Make us your home page
Instagram

WellCare dives on report of higher medical costs

NEW YORK — Shares of WellCare Health Plans Inc. of Tampa plunged to all-time lows Thursday after the health insurer, already the target of multiple state and federal investigations, said it is in default on some debt covenants and is being hurt by higher Medicare costs.

In a filing with the Securities and Exchange Commission, WellCare said it is in default on a loan facility with a balance of $153.2-million.

It also reported that its medical benefits ratio — a measure of how many premium dollars were spent on providing care — was 2 to 4 percent higher for the first nine months of 2008 than in the same period in 2007. It added the weakened economy could hurt its results for the year because of rising expenses and potential changes in rates and eligibility.

Shares sank $10.77, or 54.2 percent, to close at $9.10. Earlier Thursday they had fallen to $6.12. The stock was already trading near all-time lows and set an annual minimum of $19.71 Wednesday.

Spokeswoman Amy Knapp wouldn't comment on whether the company was facing more layoffs after it let go about 5 percent of its workforce, eliminating 208 jobs, in May.

"It's not appropriate for me to comment on any rumors or speculations," Knapp said. "We're committed to the community, we're committed to our members, and we're committed to our clients."

She added that the company is growing, enrolling members and renewing contracts with government programs.

But that apparently didn't outweigh the bad news for investors on Thursday.

WellCare disclosed it is in default on one loan, due May 13, 2009 The turmoil in the credit markets over the last few months has made it more difficult for WellCare to obtain cash, but the company said it is pursuing alternatives so it can pay debts and raise additional money.

However, the company noted it may not be able to obtain financing, and said if it does, the costs are likely to be high and the terms burdensome.

WellCare has not filed a quarterly report since October 2007, when an FBI raid kicked off an investigation by the Justice Department, Federal Bureau of Investigation, Department of Health and Human Services' Office of Inspector General and Florida's U.S. Attorney's office.

The Securities and Exchange Commission also is conducting an informal inquiry, and the company is investigating itself.

Before the raid, its stock was trading at more than $120 a share. Since then, the company has struggled to recover as investors learned more about what brought the business down.

It cleaned house in January, ousting its top three executives and bringing in two veterans of the managed-care business.

In its own investigation, WellCare concluded it overcharged the states of Florida and Illinois for three health businesses.

The company has said it will pay $35.2-million as part of an agreement with prosecutors. But that doesn't settle the case or limit the U.S. government and state of Florida from making further claims in their investigation.

On Wednesday, the company said the third quarter included about $23-million in costs related to its internal investigation and the various government investigations into its business. Those costs are $87-million for the year to date.

WellCare dives on report of higher medical costs 11/13/08 [Last modified: Tuesday, November 18, 2008 3:37pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Culver's crosses into Brandon near Selmon Expressway

    Business

    BRANDON — Like many children, Theresa Hutchins recalls pleading with her parents to take her for ice cream.

    Theresa Hutchins and her fianc? Mike Carelli opened the Tampa Bay area’s newest Culver’s August 28 in Brandon at 2470 S Falkenburg Road.
  2. Back to life: Event helps Riverview revert to peaceful pace after Irma

    Human Interest

    RIVERVIEW — Robin and Ray Castell say establishing residency in the Winthrop Village was one of the best decisions of their lifetime.

    hillsbrandon092217: Meredith Tucker of Riverview, the mother of two children and another one soon on the way, browses the racks of Dot Dot Smile children?€™s clothing as company merchandiser Kelcie Schranck, standing behind her in the black shirt, looks on during the first-of-its-kind Recruiting the Community event on Sept. 17 at the Barn at Winthrop in Riverview. Photo by Joyce McKenzie.
  3. SEC says hackers may have profited from stolen info

    Business

    The Securities and Exchange Commission says its corporate filing system was hacked last year and the intruders may have used the nonpublic information they obtained to profit illegally.

    In this file photo, Securities and Exchange Commission (SEC) Chairman nominee Jay Clayton testifies on Capitol Hill in Washington at his confirmation hearing before the Senate Banking Committee. The SEC says a cyber breach of a filing system it uses may have provided the basis for some illegal trading in 2016. [AP file photo]
  4. Trigaux: For Class of 2016, college debt loads favor Florida graduates

    Banking

    Florida college graduates saddled with student debt: Take heart. The average debt Class of 2016 Florida grads must bear is less than students in most states.

    University of South Florida undergraduates gather at the USF Sun Dome in Tampa for last fall's commencement ceremony. A new survey finds their average student debt upon graduating was $22,276. Statewide, 2016 Florida grads ranked a relatively unencumbered 45th among states, averaging $24,461 in student debt. [Photo Luis Santana | Times]
  5. After Hurricane Irma, many ask: How safe are shelters?

    News

    NAPLES — Residents of the Naples Estates mobile home park beamed and cheered when President Donald Trump and Gov. Rick Scott strolled amid piles of shredded aluminum three days after Hurricane Irma to buck up residents and hail the work of emergency responders. But almost nobody had anything good to say about …

    The Islamic Society of Tampa Bay Area opened its doors to anyone seeking temporary shelter during Hurricane Irma. Evacuees were housed in the Istaba multipurpose building and was quickly at capacity housing over 500 people. [Saturday, September 9, 2017] [Photo Luis Santana | Times]