WellCare Health Plans, Inc.
) reported second-quarter 2013 adjusted operating earnings of
$59.2 million or $1.35 per share, beating $54.5 million or $1.24
per share earned in the year-ago quarter. Results also surpassed
the Zacks Consensus Estimate of $1.24 per share.
The year-over-year increase was due to higher premium revenues
and lower adjusted administrative expense ratio, partly offset by
the increase in WellCare's medical benefit ratio (MBR).
Including all non-recurring one-time items, WellCare reported
net income of $46.9 million or $1.07 per share, inching up from
$46.4 million or $1.06 per share recorded in the prior-year
During the quarter under review, total revenue of WellCare
grossed $2.33 billion, surging 28.8% from $1.81 billion in the
year-ago quarter on the back of higher premiums, and investment
and other income. Top line also surpassed the Zacks Consensus
Estimate of $2.27 billion. Premium revenues during the quarter
amounted to $2.3 billion, up 29% year over year.
Total expenses for the first quarter amounted to $2.25
billion; up 30.1% from the prior-year quarter, primarily due to
an increase in medical benefits expenses, selling general and
administrative expenses, Medicaid premium taxes, depreciation and
amortization, and interest expense. Medical benefits expense for
the second quarter increased 30% year over year to $2
WellCare's adjusted administrative expense ratio declined 10
basis points year over year to 8.1% in the reported quarter. The
year-over-year decline was mainly due to higher efficiency and
improved operating leverage, partly offset by investments in
growth and service initiatives. Total membership for WellCare
increased 11% year over year to about 2.8 million.
reported total premium revenue of $1.4 billion, up 26% over the
prior-year quarter owing to membership growth. However, its MBR
declined 170 basis points (bps) to 87.5% in the second quarter of
Medicare Advantage Segment
reported total premium revenue of $760 million, up 67% over the
prior-year quarter. Results were driven by acquisitions by
WellCare in California and from organic sales activity. MBR
increased 320 bps year over year to 86.5% in the second quarter
Prescription Drug Plan Segment
's premium revenues fell 28% year over year to $185 million. The
downside was attributable to a decline in memberships as well as
the effect of the 2013 bids. MBR increased 1040 basis points to
90.5% in the quarter.
WellCare exited the quarter with cash and cash equivalents of
$1.2 billion compared with $1.1 billion as of Dec 31, 2012. Total
assets for the company were valued at $3.03 billion compared with
$2.68 billion as of Dec 31, 2012. Net cash from operations
increased 183% year over year to $133 million in the second
Long-term debt obligation in WellCare's books amounted to $308
million, up 156.7% from $120 million as of Dec 31, 2012. As of
Jun 30, 2013, WellCare's stockholder equity totaled $1.40 billion
versus $1.32 billion as of 2012-end.
Outlook for 2013
WellCare announced its adjusted net income per share guidance
of $4.70-$4.90 for 2013. The company expects premium revenues
between $9.15 billion and $9.25 billion. WellCare expects
adjusted administrative expense ratio of about 8.7%.
Results at Other Healthcare Companies
Another health maintenance organization (HMO),
) reported second-quarter 2013 adjusted income of $2.60 per
share, beating the Zacks Consensus Estimate of $2.08. Adjusted
income also surpassed the year-ago earnings of $2.04 per share by
Health Net Inc.
) second-quarter 2013 operating income, which comprises combined
net earnings from the Western Region Operations and Government
Contracts segments, came in at $41.4 million or 52 cents per
share, improving from the year-ago quarter's earnings of $15.9
million or 19 cents per share. Operating income was in line with
the Zacks Consensus Estimate.
) second-quarter 2013 operating earnings came in at $420 million
or $2.63 per share. The results substantially surpassed the Zacks
Consensus Estimate of $2.46 as well as the year-ago earnings of
$356 million or $2.16 per share.
WellCare carries a Zacks Rank #2 (Buy).
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