Zacks Analyst Blog Highlights Coventry Health Care

CHICAGO -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Coventry Health Care, Inc. (NYSE: CVH), Aetna Inc. (NYSE: AET), Unitedhealth Group, Inc. (NYSE: UNH),WellPoint Inc. (NYSE: WLP) and Expedia (Nasdaq: EXPE).

Here are highlights from Friday's Analyst Blog:

Coventry Beats Expectations

Coventry Health Care, Inc. (NYSE: CVH) reported third quarter earnings of 66 cents per share, which was above the Zacks Consensus Estimate of 54 cents. The company earned 73 cents in the year-ago quarter.

Total operating revenues for the reported quarter increased 17.8% to $3.44 billion from the previous year's $2.92 billion. Revenues from managed care premiums rose 20% to $3.15 billion, while revenues from management services decreased to $290.9 million from $298.4 million a year earlier.

Due to reduced commercial risk and commercial management membership, total enrollment in Coventry plans increased 0.55% to 5.24 million members, mainly on gains in the Medicare D prescription drug program. The membership in that program increased 81,000 from the prior quarter.

Total operating expenses for the quarter came in at $3.29 billion, up 18.6% from the year ago quarter. Medical costs, the major operating expense component, rose to $2.66 billion from $2.20 billion last year. The medical loss ratio for the quarter (the proportion of premium revenue spent on providing medical care) reduced to 84.4 % from 86.4%.

For the quarter, Coventry Health displayed continued growth in all Medicare products, with Medicare Coordinated Care Product (CCP) membership rising 38% from the third quarter of 2008. The commercial group risk premium yields rose to $304.13 per member per month in the quarter, which reflected a 6.1% increase from the year-ago quarter.

Coventry ended the quarter with $1.71 billion cash and cash equivalents. Furthermore, Coventry exited the quarter with $1.71 billion in long-term debt. Coventry raised its fiscal 2009 earnings guidance to $2.01-$2.03, from the prior guidance of $1.85-$1.95 per share. The guidance excludes the impact of the First Health Services Corporation (FHSC) divestiture.

Coventry operates as a managed healthcare company in the United States. The company operates local health plans that serve markets primarily in the Mid-Atlantic, Midwest and Southeast United States. The company competes with big players like Aetna Inc. (NYSE: AET), Unitedhealth Group, Inc. (NYSE: UNH) and WellPoint Inc. (NYSE: WLP).

Currently we are Neutral on Coventry shares.