Coventry Health 4th-qtr profit jumps 39 percent
BETHESDA, Md. (AP) — Coventry Health Care's fourth-quarter earnings jumped 39 percent, as the health insurer's enrollment in Medicaid coverage and Medicare prescription drug plans helped counter rising costs.
The Bethesda, Md., company earned $119.3 million, or 88 cents per share, in the three months that ended Dec. 31. That compares to net income of $85.7 million, or 60 cents per share, in the final quarter of 2011. Revenue climbed 10 percent to about $3.45 billion.
Analysts surveyed by FactSet expected, on average, earnings of 67 cents per share on $3.53 billion in revenue.
Coventry's total membership climbed more than 12 percent to about 5.4 million people. The insurer's Medicaid enrollment jumped 41 percent to 974,000 compared to 2011.
Medicaid is the state and federally funded program that provides coverage for the poor and disabled people. States hire insurers to administer the coverage.
Enrollment in Coventry's Medicare Part D prescription drug coverage climbed 38 percent to nearly 1.6 million people. Medicare is the federally funded program that covers the elderly and disabled people.
The company also said its operating expenses climbed more than 9 percent to $3.27 billion, as medical costs grew.
Coventry Health Care Inc. is in the process of being acquired by a larger insurer, Aetna Inc., in a $5.7 billion deal expected to close in the middle of this year.
Coventry's strong quarter and growth it has experienced so far this year in its Medicare Advantage plans are positives for Aetna, Leerink Swann analyst Jason Gurda said in a research note. Medicare Advantage plans are privately administered versions of Medicare coverage.
Shares of Coventry fell 6 cents to $46.34 Wednesday afternoon, while broader trading indexes also dropped less than 1 percent. Aetna shares fell 7 cents to $49.48.