It has been about a month since the last earnings report for WellCare Health Plans, Inc. . Shares have added about 3.2% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted 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’s Q1 Earnings, Revenues Beat Estimates
WellCare Health reported first-quarter 2017 adjusted operating earnings of $1.61 per share that surpassed the Zacks Consensus Estimate by 35.3%. Earnings also surged 52% year over year, primarily due to continued operational execution as evidenced by strong results across all business lines.
Adjusted total premium revenue of $3.95 billion increased 13.5% year over year due to strong organic growth across all three lines of business and the company's acquisition of Care1st Arizona. Revenues also topped the Zacks Consensus Estimate by 2%.
Adjusted SG&A expenses increased 18% year over year to $298.2 million, primarily due to investments in staffing and infrastructure to support the growth, Care1st Arizona buyout and entry into the Nebraska Medicaid market. Adjusted SG&A expense ratio deteriorated 30 basis points (bps) from the year-ago quarter to 7.6%.
Quarterly Segment Update
Medicaid Health Plans:
The segment’s membership increased 10.3% over the last-year quarter to 2.6 million. The membership increase was primarily driven by the company's acquisition of Care1st Arizona and the launch of the company's Nebraska Medicaid business on Jan 1, 2017.
Adjusted Medicaid Health Plans premium revenues were $2.6 billion, up 14.7% year over year, primarily due to membership growth
Adjusted Medicaid Health Plans’ Medical Benefit Ratio (MBR) was 90.5%, up 60 bps from the last-year quarter.
Medicare Health Plans Segment Results:
Medicare Health Plans membership jumped 9.2% year over year to 0.356 million due to the company's 2017 bid positioning and execution of sales and retention initiatives.
Medicare Health Plans premium revenues increased 12.4% on a year-over-year basis to $1.1 billion. 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 83%, down 160 bps year over year. This was due to continued operational execution as well as the company's 2017 bid strategy.
Medicare Prescription Drug Plans (PDP) Segment Results
Medicare PDP membership was 1.1 million, up 7.2% year over year, primarily due to the company's 2017 bid positioning.
Medicare PDP premium revenues were $268.1 million, up 7.2% from the first quarter of 2016. This was mainly due to the segment’s membership growth.
The Medicare PDP segment’s MBR was 96.9%, up 260 bps from the prior-year quarter. This was due to improved operational execution and the company's 2017 bid positioning.
Financial Update
Net cash provided by operating activities was $394.5 million compared with net cash used by operating activities of $111.4 million in the prior-year quarter. The improvement was primarily driven by the timing of Medicare-related receipts in the first quarter.
As of Mar 31, 2017, unregulated cash and investments of $1.9 billion soared 107.6% from $915.3 million as of Dec 31, 2016,
As of Dec 31, 2016, days in claims payable was 46.2 days compared with 50.7 days as of Dec 31, 2016.
Guidance for 2017
The company expects adjusted earnings per diluted share in the range of $6.55–$6.80 as against previous guidance of $6.00–$6.25.
Total adjusted premium revenues are expected in the band of $16.45–$16.85 billion compared with the previous guidance of $15.12–$15.80 billion.
Investment & other income is anticipated to be $40–$45 million compared with the previous guidance of $18–$21 million.
Adjusted SG&A ratio is expected between 7.95% and 8.20% as against the previous guided range of 7.7% and 7.9%,
How Have Estimates Been Moving Since Then?
It turns out fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
WellCare Health Plans, Inc. Price and Consensus
VGM Scores
At this time, WellCare Health's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. 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.
Outlook
The Zacks Consensus Estimate moved up over the last 30 days. The stock has a Zacks Rank #1 (Strong Buy). We expect above average returns from the stock in the next few months.
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Why Is WellCare Health (WCG) Up 3.2% Since the Last Earnings Report?
It has been about a month since the last earnings report for WellCare Health Plans, Inc. . Shares have added about 3.2% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted 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’s Q1 Earnings, Revenues Beat Estimates
WellCare Health reported first-quarter 2017 adjusted operating earnings of $1.61 per share that surpassed the Zacks Consensus Estimate by 35.3%. Earnings also surged 52% year over year, primarily due to continued operational execution as evidenced by strong results across all business lines.
Adjusted total premium revenue of $3.95 billion increased 13.5% year over year due to strong organic growth across all three lines of business and the company's acquisition of Care1st Arizona. Revenues also topped the Zacks Consensus Estimate by 2%.
Adjusted SG&A expenses increased 18% year over year to $298.2 million, primarily due to investments in staffing and infrastructure to support the growth, Care1st Arizona buyout and entry into the Nebraska Medicaid market. Adjusted SG&A expense ratio deteriorated 30 basis points (bps) from the year-ago quarter to 7.6%.
Quarterly Segment Update
Medicaid Health Plans:
The segment’s membership increased 10.3% over the last-year quarter to 2.6 million. The membership increase was primarily driven by the company's acquisition of Care1st Arizona and the launch of the company's Nebraska Medicaid business on Jan 1, 2017.
Adjusted Medicaid Health Plans premium revenues were $2.6 billion, up 14.7% year over year, primarily due to membership growth
Adjusted Medicaid Health Plans’ Medical Benefit Ratio (MBR) was 90.5%, up 60 bps from the last-year quarter.
Medicare Health Plans Segment Results:
Medicare Health Plans membership jumped 9.2% year over year to 0.356 million due to the company's 2017 bid positioning and execution of sales and retention initiatives.
Medicare Health Plans premium revenues increased 12.4% on a year-over-year basis to $1.1 billion. 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 83%, down 160 bps year over year. This was due to continued operational execution as well as the company's 2017 bid strategy.
Medicare Prescription Drug Plans (PDP) Segment Results
Medicare PDP membership was 1.1 million, up 7.2% year over year, primarily due to the company's 2017 bid positioning.
Medicare PDP premium revenues were $268.1 million, up 7.2% from the first quarter of 2016. This was mainly due to the segment’s membership growth.
The Medicare PDP segment’s MBR was 96.9%, up 260 bps from the prior-year quarter. This was due to improved operational execution and the company's 2017 bid positioning.
Financial Update
Net cash provided by operating activities was $394.5 million compared with net cash used by operating activities of $111.4 million in the prior-year quarter. The improvement was primarily driven by the timing of Medicare-related receipts in the first quarter.
As of Mar 31, 2017, unregulated cash and investments of $1.9 billion soared 107.6% from $915.3 million as of Dec 31, 2016,
As of Dec 31, 2016, days in claims payable was 46.2 days compared with 50.7 days as of Dec 31, 2016.
Guidance for 2017
The company expects adjusted earnings per diluted share in the range of $6.55–$6.80 as against previous guidance of $6.00–$6.25.
Total adjusted premium revenues are expected in the band of $16.45–$16.85 billion compared with the previous guidance of $15.12–$15.80 billion.
Investment & other income is anticipated to be $40–$45 million compared with the previous guidance of $18–$21 million.
Adjusted SG&A ratio is expected between 7.95% and 8.20% as against the previous guided range of 7.7% and 7.9%,
How Have Estimates Been Moving Since Then?
It turns out fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
WellCare Health Plans, Inc. Price and Consensus
WellCare Health Plans, Inc. Price and Consensus | WellCare Health Plans, Inc. Quote
VGM Scores
At this time, WellCare Health's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. 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.
Outlook
The Zacks Consensus Estimate moved up over the last 30 days. The stock has a Zacks Rank #1 (Strong Buy). We expect above average returns from the stock in the next few months.