* Q1 EPS 62 cents vs 63-cent Street view
* Medicaid costs weigh
* Follows Aetna’s Q1 miss on Thursday
April 27 (Reuters) – Insurer Coventry Health Care Inc
reported quarterly profit that was slightly lower than
expected on Friday, hurt by high costs in its Medicaid plans for
low-income Americans.
While overall enrollment in Coventry’s Medicaid plans nearly
doubled, costs for a plan in the state of Kentucky were well
above premiums.
“Unfortunately, concern over the higher costs in Kentucky
will overshadow the otherwise solid results this quarter,”
Goldman Sachs analyst Matthew Borsch said in a research note.
Shares of Coventry, a mid-sized health insurer, rose 2 cents
to $32.70 in light pre-market trading.
Coventry’s report comes a day after larger rival Aetna Inc’s
profit missed Wall Street’s target and said
healthcare-claim costs may be about to rise, sending its shares
tumbling.
The quarterly earnings of UnitedHealth Group Inc and
WellPoint Inc, the two biggest health insurers, exceeded
expectations, and both raised their outlooks for the year.
Coventry’s first-quarter net income rose to $170.7 million,
or $1.20 per share, from $110.2 million, or 73 cents per share,
a year earlier.
Results in the quarter got a big boost from a release of
reserves related to its Medicare plans for seniors. Excluding
the reserve release, earnings of 62 cents per share were a penny
shy of the average estimate of analysts, according to Thomson
Reuters I/B/E/S.
Revenue grew 21 percent to $3.69 billion, about $200 million
ahead of estimates. Its membership jumped about 16 percent to
5.26 million, as Medicaid enrollment nearly doubled to 924,000.
Coventry saw greater-than-expected medical claims expenses
in Kentucky for its Medicaid plan, which became effective late
last year. The Kentucky contract represents about 5 percent of
company revenue, according to Goldman’s Borsch.
The company backed its 2012 earnings forecast of a range of
$3.10 to $3.30 per share. Analysts have been looking for $3.26.
Through Thursday, Coventry shares had risen more than 7
percent this year, less than the 12-percent climb for the Morgan
Stanley Healthcare Payor index of health insurers.
