It has been about a month since the last earnings report for WellCare Health Plans, Inc. . Shares have added about 2.3% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
WellCare Health Beats on Q4 Earnings, Misses Revenues
WellCare Health Plans reported fourth-quarter 2016 adjusted operating earnings of $1.03 per share that surpassed the Zacks Consensus Estimate by 94%. Earnings per share also grew 61% year over year. For 2016, adjusted earnings per share of $5.96 grew 66% year over year.
The year-over-year improvement in the bottom line (both fourth quarter and full year) was primarily driven by strong performance across all business lines.
Total adjusted premium revenues of approximately $3.43 billion in the fourth quarter, missed the Zacks Consensus Estimate but inched up 0.65% year over year. For 2016, the metric grew 3% from the prior year to $13.9 billion.
Adjusted SG&A expense ratio was 9.2% in the fourth quarter, down 20 basis points (bps) year over year.
Quarterly Segment Update
Medicaid Health Plans:
Adjusted Medicaid Health Plans premium revenues were $2.3 billion, up 89% year over year, primarily due to membership growth
Adjusted Medicaid Health Plans' Medical Benefit Ratio (MBR) was 90.6%, up 100 bps from the last-year quarter.
Medicare Health Plans Segment Results:
Medicare Health Plans premium revenues slightly decreased on a year-over-year basis to $956.0 million. This was primarily due to the year-over-year membership decline as a result of the company's 2016 bid strategy.
The segment's MBR was 85.8%, down 290 bps year over year due to continued operational execution as well as the company's 2016 bid strategy.
Medicare Prescription Drug Plans (PDP) Segment Results
Medicare PDP premium revenues were $194.2 million, up 5% from the fourth quarter of 2015. This was mainly due to the company's 2016 bid positioning.
The Medicare PDP segment's MBR was 58.9%, down 840 bps from the prior-year. This was due to improved operational execution and the company's 2016 bid positioning.
Financial Update
Net cash from operating activities was $332 million in the fourth quarter of 2016, down 30% year over year. The downside can primarily be attributed to the timing of Medicare-related receipts, though partially offset by improved year-over-year operating performance. For 2016, the metric totaled $748.3 billion, up 5% from the prior year.
As of Dec 31, 2016, unregulated cash and investments were approximately $915.3 million, up 12.3% from year-end 2015.
As of Dec 31, 2016, days claims payable was 50.7 days compared with 47.1 days as of Dec 31, 2015.
Guidance for 2017
The company expects adjusted earnings per diluted share in the range of $6.00–$6.25. Total adjusted premium revenues are expected in the band of $15.12–$15.80 billion. Investment & other income is anticipated to be $18–$21 million. The company expects to incur interest expenses in the range of $58–$60 million. Adjusted SG&A ratio is expected between 7.7% and 7.9%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, WellCare Health's stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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WellCare Health (WCG) Up 2.3% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for WellCare Health Plans, Inc. . Shares have added about 2.3% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
WellCare Health Beats on Q4 Earnings, Misses Revenues
WellCare Health Plans reported fourth-quarter 2016 adjusted operating earnings of $1.03 per share that surpassed the Zacks Consensus Estimate by 94%. Earnings per share also grew 61% year over year. For 2016, adjusted earnings per share of $5.96 grew 66% year over year.
The year-over-year improvement in the bottom line (both fourth quarter and full year) was primarily driven by strong performance across all business lines.
Total adjusted premium revenues of approximately $3.43 billion in the fourth quarter, missed the Zacks Consensus Estimate but inched up 0.65% year over year. For 2016, the metric grew 3% from the prior year to $13.9 billion.
Adjusted SG&A expense ratio was 9.2% in the fourth quarter, down 20 basis points (bps) year over year.
Quarterly Segment Update
Medicaid Health Plans:
Adjusted Medicaid Health Plans premium revenues were $2.3 billion, up 89% year over year, primarily due to membership growth
Adjusted Medicaid Health Plans' Medical Benefit Ratio (MBR) was 90.6%, up 100 bps from the last-year quarter.
Medicare Health Plans Segment Results:
Medicare Health Plans premium revenues slightly decreased on a year-over-year basis to $956.0 million. This was primarily due to the year-over-year membership decline as a result of the company's 2016 bid strategy.
The segment's MBR was 85.8%, down 290 bps year over year due to continued operational execution as well as the company's 2016 bid strategy.
Medicare Prescription Drug Plans (PDP) Segment Results
Medicare PDP premium revenues were $194.2 million, up 5% from the fourth quarter of 2015. This was mainly due to the company's 2016 bid positioning.
The Medicare PDP segment's MBR was 58.9%, down 840 bps from the prior-year. This was due to improved operational execution and the company's 2016 bid positioning.
Financial Update
Net cash from operating activities was $332 million in the fourth quarter of 2016, down 30% year over year. The downside can primarily be attributed to the timing of Medicare-related receipts, though partially offset by improved year-over-year operating performance. For 2016, the metric totaled $748.3 billion, up 5% from the prior year.
As of Dec 31, 2016, unregulated cash and investments were approximately $915.3 million, up 12.3% from year-end 2015.
As of Dec 31, 2016, days claims payable was 50.7 days compared with 47.1 days as of Dec 31, 2015.
Guidance for 2017
The company expects adjusted earnings per diluted share in the range of $6.00–$6.25. Total adjusted premium revenues are expected in the band of $15.12–$15.80 billion. Investment & other income is anticipated to be $18–$21 million. The company expects to incur interest expenses in the range of $58–$60 million. Adjusted SG&A ratio is expected between 7.7% and 7.9%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, WellCare Health's stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.