{loadposition link_supportresistance}

The Bethesda, Maryland-based company operates health plans, insurance companies, and network rental and workers' compensation services companies. When the company reveals its quarterly report card later in the day, it is expected to reflect on President Barack Obama's healthcare reform plans as well as the company's strategic initiatives.

Last month, the company decided to sell its unit First Health Services Corp. to Magellan Health Services, Inc. (MGLN) for $110 million in cash. The transaction is expected to close in the third quarter of 2009. Details of this unit sale may be given in the earnings statement today.

JPMorgan recently upgraded Coventry Health Care shares to "Neutral" from "Underweight" and said the stock is trading at a reasonable price. The brokerage also pointed out that 2009 and 2010 are expected to be tough for the company as it is exiting the private-fee-for-service business.

Another concern for the company is Obama Administration's healthcare reform plans. It is feared that a government health insurance plan will take customers away from private plans, thus hurting the revenues of private insurers. The U.S. President is trying to reduce health spending and extend coverage to about 46 million uninsured people.

Fitch's Rating Service last week reduced its rating on the company's stock to "Negative" from "Stable", reflecting the uncertainty associated with the impact of Obama's healthcare reform on private insurers. Fitch said in a statement, ''The Negative Outlook reflects the strong potential for national health care reform and its possible adverse implications on each company's financial strength and creditworthiness...Though no bill has been finalized yet, and multiple policy schemes are possible, most of the alternatives being debated could weaken health insurers' financial profiles in Fitch's view."

The company reported in April that profit for the first quarter plunged to $44.17 million or $0.30 per share from $125.0 million or $0.81 per share in the prior-year period, hurt by higher operating expenses. Total revenues increased 21.5% to $3.574 billion from $2.941 billion in the last year period.

While announcing the first-quarter results, the company also reiterated its full year earnings guidance and lifted the revenue outlook. Coventry Health said it expects earnings per share in the range of $1.70 - $1.90 for fiscal 2009. Further, full year consolidated revenue expectations were raised to a range of $13.59 billion-$13.99 billion from $13.06 billion-$13.73 billion. The company is likely to update the full year outlook today.

Among others in the industry, Aetna Inc. (AET) said Monday that second-quarter profit declined 28% from last year, hurt by higher commercial medical costs and lower-than-projected Medicare revenue. Net income for the quarter dipped to $346.6 million or $0.77 per share from prior year's $480.5 million or $0.97 per share. Total revenue grew to $8.671 billion from $7.828 billion in the previous year. The company also trimmed its fiscal 2009 operating earnings forecast drastically, citing higher anticipated commercial medical benefit ratio.

UnitedHealth Group Inc. (UNH) said last week that second-quarter net earnings surged to $859 million or $0.73 per share from $337 million or $0.27 per share reported a year ago. Revenues for the quarter revenues increased 7% to $21.66 billion from $20.27 billion generated last year.

Stock Quote

CVH opened second-quarter on April 1 at $12.79 and closed on June 30 at $18.71. It closed Monday's regular trading at $20.05, up $0.16 or 0.80%, on 1.46 million shares. For the past year, the stock traded in the range of $7.97-$39.36.

{loadposition link_nowtime}