DOW JONES NEWSWIRES
Coventry Health Care Inc.'s (CVH) second-quarter profit tumbled on a large litigation charge, but earnings excluding that beat analysts' expectations amid better-than-expected revenue and lower medical costs.
The managed-care company also raised its 2010 earnings target by 8 cents to $2.55 to $2.70 a share and boosted the low end of revenue forecast.
Coventry's profit has been beating analysts' expectations in recent quarters after posting lower earnings in 2008 and early 2009. Moody's Investors Service in June boosted its ratings outlook on the company to stable, saying it believes Coventry's results will further improve after shedding unprofitable divisions and renewing focus on its core business.
Also helping insurers of late has been reduced medical-care usage by customers, as evidenced by a host of companies in the sector reporting lower second-quarter claims costs.
Coventry reported a profit of $1 million, or 1 cents a share, down from $18.4 million, or 12 cents a share, a year earlier, which included a 34-cent loss from discontinued operations. Earnings were $1.01 a share for the latest period excluding a Medicare-related gain and the charge from a litigation judgment regarding the payment of services involving workers' compensation claims.
Revenue fell 18% to $2.87 billion as the company isn't offering a Medicare Advantage private fee-for-service program this year.
Analysts polled by Thomson Reuters most recently estimated earnings of 52 cents a share and $2.84 billion in revenue.
Coventry's medical-expense ratio, or the percentage of premium revenue used to pay patient bills, fell to 79.1% from 86.4%.
Total membership fell 6% to 4.9 million from a year earlier on the Medicare move, but increased 1% during the quarter.
Shares closed at $18.85 Thursday and were inactive premarket. The stock has fallen 22% this year.
-By Jodi Xu, Dow Jones Newswires; 212-416-3037; email@example.com