Coventry Health Care — Investor Presentation (March 2008)
16 slides from Coventry Health Care's investor presentation, Mar 17, 2008
Slide 1: Investor Presentation: March 2008
(Goon Health Core Investor Presentation: March 2008
Slide 2: Forward-Looking Statement
Forward-Looking Statement Certain statements in this presentation will be forward-looking statements. Forward-looking statements are defined as statements that are not historical facts and include those statements relating to future events or future financial performance. Actual performance may be s
Slide 3: Business Update: Results Through February 2008
(Goon Health Core Business Update: Results Through February 2008
Slide 4: Fundamentals Are Just Fine
Fundamentals Are Just Fine Commercial Medicare Advantage Medicare Part D Medicaid XXAN @coventry Torrie cere
Slide 5: Two Headwinds
Two Headwinds = Increased medical costs driven by influenza = Higher expenses than average of past 3 years = $0.04 impact on Q1 company-wide = Lower investment income = Driven by Fed rate cuts = $0.01 impact on Q1 = $0.03 additional impact on remainder of 2008
Slide 6: Commercial Group Risk: Key Drivers
Commercial Group Risk: Key Drivers " No change in trend outlook = Continues to remain stable at ~ 7.5% (same as 2007) = Reserve development consistent with expectations = “Real Time” indicators (inpatient days, Rx) look fine " No change in pricing outlook or philosophy = Competitive landscape remain
Slide 7: Commercial Group Risk: Revenue Drivers
Commercial Group Risk: Revenue Drivers = Membership down as expected in Q1 2008 = Decrease similar to Q1 2007 = Large group driven; small group continues to grow = Still targeting slight growth by year-end = Premium yields continue to be impacted by mix changes coventry J vciin care
Slide 8: Medicare Advantage
Medicare Advantage = Targeting 2008 membership growth of 100,000 = 29,000 net adds through February = PEBTF win effective May 2008 = Risk revenue = Timing and demographics of new members « Medical costs = Flu impact seen in Q1 = Excluding flu, 2008 still trending consistent with expectations @covent
Slide 9: Medicare Part D
Medicare Part D = 850,000 members through February " No change in MLR expectations = Performance on track for full year MLR in low 80%’s = Qt 2008 on track for MLR of 104% = Stability in enhanced plan = Stable membership base in 2008 compared to 2007 = Higher co-pays / cost sharing @coventry J rein
Slide 10: Medicaid: Solid results through February
= Solid results through February =» Membership up 7,000 members = MLR expectations for full year now in mid 80%’s = Opportunities: TN, PA, FL (Healthy Kids) « Notified of termination of PA Behavioral Health arrangement (107,000 members) effective July 2008 = Globally capitated “pass through” arrange
Slide 11: Individual
Individual = Momentum from 2007 continues = MLR through February as expected = Strong growth continues = 7,000 organic adds through February = 2008 membership expected to reach 150,000 = Continuing national expansion plan @coventry T
Slide 12: Specialty Division
Specialty Division = Workers’ Comp Services = Strong revenue growth continues = Build or acquire additional specialty businesses = Behavioral - Closed small acquisition in February = Dental - Acquire/Partner (in-process) = Life - Build
Slide 13: Revised 2008 Guidance
Revised 2008 Guidance Risk Revenue $10,650 - $11,100 Mgmt Svcs Revenue $1,340 - $1,390 Total Revenue $11,990 - $12,490 MLR 79.9% - 80.3% Cost of Sales $160 - $180 SG8A $2,100 - $2,160 D&A $168 - $178 Investment Income $113.5 - $121.0 Interest Expense $92 - $94 Tax Rate 36.7% - 37.3% Diluted # of Sha
Slide 14: Long Term Outlook
COVENTRY ] Health Core Long Term Outlook
Slide 15: Long Term Strategy
Long Term Strategy = THE MARKET HAS NOT CHANGED IN THE PAST 2 MONTHS!! = Long term disciplined approach = Balanced and diversified portfolio of businesses = Health plans are the foundation = Exposure and expertise in most attractive markets = Small Group = Individual = Government = Balanced exposure
Slide 16: Long Term Fundamentals
Long Term Fundamentals = Operating earnings growth of 8% - 11% = Predictable and stable “same store” performance = Successful organic growth initiatives = Resourceful use of capital = Acquisitions = Share buyback Consistent low to mid teens EPS growth @coventry Tq
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