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WellCare Reports Annual And Fourth Quarter 2011 Results

Stocks in this article: WCG

Membership as of December 31, 2011, increased 15% year over year to 2.6 million, compared with 2.2 million members as of December 31, 2010. PDP segment membership increased 208,000 year over year, or 27%. Medicare Advantage membership increased year over year by 19,000 members, or 16%. Medicaid segment membership increased by 111,000, or 8%, year over year to 1.5 million members as of December 31, 2011.

Premium revenue for the fourth quarter of 2011 increased 18% year over year to $1.6 billion. The increase was driven by growth in PDP segment premium revenue, which increased 26% year over year. In addition, Medicare Advantage segment revenue increased 18% and Medicaid segment revenue increased 17% year over year.

Medical benefits expense for the fourth quarter of 2011 was $1.2 billion, an increase of 13% from the fourth quarter of 2010. The Company MBR was 78.9% in the fourth quarter of 2011, compared with 82.5% in the fourth quarter of 2010. The MBRs of all three segments also decreased year over year. The net impact of the favorable development of medical benefits payable was $66 million in the fourth quarter of 2011, compared with $38 million in the fourth quarter of 2010.

Selling, general and administrative (“SG&A”) expense as determined under GAAP was $206 million in the fourth quarter of 2011, compared with $194 million for the same period in 2010. Adjusted SG&A was $189 million in the fourth quarter of 2011, an increase from $179 million in the same period last year. The year-over-year increase in adjusted SG&A expense was driven primarily by the implementation of the Kentucky Medicaid program, as well as by membership growth. The adjusted administrative expense ratio was 12.0% in the fourth quarter of 2011, compared with 13.4% in same period in 2010.

Cash Flow and Financial Condition Highlights

Net cash provided by operating activities as determined under GAAP was $162 million in the year ended December 31, 2011, compared with $223 million for the year 2010. Net cash provided by operating activities, modified for the timing of receipts from, and payments to, WellCare’s government customers, was $280 million for 2011, compared with $73 million in 2010.

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