Coventry Health Care, Inc. (NYSE: CVH) announced today that it has signed a definitive agreement to sell its fee-based Medicaid services subsidiary, First Health Services Corporation (“FHSC”), to Magellan Health Services, Inc. (NASDAQ: MGLN).

“After completing an internal evaluation of all of our businesses, we determined that FHSC was not an asset that complemented the Company’s long-term strategy,” said Allen F. Wise, chief executive officer of Coventry. “As outlined on our first quarter earnings call, we are very focused on the seven key businesses that form the foundation for our future. Consistent with that approach, we are pleased to enter into this transaction to divest FHSC.”

Coventry will sell FHSC and related entities and assets for $110 million in an all-cash transaction which is currently expected to close in the third quarter, subject to certain regulatory approvals and closing conditions. The transaction will result in a one-time GAAP loss per share of approximately $0.55 to $0.60, almost entirely non-cash, resulting from the original allocation of goodwill pursuant to Coventry’s acquisition of First Health Group Corporation in 2005. Subsequent to closing, the Company expects that the proceeds from this transaction will be used for a combination of debt reduction and share repurchases resulting in an approximately neutral impact to earnings per share for the remainder of 2009.

This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are defined as statements that are not historical facts and include those statements relating to future events or future financial performance. Actual performance may be significantly impacted by certain risks and uncertainties, including those described in Coventry’s Annual Report on Form 10-K for the year ended December 31, 2008 and Coventry’s Form 10-Q for the quarter ended March 31, 2009. Coventry undertakes no obligation to update or revise any forward-looking statements.

Coventry Health Care (www.coventryhealthcare.com) is a diversified national managed healthcare company based in Bethesda, Maryland, operating health plans, insurance companies, network rental and workers’ compensation services companies. Coventry provides a full range of risk and fee-based managed care products and services to a broad cross section of individuals, employer and government-funded groups, government agencies, and other insurance carriers and administrators.

Coventry Health Care, Inc.
Shawn M. Guertin, 301-581-5701
Chief Financial Officer
or
Drew Asher, 301-581-5717
Senior Vice President, Corporate Finance