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WellCare Health (WCG) Q1 Earnings Beat Estimates, Rise Y/Y

Zacks Equity Research

WellCare Health Plans, Inc. WCG delivered first-quarter 2019 adjusted operating earnings of $3.69 per share, beating the Zacks Consensus Estimate by 19%. This upside is driven by the Meridian buyout and organic growth. Moreover, the bottom line surged 49.4% year over year.

Total revenues of $6.7 billion surpassed the Zacks Consensus Estimate by 3.3% and were also up 45.5% year over year.

Adjusted selling, general & administrative (SG&A) expense ratio was 7.3% in the reported quarter, down 50 basis points from 7.8% in the year-ago period.

WellCare Health Plans, Inc. Price, Consensus and EPS Surprise

WellCare Health Plans, Inc. Price, Consensus and EPS Surprise | WellCare Health Plans, Inc. Quote

Q1 Segmental Results

Medicaid Health Plans


As of Mar 31, 2019, membership soared 52.3% to 4.1 million. This upside was aided by the acquisition of Meridian and net organic growth.

Adjusted Medicaid Health Plans premium revenues were $4.4 billion, up 63.7% year over year, courtesy of the Meridian buyout and net organic growth.

Adjusted Medicaid Health Plans’ Medical Benefit Ratio (MBR) was 90.6% compared with 89.4% in the year-ago period, attributable to the Meridian purchase and net organic growth. However, the same was offset by the company’s operational execution to some extent.

Medicare Health Plans

As of Mar 31, 2019, Medicare Health Plans membership was 0.5 million, up 10.3% year over year, boosted by the Meridian transaction and organic growth.

Medicare Health Plans revenues of $1.8 billion increased 18.4% year over year. This was primarily on the back of the company's Meridian integration and organic growth.

MBR was 84%, flat with the prior-year quarter’s figure.

Medicare Prescription Drug Plans (PDP)

Medicare PDP membership was 1.6 million, up 51.9% year over year owing to organic growth.

MBR for the reported quarter was 89.5% compared with 88.7% in the year-earlier quarter.

Financial Update

As of Mar 31, 2019, unregulated cash and investments were $296.4 million, down 47.2% year over year.

Net cash outflow from operations in the reported quarter was $30 million against the net cash inflow of $445.7 million provided by operating activities in the prior-year period due to the timing of premium-related payments.

Days in claims payable (DCP) were 49.5 for the first quarter of 2019compared with 50.2 days in the comparable quarter last year due to lower claims inventory.

2019 Outlook

The company is not currently providing any financial guidance because of its pending merger with Centene Corporation CNC.

Zacks Rank and Performance of Other Players

WellCare Health carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players from the medical sector, which already reported first-quarter earnings so far, the bottom-line figures of Anthem Inc. ANTM and UnitedHealth Group Inc. UNH beat the respective Zacks Consensus Estimates.

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