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WellCare Health's (WCG) Q2 Earnings: What's in Store?

Zacks Equity Research

WellCare Health Plans, Inc.'s WCG is scheduled to release second-quarter 2019 results on Jul 30. In the last reported quarter, the company delivered a positive earnings surprise of 19%, primarily backed by the Meridian buyout and organic growth. Moreover, the bottom line surged 49.4% year over year.

The company flaunts an impressive surprise history, having delivered an earnings beat in all the trailing four quarters, the average being 13.52%.

What to Expect for Q2 Earnings

The company’s second-quarter earnings will likely gain from higher membership, leading to revenue growth. The Zacks Consensus Estimate for the metric is pegged at $4.10, up 11.1% from the year-ago reported number.

The Zacks Consensus Estimate for second-quarter total revenues stands at $6.6 billion, indicating a 42.4% surge from the year-earlier reported figure.

On the back of the company's consistent efforts to expand, its membership is likely to shoot up in the to-be-reported quarter. The Zacks Consensus Estimate for the company’s total Medicaid membership stands at 4.1 billion, suggesting a 46.6% improvement from the prior-year reported figure.

WellCare is likely to have witnessed growth in Medicaid premium revenues on the back of its strategic moves in the quarter to be reported.

The Zacks Consensus Estimate for second-quarter Medicare Advantage membership is pegged at 571 million, up 12% from the year-ago reported number. This upside is likely to be boosted by organic growth.

The Zacks Consensus Estimate for the company’s second-quarter total membership is pinned at 6.3 billion, implying a 44.6% jump from the prior-year quarter's reported figure.

However, WellCare Health is likely to suffer high debt levels due to growth-related investments, which heighten its financial risk. Interest expenses of the company might also persist to be steep in the upcoming quarterly results.

In the to-be-reported quarter, the company could possibly face elevated expenses due to higher medical and pharmacy costs; selling, general and administrative (SG&A) expenses as well as operating costs.

What the Quantitative Model States

Our proven model conclusively shows that WellCare Health is likely to beat on earnings this to-be-reported quarter. This is because the stock needs to have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP: WellCare Health has an Earnings ESP of +1.65%. This is because the Most Accurate Estimate is pegged at $4.17, higher than the Zacks Consensus Estimate of $4.10.You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

WellCare Health Plans, Inc. Price and EPS Surprise

WellCare Health Plans, Inc. Price and EPS Surprise

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

Zacks Rank: WellCare Health carries a Zacks Rank #3, which increases the predictive power of ESP. Further, a positive ESP in the combination makes us confident about a likely positive surprise this earnings season.

Conversely, all Sell-rated stocks (#4 or 5) should never be considered going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some other stocks worth considering from the medical sector with the perfect mix of elements to surpass estimates in the next releases are as follows:

Tenet Healthcare Corporation THC is slated to release second-quarter financial figures on Aug 5. The stock has an Earnings ESP of +1.85% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mednax, Inc MD has an Earnings ESP of +2.13%. This Zacks #3 Ranked company is set to report second-quarter earnings performance on Aug 1.

Humana Inc. HUM has an Earnings ESP of +1.57% and a Zacks Rank of 3. The company is set to report second-quarter earnings numbers on Jul 31.

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