WellCare 2Q profit drops 33 pct, outlook rises
TAMPA, Fla. (AP) — WellCare Health Plans Inc.'s second-quarter earnings dropped 33 percent compared with last year's quarter, when the Medicaid and Medicare Advantage insurer recorded a big gain because of lower-than-expected leftover claims.
The Tampa, Fla., company's performance topped analyst expectations, and it raised its 2012 earnings forecast.
WellCare said Friday that it earned $46.4 million, or $1.06 per share, in the three months that ended June 30. That compares with earnings of $69.6 million, or $1.61 per share, in last year's quarter. Stripping out one-time items, the insurer reported adjusted earnings of $1.24 per share.
Revenue climbed 22 percent to $1.81 billion.
Analysts surveyed by FactSet expected, on average, earnings of $1.21 per share on $1.79 billion in revenue.
Company shares dropped 9 percent, or $5.59, to $56.79 in afternoon trading.
WellCare provides managed care for the government-sponsored health plans of Medicare, which covers the elderly and disabled, and Medicaid, which focuses on the needy and disabled people. Medicare Advantage plans are privately run, subsidized versions of Medicare.
The insurer said it recorded a pre-tax gain of $67 million in last year's quarter because leftover claims came in lower than expected, which allowed it to release money it held in reserve. In contrast, the company recorded a hit of $7 million this year because those leftover claims came in higher than expected.
WellCare's medical benefits, its largest expense, climbed 29 percent to $1.55 billion in this year's second quarter. The insurer said expenses rose in part due to its Kentucky Medicaid program, which it launched last November.
WellCare's total membership, which counts Medicare prescription drug plan customers, climbed 7 percent to nearly 2.6 million people.
The insurer now expects 2012 adjusted earnings to range between about $5.25 and $5.45 per share, up from its previous forecast of $5.20 to $5.40 per share. It also forecasts revenue of about $7.1 billion.
Analysts forecast, on average, earnings of $5.42 per share on $7.21 billion in revenue.
