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WellCare Health Plans' stock price shoots up on solid earnings report

WellCare Health Plans headquarters in Tampa
WellCare Health Plans headquarters in Tampa
Published Jul. 31, 2018

TAMPA — WellCare Health Plans remains on a financial tear.

The Tampa-based managed health care plan provider doubled its second quarter profits from $74.1 million in 2017 to $151.6 million this year, according to its earnings report released Tuesday. Revenues also got a boost, up 8 percent to $4.6 billion.

The leap in profits beat analysts' estimates, sending the price of the company's already hot stock even higher. It finished at $267 a share, up 7 percent on the day, 33 percent so far this year and more than 150 percent over the past two years.

"We are pleased with our second quarter 2018 results as they reflect continued strong performance across all three lines of our business (Medicaid, Medicare health plans and Medicare prescription drug plans)," WellCare CEO Ken Burdick said.

Can the company keep it rolling? The short-term future appears bright, though WellCare is in constant competition for market share with the likes of Aetna, Humana, United Health Group and Blue Cross and Blue Shield.

WellCare should continue to benefit from the 2017 purchase of health insurer Universal American, a Fortune 1000 company based in New York. The company also recently won new Medicaid contracts in Arizona and Hawaii. In Florida, the company won a five-year contract with Florida's Agency for Health Care Administration to provide managed medical assistance and was also selected as the sole contractor for Florida's Serious Mental Illness Specialty Plan.

When the deal is finalized "it should grow our current $2.5 billion Florida Medicaid annual revenue stream to over $4 billion annually," WellCare chief financial officer Andrew Lynn Asher, said in a call with analysts Tuesday.

WellCare's Medicaid membership stood at 2.8 million, including about 113,000 new members, mostly in Illinois. As for Medicare, the company ended the quarter with 510,000 members, up 5 percent from the same quarter in 2017.

WellCare's pending $2.5 billion deal to purchase Meridian Health Plans and its pharmacy benefit manager MeridianRx will also lead to significant growth. The deal, expected to close in the next few months, will make WellCare the largest Medicaid provider in Michigan and Illinois. It could also add another $4 billion in annual revenues.

RELATED: $2.5 billion Meridian deal is WellCare's biggest acquisition ever, but also a step in a strategic plan for growth

"We are excited about the growth opportunities ahead of us," Burdick said.

In the conference call with analysts, he ticked off several benefits of the Meridian purchase.

"First, it will grow and diversify our Medicaid and Medicare Advantage portfolio," he said. "Second, it will add new capabilities and talent. Third, it will position us for future growth opportunities in government sponsored programs."

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Contact Graham Brink at gbrink@tampabay.com. Follow @Graham Brink.

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