Coventry Health Care Inc. reduced its 2008 profit forecast on Monday, citing the impact of the flu on medical costs and pressure on net investment income, but expressed confidence in all its business lines amid fears of a broad downturn among health insurers.
Coventry Health Care Inc. is a managed health care company in the United States.
Investors have been waiting for Coventry's view of 2008 after two rival U.S. health insurers sharply lowered their forecasts last week, causing turmoil in health-insurer stocks.
Coventry backed its previous view of medical-cost trends for the year and said performance in its Medicare plans for the elderly remains on track.
Coventry shares were off $1.38 or 3.2 percent, to $41.37 in morning trade on the New York Stock Exchange, slightly underperforming other health insurer stocks and the broader U.S. markets.
Coventry expects full-year earnings per share of $4.39 to $4.50, or growth of 10 percent to 13 percent from 2007. In February, it projected 2008 earnings of $4.42 per share to $4.58 per share.
"Not withstanding the downward adjustment to our full-year EPS range, we are very pleased with the consistent performance and strong, fundamentally sound positioning of our ongoing businesses," Chief Financial Officer Shawn Guertin said in a statement.
Coventry, the sixth-largest U.S. health insurer by market value, is the last major health insurer to comment on its 2008 prospects after a profit warning early last week by WellPoint Inc., the largest health insurer by membership, sparked a broad sell-off.
WellPoint's announcement sparked fears of a downturn in business fundamentals for the entire industry. Since then, the S&P Managed Healthcare index, which includes the six largest health insurers, is off some 18 percent.
Coventry expects flu-related medical costs across all lines of business to be about 4 cents per share higher than originally expected. The flu costs are only expected to hurt results in the first quarter.
Coventry cut its first-quarter profit projection to 81 cents per share from 85 cents to 87 cents previously.
The Bethesda, Maryland-based company also projected greater pressure on net investment income for 2008, as the U.S. Federal Reserve lowers interest rates. It projected net investment income will be 4 cents per share lower than previously expected, with the impact generally felt throughout the year.
WellPoint cited high medical costs, weaker enrollment and a worsening economy in cutting its 2008 profit forecast.
Humana Inc. on Wednesday sharply cut its first-quarter and full-year outlook, blaming high drug costs for one of its Medicare prescription plans.
UnitedHealth Group Inc., the largest health insurer by market value, said Wednesday there may be pressure on first-quarter and full-year 2008 results but that it was "premature to draw adverse conclusions."
Aetna Inc. and Cigna Corp. affirmed their 2008 forecasts and their stocks have held up best over the past week.
After it turned out that Deputy Prime Minister Andrei Belousov included the Fonbet betting company in the list of backbone enterprises that can count on state support, everyone started talking about these bookmakers.