41
Coventry Health Care
Coventry is far from the biggest managed-care company, but lately it’s looking like the rosiest of the group. While others struggled to add members, CEO Dale Wolf saw Coventry recruit 6,000 new patients in the fourth quarter, bringing membership to 2.5 million. Even though the Medicare Part D drug program is only about a year old, Coventry’s 687,000 senior patients accounted for 15% of its net profit in the final quarter of 2006. The Bethesda (Md.) insurer’s revenues have grown an average 20% a year for three years, and its medical loss ratio, or fraction of premiums it had to pay back out in claims, improved across almost all product lines in 2006. And Coventry entered the lucrative field of workers’ compensation by acquiring First Health Group for $1.8 billion. In February the insurer announced it would boost that business by paying $387.5 million to acquire Concentra’s workers’ compensation unit.
| Overall Grade | A- |
|
| Market Data | CVH | |
| Market Value (2/28/2007) |
$8.7 Billion |
|
| Profitability* | 29.8% | B+ |
| Sales Growth Rate** | 20.0% | B+ |
| 12-Month Sales | $7.7 Billion |
|
| 12-Month Net Income | $0.6 Billion |
|
| Total Return | Past 12 Months-8.8% | Past 36 Months87.2% |
| Economic Sector | Health Care | |
| Industry | Managed Health Care | |
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.
$FOOTNOTE
