Healthspring, Inc.

Healthspring, Inc. (HS - Snapshot Report), which operates Medicare Advantage plans and a national stand-alone Medicare prescription drug plan, reported bullish third-quarter earnings on Oct 31 and increased 2008 EPS guidance.

Net income jumped 31% to $29.4 million, or 53 cents per share, from $22.4 million, or 39 cents in the third-quarter of 2007. Analysts expected 50 cents.

Total revenues rose 44.1% year-over-year. Medicare premium revenue surged 50.5% to $514.9 million from a year ago. Medicare Advantage premiums, which includes the prescription drug component, grew 44.6% to $455.8 million from the third quarter of 2007.

2008 EPS Guidance Raised

Healthspring is optimistic about the rest of 2008. The company now expects EPS in the range of $2.10 to $2.20 up from previous guidance of $2.05 to $2.15.

HS is also raising its membership totals in the Medicare Advantage program. It now also estimates 2008 total revenue in the range of $2.1 billion to $2.2 billion.

Strong Value Fundamentals

Healthspring was a Zacks #1 Rank (strong buy) stock when we reviewed it on Sep 23. It's now a Zacks #2 Rank (buy) stock. It's even cheaper than when we last reviewed it. HS is now trading at only 6.8x forward earnings. Its price-to-book is 1.28. Read the Sep 23 analysis.

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