The Future 

I have, thus far, talked about the past. It’s 
a past of which we are, I think justifiably, 
proud. Our shareholders, however, want 
to know about the future, as well they 
should, and that is where I would like to 
direct your attention.  

As pleased as I am about our 2001 results 
and our track record of improvement, I am 
even more excited about our prospects to 
grow profitably into the future.  

We remain convinced that managed care 
is still the best vehicle for delivering high 
quality health care while meeting the mar-
ket’s demands for choice and reasonable

                       cost. Health care is 
                       also a growth busi-
                       ness, as evidenced 
                       by medical trend of 
                       over 10% a year.

                      We are part of an
                      industry that contin-
                      ues to consolidate as
                      smaller local plans 
                      find it more difficult 
to compete and larger national plans are 
rationalizing their markets. This environ-
ment provides opportunities for good 
operators and we feel Coventry certainly 
merits that description.  

As noted, acquisitions have been an engine 
of growth for Coventry and we intend to con-
tinue to seek viable acquisition candidates.  

We have a strong management team that 
has produced consistent and reliable results, 
supported by a base of dedicated and caring 
employees focused on the continued growth 
and improvement of our company.  

We have a strong balance sheet and conser-
vative financial policies in place. Our total 
cash and investments have grown to $952 
million at year-end 2001, a more than five-
fold increase from year-end 1996 when I 
first joined Coventry. Over that same period, 
our net worth has grown to $689 million 
versus $100 million at year-end 1996.   

There is additional upside in our operating 
margins. Although we had record earnings 
in 2001, there is still ample room to 
improve the results of our recent acquisi-
tions, to continue leveraging on our over-
head as we grow, and to incrementally