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WellCare Reports Fourth Quarter And Year 2012 Results

Stocks in this article: WCG

The Medicaid segment MBR was 88.7% for the fourth quarter of 2012, an increase from 83.8% in the fourth quarter of 2011. The MBR increase results primarily from the growth in and the performance of the Kentucky Medicaid program.

Medicare Advantage Segment Operations

Medicare Advantage segment membership as of December 31, 2012, increased by 78,000 year-over-year, or 58%, to 213,000 members. Premium revenue for the quarter grew 49% year over year. The growth resulted from the acquisition of Easy Choice Health Plan, which closed in November 2012, as well as organic sales activities.

The Medicare Advantage segment MBR was 86.9% in the fourth quarter of 2012, an increase from 79.8% in the fourth quarter of 2011. The increase was driven primarily by differences between 2012 and 2011 in the development of prior periods’ medical benefits payable. In addition, the MBR was impacted by the inclusion of the Easy Choice Health Plan acquisition. Other factors that contributed to the year-over-year increase were higher expenditures for quality improvement as well as the Company’s Medicare Advantage membership growth.

Prescription Drug Plan Segment Operations

PDP segment membership as of December 31, 2012, decreased 107,000 year-over-year, or 11%. The decrease was caused mainly by a reduction in membership assigned by CMS to the Company’s plan. Premium revenue for the quarter decreased 9%. The PDP segment MBR was 66.9% in the fourth quarter of 2012, a decrease from 67.1% in the fourth quarter of 2011. The decrease resulted mainly from lower pharmacy costs.

Credit Facility

On February 12, 2013, WellCare entered into a $230 million expansion of its senior secured credit agreement. Also on that date, the Company borrowed $230 million under the term loan facility. Both the term loan and revolving credit facility are still set to expire in August 2016. The other principal terms of the credit facility, including fees and rates, also are unchanged. The Company intends to use the proceeds to support growth initiatives and for general corporate purposes.

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