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WellCare Health (WCG) Q2 Earnings & Revenues Beat, Rise Y/Y

Zacks Equity Research

WellCare Health Plans, Inc. WCG delivered second-quarter 2019 adjusted operating earnings of $4.31 per share, beating the Zacks Consensus Estimate by 5.1% on the back of solid revenues and improved membership. Also, the bottom line improved nearly 17% year over year.

Further, total revenues of the company came in at $7 billion, surpassing the Zacks Consensus Estimate by 6%. Moreover, the top line soared 51.1% year over year. This was mainly driven by the company’s 2018 purchase of Meridian and organic growth in all business lines. However, the same was offset to some extent due to the 2019 ACA Health Insurer Fee (HIF) moratorium.

The adjusted selling, general & administrative (SG&A) expense ratio was 6.8% in the reported quarter, down from 8.1% in the year-ago period. This improvement was supported by the company’s operating leverage.

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

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

WellCare Health Plans, Inc. price-consensus-eps-surprise-chart | WellCare Health Plans, Inc. Quote

Q2 Segment Results

Medicaid Health Plans

As of Jun 30, 2019, membership surged 45.5% to 4.1 million. This upside was driven by the acquisition of Meridian and net organic growth.

Adjusted Medicaid Health Plans premium revenues were $4.7 billion, up 64.1% year over year owing to the Meridian buyout and solid net organic growth, which include higher membership in Florida and Arizona Medical health plans.

Adjusted Medicaid Health Plans’ Medical Benefit Ratio (MBR) was 91.3% compared with 88% in the year-ago period, attributable to the Meridian buyout — mainly the Illinois health plan and net organic growth. However, the same was offset by the company’s operational execution to some extent.

Medicare Health Plans

As of Jun 30, 2019, Medicare Health Plans membership was 0.5 million, up 9.8% year over year, driven by the integration of Meridian and continued organic growth.

Medicare Health Plans revenues of $1.9 billion increased 21.1% year over year. This was primarily aided by the company's Meridian buyout as well as organic growth.

MBR was 82.5% compared with 82.9% in the prior-year quarter. The main reason behind this year-over-year contraction is the 2019 bid positioning and consistent operational exellence.

Medicare PDP

Medicare PDP membership was approximately 1.6 million as of Jun 30, 2019, up 56.1% year over year, attributable to organic growth via the newly-enhanced product offering this year.

Premium revenues were $259.3 million, up 29.7% year over year. This can be attributed to the company's organic membership improvement through product offering in 2019.

MBR was 81.2% compared with 72.7% in the year-earlier quarter, attributable to the company’s 2018 bid strategy and the steady operational efficiency.

Financial Update

As of Jun 30, 2019, unregulated cash and investments were $249.4 million, down 52% year over year.

Net flow from operating activities was $536.5 million, up 62% from the year-ago figure of $330.9 million, courtesy of the timing of pharmacy rebate payments and better earnings in the quarter under review.

Days in claims payable (DCP) were 48.8 for the second quarter of 2019 compared with 55.2 days in the comparable quarter last year.


The company is not providing any updated outlook due to its pending merger with Centene.

Zacks Rank

WellCare Health carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Releases From the Medical Sector

Among other players from the medical sector having reported second-quarter earnings so far, the bottom-line results of UnitedHealth Group Incorporated UNH, Anthem Inc. ANTM and Centene Corporation CNC outpaced the respective Zacks Consensus Estimate.

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