Coventry Health Care, Inc. (NYSE: CVH) is a health insurance company. CVH provides both risk-based (CVH assumes all costs and risks in exchange for monthly premiums) and administrative only services (billing and processing for self-insuring companies).

Historically, the company has focused on providing risk based health insurance policies to individuals and smaller-midsized corporation's. However, in 2005, the company departed from this strategy when it acquired First Health, a provider of administrative only services to large corporations. While the acquisition diversified CVH's business and transformed the company from a regional player to a national franchise, it also brought with it considerable risk. The administrative services only business is largely one of scale, where high fixed costs and thin margins make large volumes necessary for profitability. As a relatively smaller player in the industry, CVH is at a decided disadvantage to its larger competitors. Meanwhile, roughly a third of CVH's revenue come from Medicare and Medicaid, and the company plans to increase this by over 50% in next few years.

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