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WellCare Health Plans Prices Senior Notes Worth $1.2 Billion
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WellCare Health Plans, Inc. issued 5.25% $1.2 billion senior notes with maturity scheduled on Apr 1, 2025. The first interest payment on these notes will be paid on Oct 1, 2017.
WellCare Health plans to deploy the net proceeds for the redemption or repayment of its 5.75% $900 million senior notes, which are due to mature in 2020. The company will also use the amount generated for the payment of related premiums, accrued interest and fees as well as expenses associated with such redemption or repayment. Furthermore, the proceeds will be utilized to repay the amounts outstanding from time to time under the company’s revolving credit facility. This apart, the funds will be used for general corporate purposes, such as boosting organic growth and working capital. The remaining proceeds, if any, will be used for temporary investment in short-term interest-bearing, investment-grade securities or similar assets.
WellCare Health issued notes at lower coupon rate to redeem notes at a higher coupon rate issued earlier, thereby reducing interest burden. We appreciate the company’s move to capitalize on the still low interest rate environment. However, everybody is pinning hope on the upcoming FOMC meeting, which will be held on Mar 14 and Mar 15. At the meeting, investor focus will primarily be on the possibility of the Fed raising interest rate once again amid a stabilizing economy, improving employment and inflation rate of 2%.
The Zacks Rank #3 (Hold) health maintenance organization’s solid liquidity position, excellent financial strength and operational strength should enable it to service debt uninterruptedly, maintaining its creditworthiness.
As of Dec 31, 2016, total debt of the company was $997.6 million, down 16.8% from $1.2 billion at the end of 2015. The debt-to-capital ratio as of Dec 31, 2016 was 33.3%, down 760 basis points (bps) from 40.9% at the end 2015. However, the latest offering will increase the debt-to-capital ratio by 1910 bps.
Shares of WellCare Health Plans gained 5.65% year to date, underperforming the Zacks categorized Health Maintenance Organization industry gained 7.06%. Nonetheless, we expect bottom-line growth and robust performance across all business lines to drive the stock higher in the future.
Alcobra Ltd. is a biopharmaceutical company, which focuses on the development and commercialization of oral drug candidates. The company delivered positive surprises in three of the last four quarters, with an average beat of 9.49%.
Agile Therapeutics is a specialty pharmaceutical company that focuses on the development and commercialization of prescription contraceptive products for women. The company delivered positive surprises in three of the last four quarters, with an average beat of 27.59%.
The Joint Corp. develops, owns, operates, franchises, supports, and manages chiropractic clinics in the United States. The company delivered a positive surprise in two of the last four quarters but with an average negative surprise of 5.20%.
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WellCare Health Plans Prices Senior Notes Worth $1.2 Billion
WellCare Health Plans, Inc. issued 5.25% $1.2 billion senior notes with maturity scheduled on Apr 1, 2025. The first interest payment on these notes will be paid on Oct 1, 2017.
WellCare Health plans to deploy the net proceeds for the redemption or repayment of its 5.75% $900 million senior notes, which are due to mature in 2020. The company will also use the amount generated for the payment of related premiums, accrued interest and fees as well as expenses associated with such redemption or repayment. Furthermore, the proceeds will be utilized to repay the amounts outstanding from time to time under the company’s revolving credit facility. This apart, the funds will be used for general corporate purposes, such as boosting organic growth and working capital. The remaining proceeds, if any, will be used for temporary investment in short-term interest-bearing, investment-grade securities or similar assets.
WellCare Health issued notes at lower coupon rate to redeem notes at a higher coupon rate issued earlier, thereby reducing interest burden. We appreciate the company’s move to capitalize on the still low interest rate environment. However, everybody is pinning hope on the upcoming FOMC meeting, which will be held on Mar 14 and Mar 15. At the meeting, investor focus will primarily be on the possibility of the Fed raising interest rate once again amid a stabilizing economy, improving employment and inflation rate of 2%.
The Zacks Rank #3 (Hold) health maintenance organization’s solid liquidity position, excellent financial strength and operational strength should enable it to service debt uninterruptedly, maintaining its creditworthiness.
As of Dec 31, 2016, total debt of the company was $997.6 million, down 16.8% from $1.2 billion at the end of 2015. The debt-to-capital ratio as of Dec 31, 2016 was 33.3%, down 760 basis points (bps) from 40.9% at the end 2015. However, the latest offering will increase the debt-to-capital ratio by 1910 bps.
Shares of WellCare Health Plans gained 5.65% year to date, underperforming the Zacks categorized Health Maintenance Organization industry gained 7.06%. Nonetheless, we expect bottom-line growth and robust performance across all business lines to drive the stock higher in the future.
Stocks to Consider
Some better-ranked stocks from the medical sector include Alcobra Ltd. , Agile Therapeutics, Inc. (AGRX - Free Report) and The Joint Corp. (JYNT - Free Report) . Each of these stocks holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alcobra Ltd. is a biopharmaceutical company, which focuses on the development and commercialization of oral drug candidates. The company delivered positive surprises in three of the last four quarters, with an average beat of 9.49%.
Agile Therapeutics is a specialty pharmaceutical company that focuses on the development and commercialization of prescription contraceptive products for women. The company delivered positive surprises in three of the last four quarters, with an average beat of 27.59%.
The Joint Corp. develops, owns, operates, franchises, supports, and manages chiropractic clinics in the United States. The company delivered a positive surprise in two of the last four quarters but with an average negative surprise of 5.20%.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>