WellCare Preliminary Q3 Results Beat Estimates; Shares Surge

WellCare Health Plans, whose stock plunged 77% over the past week after the company's offices were raided, told investors Monday Q3 net income jumped 67% on strong membership gains in its Medicare plans for seniors. Preliminary third-quarter net income rose to $72.4 million ($1.71/share), from $43.3 million ($1.06/share) a year ago. Revenue rose 41.7% to $1.43 billion, while total membership was up almost 8% to 2.43 million. Analysts polled by Reuters had forecast EPS of $1.52 on revenue of $1.36B. The company said late Friday it was forming an independent committee to probe the issue, and said it still had not been informed as to what the subject of the investigation is or what impact it might have on the company. The Wall Street Journal reported Saturday a person familiar with the matter claims the raid of WellCare's headquarters by over 200 state and federal agents was prompted in part by allegations WellCare inflated the amount it spent on mental-health care so it could keep funds that should have been refunded to Medicaid, allegedly costing the program more than $35M over five years period (full story). WellCare said Monday it learned of a whistleblower suit filed by a former employee last month, but is unable to determine if the raid was related to the suit, because the complaint is sealed. The company said it would not file Q3 results with the SEC, nor issue additional earnings guidance, and may have to delay full-year results, pending the completion of the committee's probe. Shares jumped 50% to $41 in pre-market trading, down from more than $122 before the raid.

Sources: Press release, Reuters, AP
Commentary: WellCare Health Plans' Day of Reckoning May Have Arrived
Stocks to watch: WCG

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