WellCare Health Plans
beat fourth-quarter targets and guided higher for 2006.
The Tampa, Fla., health insurer made $11 million, or 27 cents a share, for the quarter ended Dec. 31, down from the year-ago $18 million, or 46 cents a share. Latest-quarter earnings were weighed down by $18 million in pretax administrative costs tied to prescription drug and Georgia efforts. Excluding those costs, the company made 54 cents a share, beating the Thomson Financial estimate by 4 cents.
Revenue rose 29% from a year ago to $511 million, beating the $500 million analyst consensus estimate. The company cited membership growth and the mix of members between product lines for revenue gains.
"The strong performance of our core business in 2005, led by 50% growth in our Medicare membership, provides an excellent foundation for our new Georgia and PDP opportunities in 2006," said CEO Todd S. Farha. "We have surpassed the million member milestone, currently serving over 1.4 million members, including approximately 620,000 new members from the successful launch of our Medicare Part D plans across the country. We are pleased by the strong acceptance of our plan offerings among Medicare beneficiaries."
Medical benefits expense rose to 80.2% of premium revenue from 79.3% for the same period last year.
Selling, general and administrative expense rose to 16.1% of revenue from 12.4% a year ago. The company continues its investment in Medicare expansion and information technology as well as general spending necessary to support its growth strategy, including its investments in its Georgia and PDP initiatives. Excluding about $17.5 million of administrative expenses related to the Georgia and PDP initiatives, SG&A expense related to core operations was 12.7% of revenue.
WellCare said it expects to make $2.37 to $2.42 a share for 2006 on revenue of $3.1 billion, including a 13-cent stock option expense and a dime-a-share impact from a two-month delay in Georgia. Earlier the company had guided to earnings of $2.50 a share on revenue of $3 billion.
For the first quarter, WellCare expects to make 35 cents a share on revenue of $700 million. Analysts surveyed by Thomson were looking for 36 cents a share on $664 million.
On Monday, WellCare shares rose 16 cents to $39.16.