Sequenom falls after losing coverage for test

WASHINGTON -- Shares of medical test maker Sequenom fell Friday, a day after the company announced that insurer Coventry Health Care Inc. would no longer pay for the company's Down syndrome test for pregnant women.

The company said in a release that Coventry terminated the agreement without cause, effective Aug. 31.

Shares fell 43 cents, or 9 percent, to $4.34 in trading.

Sequenom had previously gained coverage for the test through one of Coventry's regional offices in California. The insurer announced on May 9 that it would cover the cost of the test. The company said it has 2.2 million people in its network.

However, on May 14 Coventry sent a letter to Sequenom saying it was terminating the agreement and would no longer cover the test.

MaterniT21 intended for women who are at high risk of carrying a fetus with Down syndrome. Sequenom says the test can detect the chromosomal anomaly that causes Down syndrome as early as 10 weeks into pregnancy. It is intended to be less invasive than other forms of testing.

"While there is no denying that this is a frustrating development, we do take solace that Coventry is a smaller player in the market," William Blair analyst Brian Weinstein wrote in a note to investors Friday. Weinstein said the company still expects to gain coverage before year's end from two of the six largest insurers: Wellpoint, Cigna, Aetna, Humana, United Healthcare and Blue Cross Blue Shield.

Weinstein holds an "Outperform" rating on Sequenom, which is based in San Diego.