WellCare Looking Vulnerable

"Given the rapidly deteriorating regulatory situation at WCG, we expect the other public managed care organizations currently operating in Florida may have significant opportunities to gain market share in Florida Medicaid from WCG" going forward.

WellCare failed to answer questions for this story. Meanwhile, the company's stock continues to suffer. The shares have lost three-quarters of their value since scandal first engulfed the company less than one month ago.

For now, at least, both Rex and Fidel are urging investors to remain on the sidelines until WellCare's future prospects become clearer. Fidel's firm owns at least 1% of WellCare's stock itself.

Target Practice

Some experts saw looming risks to WellCare's government business, especially its lucrative MA program, even before last month's raid.

They worried about the company's Medicare private fee-for-service, or PFFS, plans in particular. With Congress intensifying its scrutiny of Medicare PFFS offerings -- and even blasting them in a formal hearing this spring -- they fretted over WellCare's rising dependence on that program for growth.

Jefferies analyst Brian Wright in fact downgraded WellCare months ago for this very reason. By early this year, Wright calculated, WellCare was relying on PFFS plans for nearly 70% of its MA growth overall. Less than two weeks after that downgrade, WellCare found itself rushing to defend its Medicare PFFS program from Congressional leaders who view it as a clear rip-off to senior citizens and government payers alike.