WellCare Health Plans, Inc. delivered third-quarter 2018 adjusted operating earnings of $3.33 per share, beating the Zacks Consensus Estimate of $3.08 by 8.1% backed by the Meridian buyout and membership growth. However, the bottom line dropped 18.4% year over year.
Total revenues of the company totaled $5 billion, in line with the Zacks Consensus Estimate. But the top line improved 14.9% year over year. This was mainly backed by the company’s purchase of Meridian, addition of members owing to the Illinois Medicaid program as well as organic growth in Medicare Health Plans segment along with the reinstatement of the ACA Health Insurer Fee for 2018.
The adjusted selling, general & administrative (SG&A) expense ratio was 8.5% in the reported quarter, up from 8.3% in the year-ago period.
Q3 Segment ResultsMedicaid Health Plans
As of Sep 30, 2018, membership soared 43.7% to 3.9 million. This upside was driven by the acquisition of Meridian and net organic growth.
Adjusted Medicaid Health Plans premium revenues were $3.1 billion, up 15.9% year over year on Meridian buyout and higher membership from the statewide expansion of the Illinois Medicaid program.
Adjusted Medicaid Health Plans’ Medical Benefit Ratio (MBR) was 87.8% compared with 86.9% in the year-ago period, attributable to Meridian buyout and incremental retroactive revenues from Florida. However, the same was offset by the company’s operational execution to some extent.
Medicare Health Plans
As of Sep 30, 2018, Medicare Health Plans membership was 0.5 million, up 10.6% year over year, driven by the integration of Meridian and continued organic growth.
Medicare Health Plans revenues of $1.6 billion increased 7.9% year over year. This was primarily aided by the company's Meridian purchase as well as organic growth.
MBR was 84.8% compared with 85.7% in the prior-year quarter. The main reason behind this year-over-year improvement was the company’s 2018 bid strategy as well as its operational performance.
Medicare PDP
Medicare PDP membership was approximately 1.1 million as of Sep 30, 2018, down 7.4% year over year due to bid positioning.
Premium revenues were $182.3 million, decreasing 9.7% year over year. This can be attributed to the company's 2018 bid positioning.
MBR was 88.7% compared with 96.9% in the year-earlier quarter, attributable to the company’s 2018 bid strategy as well as the continued operational execution.
Financial Update
As of Sep 30, 2018, unregulated cash and investments were $462.6 million, down 20.5% year over year.
Net flow from operating activities was $578.6 million, down from the year-ago figure of $910.6 million. This is mainly due to the advanced receipt of October CMS Medicare premiums in September 2017 and the payment of ACA HIF in September 2018.
Days in claims payable (DCP) were 54.2 for the third quarter of 2018 compared with 51 days in the comparable quarter last year.
Guidance for 2018
Based on a strong third-quarter performance, WellCare Health raised its full-year adjusted EPS view to a range of $10.90-$11, up from the earlier projection of $10.70-$10.90 per share.
Total adjusted premium revenues are now expected in the band of $19.6-$19.9 billion, up from the previous forecast of $17.9-$18.4 billion. Investment & other income is anticipated to be $101-$105 million, up from $90-$94 million.
Adjusted SG&A ratio is likely to be between 8.35% and 8.45%.
Zacks Rank
WellCare Health carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.
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WellCare Health Plans, Inc. delivered third-quarter 2018 adjusted operating earnings of $3.33 per share, beating the Zacks Consensus Estimate of $3.08 by 8.1% backed by the Meridian buyout and membership growth. However, the bottom line dropped 18.4% year over year.
Total revenues of the company totaled $5 billion, in line with the Zacks Consensus Estimate. But the top line improved 14.9% year over year. This was mainly backed by the company’s purchase of Meridian, addition of members owing to the Illinois Medicaid program as well as organic growth in Medicare Health Plans segment along with the reinstatement of the ACA Health Insurer Fee for 2018.
The adjusted selling, general & administrative (SG&A) expense ratio was 8.5% in the reported quarter, up from 8.3% in the year-ago period.
Q3 Segment Results
Medicaid Health Plans
As of Sep 30, 2018, membership soared 43.7% to 3.9 million. This upside was driven by the acquisition of Meridian and net organic growth.
Adjusted Medicaid Health Plans premium revenues were $3.1 billion, up 15.9% year over year on Meridian buyout and higher membership from the statewide expansion of the Illinois Medicaid program.
Adjusted Medicaid Health Plans’ Medical Benefit Ratio (MBR) was 87.8% compared with 86.9% in the year-ago period, attributable to Meridian buyout and incremental retroactive revenues from Florida. However, the same was offset by the company’s operational execution to some extent.
Medicare Health Plans
As of Sep 30, 2018, Medicare Health Plans membership was 0.5 million, up 10.6% year over year, driven by the integration of Meridian and continued organic growth.
Medicare Health Plans revenues of $1.6 billion increased 7.9% year over year. This was primarily aided by the company's Meridian purchase as well as organic growth.
MBR was 84.8% compared with 85.7% in the prior-year quarter. The main reason behind this year-over-year improvement was the company’s 2018 bid strategy as well as its operational performance.
Medicare PDP
Medicare PDP membership was approximately 1.1 million as of Sep 30, 2018, down 7.4% year over year due to bid positioning.
Premium revenues were $182.3 million, decreasing 9.7% year over year. This can be attributed to the company's 2018 bid positioning.
MBR was 88.7% compared with 96.9% in the year-earlier quarter, attributable to the company’s 2018 bid strategy as well as the continued operational execution.
Financial Update
As of Sep 30, 2018, unregulated cash and investments were $462.6 million, down 20.5% year over year.
Net flow from operating activities was $578.6 million, down from the year-ago figure of $910.6 million. This is mainly due to the advanced receipt of October CMS Medicare premiums in September 2017 and the payment of ACA HIF in September 2018.
Days in claims payable (DCP) were 54.2 for the third quarter of 2018 compared with 51 days in the comparable quarter last year.
Guidance for 2018
Based on a strong third-quarter performance, WellCare Health raised its full-year adjusted EPS view to a range of $10.90-$11, up from the earlier projection of $10.70-$10.90 per share.
Total adjusted premium revenues are now expected in the band of $19.6-$19.9 billion, up from the previous forecast of $17.9-$18.4 billion. Investment & other income is anticipated to be $101-$105 million, up from $90-$94 million.
Adjusted SG&A ratio is likely to be between 8.35% and 8.45%.
Zacks Rank
WellCare Health carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.
Releases From the Medical Sector
UnitedHealth Group Incorporated’s (UNH - Free Report) third-quarter bottom line beat estimates on the back of higher revenues.
Centene Inc.’s (CNC - Free Report) third-quarter earnings surpassed estimates, majorly driven by the execution of growth strategy and solid operating metrics.
Community Health Systems, Inc. (CYH - Free Report) incurred a wider-than-expected loss due to lower admissions in the reported quarter.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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