $43.93 and were inactive premarket.
The stock is up 45% so far this year.
Write to Melodie Warner at melodie.warner@dowjones.com
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