WellCare Plunges 63% on FBI Raid

Shares of WellCare Health Plan plunged as much as 70% Thursday after the company revealed it was being investigated by the U.S. government and Florida prosecutors. Florida Attorney General's Medicaid fraud unit and members of the FBI searched WellCare's Tampa headquarters yesterday, according to James Klindt, acting U.S. Attorney for the Middle District of Florida. Neither the company nor members of the government involved would elaborate on what the probe was attempting to uncover. CEO Todd Farha said the company would comply with investigators and "all essential services remain operational and uninterrupted." John Rex, an analyst at Bear Stearns, noted, "The presence of the Florida Medicaid fraud unit indicates this component of the business is involved." The unit Rex is referring to is estimated to make up 20-25% of WellCare's earnings. WellCare manages medical care for the elderly and disabled under the U.S. Medicare program and the poor under Medicaid, a program run by both the federal and state government. It has 155,000 people enrolled in its coverage. Shares closed down 63% to $42.67 Thursday.

Sources: Bloomberg, MarketWatch
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