Edit Symbol List
Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.
Don't know the stock symbol? Use the symbol lookup tool.
Alphabetize the sort order of my symbols
Investing just got easier…
Sign up now to become a NASDAQ.com member and begin receiving instant notifications when key events occur that affect the stocks you follow.Access Now X
WellCare Health Plans (WCG)
Q1 2013 Earnings Call
May 03, 2013 8:30 am ET
Gregg Haddad - Vice President of Investor Relations
Alexander R. Cunningham - Chief Executive Officer and Director
Thomas L. Tran - Chief Financial Officer and Senior Vice President
Charles G. Berg - Non-Executive Chairman and Member of Regulatory Compliance Committee
Christian Rigg - Susquehanna Financial Group, LLLP, Research Division
Carl R. McDonald - Citigroup Inc, Research Division
Brian Wright - Monness, Crespi, Hardt & Co., Inc., Research Division
Joshua R. Raskin - Barclays Capital, Research Division
Kevin M. Fischbeck - BofA Merrill Lynch, Research Division
Ana Gupte - Dowling & Partners Securities, LLC
David H. Windley - Jefferies & Company, Inc., Research Division
Thomas A. Carroll - Stifel, Nicolaus & Co., Inc., Research Division
Matthew Borsch - Goldman Sachs Group Inc., Research Division
Peter Heinz Costa - Wells Fargo Securities, LLC, Research Division
Sarah James - Wedbush Securities Inc., Research Division
Scott J. Fidel - Deutsche Bank AG, Research Division
Previous Statements by WCG
» WellCare Health Plans' CEO Presents at Barclays Global Healthcare Conference (Transcript)
» WellCare Health Plans' CEO Discusses Q4 2012 Results - Earnings Call Transcript
» WellCare Health Plans' CEO Discusses Q3 Results - Earnings Call Transcript
Good morning, and thank you for joining us. Today, we will be making forward-looking statements, including, but not limited to, our 2013 financial guidance. Various risks and uncertainties, such as those described in our filings with the SEC, including our 2012 Annual Report on Form 10-K, may materially impact those statements. While these risks and uncertainties may cause our future results to differ from today's statements, we are not undertaking any obligation to update or revise any forward-looking statement.
Certain financial information that we will discuss today includes adjustments to expenses related to previously disclosed government investigations and related litigation that we believe are not indicative of long-term business operations.
We will identify results that have been adjusted. In addition, please refer to our news release published this morning for supplemental schedules that reconcile results determined under generally accepted accounting principles, or GAAP, to our adjusted results. Our news release is published on our website at www.wellcare.com.
Separately, we closed the Missouri Care acquisition at the end of the first quarter. Our first quarter of 2013 membership, revenues and expenses do not include any Missouri Care activity. Certain balance sheet and cash flow items were affected by the transaction.
Following our prepared remarks, we will address your questions. We request that each participant ask no more than 2 questions.
Our discussion today is led by Alec Cunningham, WellCare's Chief Executive Officer; and Tom Tran, Chief Financial Officer.
I will now turn the discussion over to Alex.
Alexander R. Cunningham
Thank you, Gregg, and good morning, everyone. Today, we will bring you up-to-date on our work for the first quarter of 2013 and also talk about our priorities and plans for the balance of the year.
Following that, Tom will discuss the quarter's financial results and detail our updated 2013 financial guidance. Our first quarter results highlight the continued expansion and diversification of our portfolio, driven by the successful execution of our 3-product strategy. Premium revenue of more than $2.2 billion was up 26% year-over-year. And as of March 31, we served more than 2.7 million members. The performance of our Kentucky Medicaid program was in line with our expectations and improved significantly compared to last year. We closed acquisitions that added 2 new Medicaid states to our portfolio and made a meaningful progress on their integration.
Membership in our Medicare Advantage HMO plans grew 71% year-over-year to 256,000 people, and we continue to benefit from the repositioning of our PDP segment to target low income, value-conscious choosers. Our results continue to be driven by our 3 top priorities, the first of which is improving health care quality and access. Our achievements were recognized during the past quarter with a commendable NCQA accreditation of our Florida health plan for both our Medicaid and Medicare products. We continue to target accreditation for all of our health plans and anticipate further progress in 2013. More broadly, we continued to invest in quality improvement.
For the first quarter, our results reflect a 50% year-over-year increase in quality expenditures, and we expect to sustain this level of investment for the balance of the year. With respect to our second priority, which is ensuring a competitive cost structure, the quarter's results reflect the investments we are making in growth and other initiatives. We are investing in the acquisitions that we closed during the past 6 months in terms of both integration and performance enhancement to position them for future growth and improve profitability. We are also investing in other key initiatives, including technology and infrastructure enhancements. One of our primary objectives is to make further progress in our service effectiveness by better aligning our operations with our government customers' goals. Our experience increasingly tells us that serving our health and drug plan members with associates who are their state and local neighbors is important to our success in terms of cost, quality, member retention and other important factors. An example of the deployment of this strategy is our recently opened call center in Orlando, Florida, which resulted in the creation of approximately 300 Florida jobs, replacing positions that were previously staffed overseas. We are excited about the opportunity to enhance our service to members and providers through this second on-shoring effort in Florida in the past year, and we continue to evaluate similar changes to our operations designed to strengthen our ties to the communities that we serve.
I'll now turn to our third priority, which is prudent profitable growth. Starting with the Medicaid segment. Premium revenue for the first quarter increased 22% year-over-year to nearly $1.3 billion. Our Medicaid segment membership increased 14% year-over-year to almost $1.7 million as of March 31, driven by growth in Kentucky and Florida and our South Carolina acquisition. In Kentucky, following the program, the policy changes that were implemented earlier this year, performance this quarter improved significantly. Although membership in the new Louisville Region 3 is below what was anticipated, other aspects of the implementation of that region are in line with or better than our expectations. We continue to strengthen our clinical care, quality and cost management statewide and expect further progress in those areas during the balance of the year.