Coventry Health Care lowers its guidance

Another shoe dropped in the managed healthcare space. Coventry(CVH) lowered its full year guidance to $3.65 to $3.75 from $ 4.39-$4.49. Higher than expected MLR is cited. The revision of Private Fee For Service (PFFS) seems to be firm specific driven by a negative development of its reserve (delayed claim submission is cited as the cause.). While the higher than expected MLR of its commercial business is quite a concern. Looking back to its 2008 1Q call, CFO, Shawn M. Guertin, confirmed a "stable trend at the neighborhood of 7.5%", after many of its major competitors (UNH, WLP) reported higher than expected inpatient unit cost. The management also backed its original guidance given the fact that most of its competitors lowered theirs. Management's credibility aside, this revision come barely as a surprise. It is merely a catch up with its competitors......