Coventry Health profit dives 45 percent as costs soar

NEW YORK (Reuters) - Health insurer Coventry Health Care Inc (CVH.N: Quote, Profile, Research, Stock Buzz) posted a 45 percent drop in second-quarter profit Friday on soaring medical costs.

The results were in line with analysts' average estimate. The Bethesda, Maryland-based company also stood by its 2008 profit forecast, which it cut substantially last month.

Second-quarter net income fell to $83.2 million, or 55 cents per share, from $151.3 million, or 96 cents per share, a year earlier.

Coventry last month slashed its second-quarter profit forecast nearly in half, saying it expected earnings of 55 cents to 57 cents per share.

The sixth-largest U.S. health insurer by market value said revenue rose 28 percent to $2.98 billion.

Coventry's medical costs jumped 41 percent to $2.27 billion. Costs as a percentage of premiums spiked in its commercial plans for its employers and in its full-service Medicare Advantage plans.

Its consolidated medical loss ratio, which is the percentage of premiums spent on medical costs, worsened to 85.8 percent from 79.6 percent.

Coventry's profit warning last month was one of several by health insurers this year that have sparked sectorwide sell-offs. Coventry shares have fallen 43 percent this year, compared with a 35 percent drop for the Morgan Stanley Healthcare Payor index .

(Reporting by Lewis Krauskopf; Editing by Derek Caney and John Wallace)