Friday, June 22, 2018
Business

CEO Alec Cunningham out at Tampa's WellCare Health Plans

TAMPA — WellCare Health Plans, a major area employer and provider of managed-care plans for about 2.8 million people, has abruptly replaced its chief executive officer, Alec Cunningham.

Company chairman David Gallitano, who runs an investment and advisory firm, will serve as interim CEO of the Tampa-based company during a national search.

The ousted CEO and his replacement offered different takes on what triggered the decision.

Gallitano, a WellCare board member since 2009 who was just named chairman in May, told analysts the company needed a CEO with a track record to execute large-scale growth "leading a company of the size and scope we anticipate WellCare will attain over the next several years."

"The board felt that it was necessary to identify a new experienced leader to help write the next chapter for WellCare," he said.

For his part, Cunningham said his departure was because of differing agendas.

"The board and I have different perspectives on how best to move forward in a very complicated health care marketplace, but I want to wish them — and the entire WellCare family — all the best," he said in a statement released separately.

Cunningham described his tenure at WellCare as "a time of great growth and profitability. … I'm very proud about what we accomplished for our shareholders, our stakeholders and all those we serve."

In the last fiscal year, Cunningham's total compensation was $5.5 million, up 23 percent from the previous year. According to the latest company proxy filed with the Securities and Exchange Commission, he could be eligible for a severance payout of $3.6 million, but a company spokesman estimated that the severance will be closer to $3.2 million.

As interim CEO, Gallitano will receive a monthly salary of $166,667, plus restricted stock and a monthly allowance for housing and auto expenses.

After joining WellCare in 2005, Cunningham soon ran the company's largest operating division, which serves Medicare and Medicaid members in Florida and Hawaii. When he was named CEO in 2009 at the age of 42, Cunningham became one of the youngest leaders of a major health care organization in the country.

At the time, WellCare was still trying to overcome a shadow tainting the company ever since the FBI raided its Tampa headquarters in October 2007. Former CEO Todd Farha and two other executives at that time were found guilty in June of health care fraud.

Trying to regroup from the Farha era, the company imposed new safeguards, regulatory oversight, training and whistle-blowing alerts while revamping its leadership team.

Cunningham's exit surprised some analysts, given WellCare's strong financial rebound in recent years. Its revenues have grown by double-digit percentages the past two years, while its stock has steadily climbed. Its workforce has swelled to about 5,150, including about 3,000 employees in Tampa.

With $7.4 billion in annual revenue last year, WellCare ranks as the third-largest public company in Tampa Bay, trailing only Tech Data and Jabil Circuit.

Gallitano told analysts that Cunningham's prior roles were "significant" and commended his earlier work, dismissing job performance as a concern.

"This (management) change is not the result of any other issue," he said. "As demonstrated by our third-quarter results (also released Friday), the company is effectively implementing our growth, quality, service and cost initiatives."

In the third quarter, WellCare earnings jumped 67 percent to $64 million, and revenue rose 38 percent to $2.5 billion, beating analyst expectations.

Shares in WellCare fell nearly 10 percent early Friday before closing at $62.60 apiece, down 6 percent.

Jeff Harrington can be reached at (727) 893-8242 or [email protected]

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