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WellCare Reports Fourth Quarter And Year 2012 Results

Membership as of December 31, 2012, increased 4% to 2.7 million, compared with 2.6 million members as of December 31, 2011. Premium revenue for the fourth quarter of 2012 increased 24% year–over-year to $2.0 billion. Medical benefits expense for the fourth quarter of 2012 was $1.7 billion, an increase of 33% from the fourth quarter of 2011.

Selling, general, and administrative (SG&A) expense as determined under GAAP was $193 million in the fourth quarter of 2012, compared with $183 million for the same period in 2011. Adjusted SG&A expense was $179 million in the fourth quarter of 2012, an increase of 7% from $167 million for the same period last year. The increase was driven primarily by the inclusion of the Easy Choice Health Plan acquisition for November and December 2012, as well as the Company’s other growth initiatives. The adjusted administrative expense ratio was 9.1% in the fourth quarter of 2012, compared with 10.6% for the same period in 2011. The decrease in the adjusted administrative expense ratio results from increased premium revenue and improvements in operating efficiency, partially offset by costs incurred for growth initiatives.

Medicaid Segment Operations

Medicaid segment membership increased by 136,000, or 9%, year-over-year, to 1.6 million members as of December 31, 2012. The increase resulted mainly from the growth in the Kentucky Medicaid program. In addition, the Company experienced growth in Florida and several other states, offset in part by the end of the Company’s participation in the Missouri program on June 30, 2012.

Premium revenue was $1.2 billion for the fourth quarter of 2012, an increase of 22% year-over-year, mainly due to the inclusion of the Kentucky program for a full quarter in 2012 compared with two months in 2011, as well as the growth of the Kentucky program over the past year. WellCare’s New York and Florida Medicaid programs also contributed meaningfully to the year-over-year growth.

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