WellCare Health Posts Downbeat Forecast
WellCare Health Plans posted earnings guidance for the full year on Wednesday that was downbeat, after a severe flu season that was unexpected dragged on its profit leading its earnings to fall 82% in the quarter that ended in December.
The company said it expects earnings for the full year to be $3.15 to $3.40 per share, which is below estimates by analysts of $3.59 per share.
While the company is very disappointed with earnings for the fourth quarter due to effects from a more severe and early flu season on our Medicaid arm, we are focusing on enhancing core capabilities, said Kenneth Burdick the Chief Executive Officer.
The quarter most recently ended had an extra 22 cents per share or $15 million charge that was related to just flu costs. Drug costs also have weighed on the results of health insurers’ in general, and in particular from the expensive treatment for hepatitis C that have been hitting the market.
WellCare focuses on healthcare programs that are government backed, expanding its core of business with a number of different acquisitions of plans that are Medicaid focused over the last few years.
It announced its membership rolls had increased by 45% to over 4.1 million as of December 31, 2014.
At the same time, coinciding with its growth in membership roles, expenses for medical benefits were higher by 43% to more than $3 billion. In December, Burdick, who was the former COO, was appointed by Well Care as the new CEO, a year after Alec Cunningham was fired over a difference in perspectives.
In all, WellCare posted overall earnings of $7.7 million equal to 18 cents per share, which were down from last year’s $42.9 million equal to 97 cents per share. Excluding certain items, WellCare earnings dropped to 41 cents per share from last year’s $1.09 per share.
Revenue from premiums was up 40% to end the quarter at $3.4 billion.
Earnings by the company were expected to be between 60 cents and 70 cents per share with projected revenue by analysts of $3.42 billion.