WellCare 1Q profit plunges 58 pct, forecast rises

TAMPA, Fla. (AP) -- Earnings at WellCare Health Plans Inc. plunged 58 percent in the first quarter compared with last year, when the Medicaid and Medicare coverage provider booked a large gain from lower-than-expected leftover claims.

The Tampa, Fla., company raised its 2013 earnings expectations Friday, but shares still slid 2 percent.

WellCare mostly administers the state and federally funded Medicaid program, which provides coverage for poor and disabled people. It also sells Medicare prescription drug coverage and Medicare Advantage plans, which are privately run versions of the government's Medicare program for elderly and disabled people.

In the first quarter, WellCare earned $21.5 million, or 49 cents per share. That compares to earnings of $51.2 million, or $1.18 per share, in last year's quarter. Adjusted earnings totaled 63 cents per share, and total revenue jumped 26 percent to $2.26 billion.

Analysts expected, on average, earnings of 69 cents per share on about $2.17 billion in revenue.

WellCare executives told analysts during a Friday morning conference call that the company recorded a much smaller gain of $16 million in this year's first quarter due to the lower-than-expected leftover claims, which allowed WellCare to release money it held in reserve.

That compares to a $52 million gain in last year's quarter. Goldman Sachs analyst Matthew Borsch said in a research note such a gain was "extraordinarily high."

The analyst added that WellCare delivered "mixed but overall solid results" in the quarter.

The company's Medicaid enrollment grew 14 percent to 1.7 million people, as it added members in Kentucky and Florida. Medicare Advantage membership soared 71 percent to 256,000 compared to last year.

But the company's largest expense, medical benefits, jumped 31 percent to about $1.99 billion, and selling, general and administrative costs rose 32 percent to $213.4 million.

WellCare now expects adjusted 2013 earnings to range between about $4.60 and $4.90 per share, up from its previous forecast for $4.50 to $4.85 per share.

Analysts expect, on average, earnings of $4.86 per share.

Company shares fell 67 cents to $57.81 in midday trading, while the Standard & Poor's index climbed more than 1 percent. The price of WellCare shares has ranged between $44.75 and $68.65 over the past year.