The Bethesda, Md., company said Wednesday that operating expenses rose 7 percent to $2.98 billion in 2011's final quarter. The cost of sales, medical costs and selling, general and administrative expenses all climbed. In contrast, operating expenses fell 14 percent in the final quarter of 2010.
The insurer earned $85.7 million, or 60 cents per share, in the three months that ended Dec. 31. That compares with net income of $150.3 million, or $1.01 per share in the last quarter of 2010.
Adjusted earnings, which exclude a Medicare Advantage product Coventry did not renew, were 58 cents per share. Analysts surveyed by FactSet expected, on average, earnings of 64 cents per share.
Revenue rose 3 percent to $3.13 billion, which topped analysts' expectations of $3.09 billion.
Leerink Swann analyst Jason Gurda said in a research note that a higher-than-normal tax rate brought down earnings.
Medical membership, which includes commercial health insurance and government-sponsored Medicare and Medicaid coverage, climbed 6 percent to 3.6 million compared to the third quarter.
For the full year, Coventry earned $543.1 million, or $3.70 per share, on $12.19 billion in revenue. It made $438.6 million, or $2.97 per share, on $11.59 billion in revenue in 2010.
This year the insurer expects earnings to range from $3.10 to $3.30 per share. Analysts expect earnings of $3.27 per share.
Coventry shares fell 31 cents to $30.69 in afternoon trading.
