Net income of $31.9 million, or $0.58 per diluted share, compared with $40.2 million, or $0.72 per diluted share, in the 2008 second quarter;

Premium revenue of $671.5 million, up 21.1% over the 2008 second quarter; and

Medicare Advantage membership of 182,231 at quarter-end, up 18.4% over the 2008 second quarter-end, and up 12.4% compared with 2008 year-end; stand-alone PDP membership of 294,753, up 11.0% over the 2008 second quarter-end.

Commenting on 2009 second quarter results, Herb Fritch, Chairman and Chief Executive Officer, said, "Results for the first six months of 2009 were better than initial expectations, although the relative contributions to our earnings were different than anticipated. Our Florida health plan and our Part D operations have been particularly strong contributors to results for the first six months of 2009. In addition, membership growth and attention to administrative expenses offset higher-than-expected medical costs and resulted in a solid second quarter. We recently submitted our 2010 plan bids and believe we are well positioned to maintain competitiveness and margins as we enter a more difficult Medicare payment environment."

  Second Quarter Results                         Three Months Ended                   ($ in thousands, except per share amounts)     June 30,                  Percent                                                      2009         2008      Change     Premium revenue                                $  671,450   $  554,667   21.1   %   Total revenue                                     682,543      566,874   20.4       Medical expense                                   558,403      436,157   28.0       Net income                                        31,891       40,222    (20.7  )   Net income per common share -- diluted ((1))      0.58         0.72      (19.4  )                                                                                        -------------------------------------------------------------------------------  

  ((1))   Weighted average shares outstanding used in the calculation of net income per common share - diluted, were 54,770,212 and 55,959,111, respectively, for the three months ended June 30, 2009 and 2008.                                                                                                                                                                                                                     -------------------------------------------------------------------------------  

Operating Highlights

Revenue

Medicare Advantage premiums (including the prescription drug component of HealthSpring's Medicare Advantage plans, or "MA-PD") were $583.2 million for the 2009 second quarter, reflecting an increase of 20.8% over the 2008 second quarter. The premium increase is primarily attributable to an 18.4% increase in membership. The 2009 second quarter included $7.9 million of additional Medicare Advantage premium revenue for a change in estimate for 2008 final retroactive risk adjustment settlements, which had a favorable impact on net income of $2.6 million, or $0.05 per diluted share, in the current quarter. For comparison purposes, the 2008 second quarter included additional Medicare Advantage premium revenue of $17.3 million for 2007 final retroactive risk settlements, which had a favorable impact on net income of $8.1 million, or $0.15 per diluted share.

Medicare Advantage premiums per member per month, or "PMPM," were $1,060.11 in the 2009 second quarter, representing an increase of 4.9% compared with the prior year's second quarter, in each case as adjusted to exclude retroactive risk adjustments associated with prior years. The PMPM premium increase resulted from rate increases in CMS-calculated base rates as well as rate increases related to risk scores.

Stand-alone PDP premium revenue was $87.4 million for the 2009 second quarter, an increase of 23.6% compared with the 2008 second quarter. The higher revenue resulted primarily from an 11.0% increase in membership and an 11.2% increase in PDP premiums PMPM in the current quarter.

Investment income decreased from the 2008 second quarter by $2.3 million, or 67.1%, to $1.1million for the 2009 second quarter primarily as a result of a lower average yield on invested and cash balances.

Medical Expense

Medicare Advantage medical loss ratio, or "MLR," was 82.4% for the 2009 second quarter, compared with 77.7% for the prior year's second quarter, in each case as adjusted to exclude retroactive risk adjustments associated with prior years. The deterioration in the MLR for the current period was primarily attributable to higher inpatient procedure costs in the Tennessee health plan and increases in physician expenses in the Alabama, Tennessee, and Texas health plans. The deterioration was partially offset by improvements in the Florida plan's MLR attributable primarily to hospital recontracting efforts. On a year-to-date basis, the MLR was 81.8%, compared with 79.2% for the prior year's first six months, as adjusted.

PDP MLR was 91.1% for the 2009 second quarter, compared with 96.3% in the 2008 second quarter. The improvement in the 2009 PDP MLR was primarily attributable to higher revenue as a result of how the Company structured its PDP bids.

Selling, General & Administrative (SG&A)

SG&A expense as a percentage of total revenue in the 2009 second quarter decreased 80 basis points to 9.1% compared with 9.9% in the 2008 second quarter. The improvement in SG&A as a percentage of revenue results primarily from improvements in the Company's operating model and revenue increases. The $6.3 million increase in the 2009 second quarter compared with the 2008 second quarter is primarily the result of additional personnel costs associated with the management of membership increases.

Interest Expense

Interest expense in the 2009 second quarter decreased $0.6 million compared with the 2008 second quarter as a result of lower interest rates and lower average principal balances.

The Company's weighted average effective interest rate (exclusive of the amortization of deferred financing costs) for the three months ended June 30, 2009, was 4.9% compared with 5.2% for the three months ended June 30, 2008.

Balance Sheet Highlights

At June 30, 2009, the Company's cash and cash equivalents were $295.0 million, $57.7 million of which was held at unregulated subsidiaries.

Total debt outstanding was $251.3 million at June 30, 2009, compared with $268.0 million at December 31, 2008, and $278.9 million at June 30, 2008. There were no borrowings outstanding under the Company's $100 million revolving credit facility at June 30, 2009 or 2008.

For the first six months of 2009, net cash used in operating activities was $8.4 million compared with $7.3 million used in the same period of 2008.