UPDATE 3-Coventry Q2 profit tops estimate, shares rise

* Q2 EPS 50 cents, ex items, vs 40 cents Street estimate

* Raises FY view, sees 2009 EPS of $1.85-$1.95

* Shares rise 11 percent (Adds analyst comment, shares)

NEW YORK, July 28 (Reuters) - Coventry Health Care Inc (CVH.N) posted a sharp drop in quarterly net profit on Tuesday, hurt by a charge tied to a sale, but easily topped analyst projections as its business serving employers improved.

The diversified regional health insurer also raised its full-year forecast, and its shares rose 11 percent.

Net income tumbled to $18.4 million, or 12 cents per share, in the second quarter, from $83.2 million, or 55 cents per share, a year earlier.

Excluding the goodwill impairment charge, earnings were 50 cents a share, 10 cents above the average expectation of analysts, according to Reuters Estimates.

Revenue rose 19 percent to $3.54 billion, ahead of the $3.47 billion expected by analysts.

"The outperformance in the quarter was from a slightly stronger top-line, better operating leverage and higher than expected investment income," Wells Fargo analyst Matt Perry said in a research note that described the quarterly results as "strong."

Coventry's total membership stood at 5.2 million at the end of June, up 9.4 percent from a year earlier.

The company, the sixth largest U.S. health insurer by market value, spent 81.7 percent of premium revenue on medical costs in its commercial business serving employers, compared with 82.7 percent a year earlier. In the commercial plans, it took in 5.1 percent more in monthly revenue on a per-member basis.

Coventry projected full-year earnings of $1.85 to $1.95 per share, excluding special items, up from a prior range of $1.70 to $1.90.

Coventry has been reorganizing under Chief Executive Allen Wise, who returned to the top job in January after the company posted disappointing results and forecasts last year.

"The better 2009 outlook is an indication that Coventry's margins have stabilized and begun to improve," Perry said.

Last month, Coventry said it would sell its First Health Services Medicaid subsidiary for $110 million to Magellan Health Services Inc (MGLN.O).

Coventry shares rose $2.17, or 11 percent, to $22.22 in morning trading on the New York Stock Exchange. (Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn, Derek Caney and Jeffrey Benkoe)