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WellCare Health Plans, Inc. (NYSE: WCG) today reported results for the fourth quarter and year ended December 31, 2011. As determined under generally accepted accounting principles (“GAAP”), net income for the fourth quarter of 2011 was $85.1 million, or $1.96 per diluted share, compared with $26.1 million, or $0.61 per diluted share, for the fourth quarter of 2010. Adjusted net income for the fourth quarter of 2011 was $93.4 million, or $2.15 per diluted share, compared with $30.4 million, or $0.71 per diluted share, for the fourth quarter of 2010.
As determined under GAAP, the Company reported net income for the year 2011 of $264.2 million, or $6.10 per diluted share, compared with a net loss of $53.4 million, or $1.26 per share, for 2010. Adjusted net income for 2011 was $291.4 million, or $6.73 per diluted share, compared with $114.2 million, or $2.67 per diluted share, for 2010.
“In many ways, our achievements during 2011 transformed the Company and positioned us well for the future,” said Alec Cunningham, WellCare’s chief executive officer. “Most importantly, growth across our lines of business means we are helping hundreds of thousands more people to improve their health and quality of life, while also helping our government customers more effectively manage their limited resources.”
WellCare’s 2011 accomplishments are highlighted by accreditations of its Georgia and Missouri health plans by the National Committee for Quality Assurance, or NCQA, as well as broad-based year-over-year improvement across all of the Company’s lines of business in Healthcare Effectiveness Data and Information Set, or HEDIS
®, measures. WellCare also maintained a disciplined approach to ensuring a competitive cost structure, reducing its adjusted administrative expense ratio by 60 basis points in 2011. In addition, medical expense management initiatives contributed meaningfully to improvement in the Company’s medical benefits ratio (“MBR”). During the third quarter, the Company completed an upgrade of its core operating system, which is enabling further progress in improving service, productivity, and compliance. Finally, WellCare delivered prudent, profitable growth, highlighted by Medicaid program awards in Kentucky and Hawaii. In addition, membership enrolled in WellCare’s Medicare Advantage dual special needs plans increased over 50%, and Medicare Prescription Drug Plans (“PDPs”) membership grew 27% in 2011.
Highlights of Operations for the Fourth Quarter
Adjusted net income for the fourth quarter of 2011 increased compared with the fourth quarter of 2010, primarily due to the favorable development of medical benefits payable as well as higher premium revenue. In addition, resolution of prior years’ state tax matters contributed to the better-than-anticipated outcome. Results for the fourth quarter of 2011 also were affected by greater-than-expected Kentucky Medicaid membership following the Company’s November launch of the program.