After months of wrangling with restatements, Tampa managed-care company WellCare Health Plans Inc. on Monday told investors it posted net income of $216 million for 2007, but 2008 income will be "materially" less due in part to sharply rising expenses.
The numbers were part of a detailed filing with the Securities and Exchange Commission that included restated financials for 2004 to 2007. For 2007, its net income of $216 million, or $5.16 a share, was up 78 percent from the restated 2006 figures of $121 million, or $2.98 a share. Revenue was up 48 percent to $5.39 billion.
WellCare is still working with auditors from Deloitte & Touche to finish its 2008 reports as well as its amended filings for the first and second quarters of 2007.
One of the biggest drains on 2008 income was a leap in administrative expenses related to ongoing state and federal investigations. Costs for legal, accounting and consulting fees, along with employee retention and similar expenses, jumped almost fivefold to $103 million last year.
The company employs 4,100, including 2,200 at its corporate headquarters in Tampa.
WellCare also indicated results will be adversely affected by lower investment yields and said recent reductions in Medicaid reimbursements in Florida will result in a loss of about $35 million of revenue in 2009.
"Like many managed-care companies, we are addressing challenges in 2008 and 2009 presented by growing state budget deficits, changing health care regulations, and the deteriorating economic environment," Heath Schiesser, WellCare president and chief executive officer, said in a statement. "Nevertheless, we are excited about the many positive developments at WellCare."
WellCare, which manages private Medicaid and Medicare plans, stopped filing financial reports and brought in new management after an October 2007 FBI raid triggered investigations by the Justice Department, the FBI, the Department of Health and Human Services' Office of the Inspector General and Florida's U.S. Attorney's Office.
In July, WellCare's board determined that financial statements from 2004 through the first half of 2007 should be restated because they recorded inadequate liabilities for certain premium refunds.
Though current on loan payments, WellCare is in default on a number of covenants on a long-term credit facility that had an outstanding balance of $152.8 million as of Dec. 31.
So far, the company said, lenders have not exercised their rights under the defaults to accelerate payments or increase interest rates.
Shares of WellCare rose 14 percent Monday to close at $13.76.