Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - WELLCARE HEALTH PLANS, INC. | form8k.htm |
| Back to 8-K | Exhibit 99.1 |
| CONTACTS:
Investor relations:
Gregg Haddad
813-206-3916
gregg.haddad@wellcare.com
|
Media relations:
Crystal Warwell Walker
813-206-2697
crystal.walker@wellcare.com
|
WELLCARE REPORTS THIRD QUARTER 2013 RESULTS
TAMPA, Fla. (November 1, 2013) – WellCare Health Plans, Inc. (NYSE: WCG) today reported results for the third quarter and nine months ended September 30, 2013. As determined under generally accepted accounting principles (GAAP), net income for the third quarter of 2013 was $64.0 million, or $1.45 per diluted share, compared with $38.3 million, or $0.87 per diluted share, for the third quarter of 2012. Adjusted (non-GAAP) net income for the third quarter of 2013 was $68.9 million, or $1.56 per diluted share, compared with $46.2 million, or $1.05 per diluted share, for the third quarter of 2012.
Highlights of Recent Accomplishments
|
·
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Third quarter premium revenue of $2.5 billion grew 38% year over year, driven by a 71% increase in Medicare Advantage segment premium revenue and a 37% increase in Medicaid segment premium revenue.
|
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·
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The Florida Agency for Healthcare Administration has recommended an award of contracts to WellCare in the Managed Medical Assistance (MMA) Medicaid program in eight of the state’s eleven regions. These regions include the metropolitan areas of Jacksonville, Orlando, Miami, Tallahassee, and Tampa. The Company will be implementing a new model of care for the MMA program that is expected to more effectively coordinate benefits and enhance member services.
|
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·
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WellCare has agreed to acquire Windsor Health Group, Inc. (Windsor). Through its subsidiaries, Windsor serves Medicare beneficiaries with Medicare Advantage plans primarily in the states of Mississippi, Tennessee, Arkansas, and South Carolina, as well as with Medicare Prescription Drug Plan (PDP) and Medicare Supplement products in a number of states. The Company expects this transaction to close in the next two to three months, subject to customary regulatory approvals.
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·
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WellCare has been approved to enter the New Jersey Medicaid managed care program in December 2013. New Jersey will be the ninth state in which WellCare offers Medicaid services. In addition, WellCare has agreed to acquire certain assets of Healthfirst Health Plan of New Jersey, Inc. (Healthfirst NJ). As of September 2013, Healthfirst NJ served approximately 47,000 Medicaid members in 12 counties in the state, 5,000 of whom also are served by a Healthfirst Medicare Advantage plan. The Company anticipates that the acquisition will close during the first quarter of 2014, subject to customary regulatory approvals.
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·
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The Centers for Medicare & Medicaid Services (CMS) recently announced 2014 Medicare Advantage and PDP quality ratings, known as star ratings, which reflected improvement for several of WellCare’s plans. The star rating for the Company’s Florida plan, which serves approximately 28% of the Company’s September 2013 Medicare Advantage membership, is increasing from 3.0 to 3.5 stars for 2014.
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WCG Reports Third Quarter 2013 Results
Page 2
November 1, 2013
Company Operations for the Third Quarter of 2013
Adjusted net income per diluted share for the third quarter of 2013 increased $0.51 compared with the same period in 2012, primarily due to increased premium revenue, offset in part by the increase in the Company medical benefits ratio (MBR). A decrease in the adjusted administrative expense ratio also contributed to the year over year increase in adjusted net income. Membership as of September 30, 2013, increased 10% to 2.8 million compared with the same period in 2012. Premium revenue for the third quarter of 2013 increased 38% year over year to $2.5 billion. Medical benefits expense for the third quarter of 2013 was $2.1 billion, an increase of 38% from the third quarter of 2012.
Selling, general and administrative (SG&A) expense as determined under GAAP was $219 million in the third quarter of 2013, compared with $177 million for the same period in 2012. Adjusted (non-GAAP) SG&A expense was $211 million in the third quarter of 2013, an increase of 28% from $165 million for the same period last year. The increase was driven primarily by increased membership, including membership associated with acquisitions. The adjusted administrative expense ratio was 8.5% in the third quarter of 2013, compared with 9.2% for the same period in 2012. The decrease in the ratio resulted from improved operating leverage and productivity gains, offset in part by investments in growth and service initiatives.
Medicaid Segment Operations
Medicaid segment membership increased by 242,000, or 16% year over year, to 1.8 million members as of September 30, 2013. The increase resulted mainly from growth in the Kentucky and Florida programs and the first quarter 2013 acquisitions in Missouri and South Carolina. Premium revenue was $1.5 billion for the third quarter of 2013, an increase of 37% year over year, and was driven by changes in the demographic and geographic mix of membership, as well as the enrollment increase. The Medicaid segment MBR was 89.1% for the third quarter of 2013, a 200 basis point decrease from 91.1% in the third quarter of 2012. The third quarter of 2013 segment MBR was higher than the Company’s expectation, primarily due to the performance of the Kentucky and Georgia Medicaid programs.
Medicare Advantage Segment Operations
Medicare Advantage segment membership as of September 30, 2013, increased by 116,000 year over year, or 69%, to 283,000 members. Premium revenue for the quarter grew 71% year over year to $807 million. The growth resulted primarily from the Company’s California health plan acquisition that closed in October 2012, as well as organic sales activity in New York, Florida, Georgia, and Texas. The Medicare Advantage segment MBR was 84.9% for the third quarter of 2013. The MBR was below the Company’s expectation, mainly as a result of favorable prior period revenue adjustments. The MBR decreased from 86.8% in the third quarter of 2012.
Prescription Drug Plan Segment Operations
PDP segment membership as of September 30, 2013, decreased 95,000 year over year, or 11%, to 784,000 members. The decrease was primarily due to a reduction in membership assigned to the WellCare’s plans by CMS, offset in part by growth in the Company’s enhanced PDP product. Premium revenue for the quarter decreased 21% to $196 million as a result of the membership decline and the outcome of the 2013 bids. The PDP segment MBR was 73.7% in the third quarter of 2013, which was higher than anticipated primarily as a result of the performance of the Company’s enhanced product. The MBR increased from 64.7% in the third quarter of 2012.
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WCG Reports Third Quarter 2013 Results
Page 3
November 1, 2013
Cash Flow and Financial Condition
Net cash provided by operating activities as determined under GAAP was $230 million for the nine months ended September 30, 2013, compared with net cash used in operating activities of $134 million for the nine months ended September 30, 2012.
On a non-GAAP basis, modified for the timing of receipts from, and payments to, WellCare’s government customers, net cash provided by operating activities was $278 million for the nine months ended September 30, 2013, compared with net cash provided by operating activities of $20 million for the same period in 2012. The increase resulted mainly from the Company’s growth.
As of September 30, 2013, unregulated cash and investments were approximately $392 million, compared with $267 million as of June 30, 2013. The increase resulted primarily from dividends paid by the Company’s regulated subsidiaries to its unregulated entities.
Days in claims payable were 41 days as of September 30, 2013, compared with 40 days as of June 30, 2013, and 40 days as of September 30, 2012.
Financial Outlook
The Company is updating its financial outlook for the year ending December 31, 2013:
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·
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Premium revenue in total is expected to be between $9.35 and $9.40 billion. The previous guidance was for premium revenue to be between $9.15 and $9.25 billion.
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·
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Adjusted net income per diluted share is expected to be between approximately $4.70 and $4.80. The previous guidance was for adjusted net income per diluted share of between $4.70 and $4.90. The change in range results mainly from the incorporation into the guidance of the Company’s third quarter results, as well as from anticipated fourth quarter 2013 SG&A expenses associated with the implementation of the Florida MMA program and acquisition integration.
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·
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Premium revenues and MBRs for each of the Company’s segments are anticipated as follows:
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Segments
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Premium Revenue Year-over-year Changes
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MBRs
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Medicaid
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Increase approximately 26%
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88.00% to 88.50%
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Medicare Advantage
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Increase approximately 58%
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86.50% to 87.00%
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Medicare PDP
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Decrease approximately 21%
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87.00% to 87.50%
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·
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The adjusted administrative expense ratio is expected to be approximately 8.6%. Previous guidance was for the adjusted administrative expense ratio to be approximately 8.7%.
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All elements of the Company’s outlook exclude the impact of Medicaid premium taxes.
Webcast
A discussion of WellCare’s third quarter 2013 results will be webcast live on Friday, November 1, 2013, beginning at 8:30 a.m. Eastern Time. A replay will be available beginning approximately one hour following the conclusion of the live broadcast and will be available for 30 days. The webcast is available via the Company’s web site at www.wellcare.com.
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WCG Reports Third Quarter 2013 Results
Page 4
November 1, 2013
About WellCare Health Plans, Inc.
WellCare Health Plans, Inc. provides managed care services targeted to government-sponsored health care programs, focusing on Medicaid and Medicare. Headquartered in Tampa, Fla., WellCare offers a variety of health plans for families, children, and the aged, blind, and disabled, as well as prescription drug plans. The Company served approximately 2.8 million members nationwide as of September 30, 2013. For more information about WellCare, please visit the Company’s website at www.wellcare.com.
Basis of Presentation
In addition to results determined under GAAP, premium revenue as described in this news release excludes the impact of premium taxes. Both the Company and segment MBRs, as well as the Company’s administrative expense ratio, are calculated as a percentage of premium revenue, excluding premium taxes. Additionally, net income and certain other operating results described in this news release are reported after adjustment for certain SG&A expenses related to previously disclosed government investigations and related litigation and resolution costs that management believes are not indicative of long-term business operations. Please refer to the schedule in this news release that provides supplemental information reconciling results determined under GAAP to adjusted (non-GAAP) results.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains “forward-looking” statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions are forward-looking statements. For example, statements regarding the Company’s financial outlook and the timing of the closing of the Windsor and Healthfirst NJ acquisitions contain forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause WellCare’s actual future results to differ materially from those projected or contemplated in the forward-looking statements. These risks and uncertainties include, but are not limited to, WellCare’s progress on top priorities such as improving health care quality and access, ensuring a competitive cost position, and delivering prudent, profitable growth, WellCare’s ability to effectively manage growth, WellCare’s ability to address operational challenges relating to new business, WellCare’s ability to effectively execute and integrate acquisitions, potential reductions in Medicaid and Medicare revenue, including due to sequestration, WellCare’s ability to estimate and manage medical benefits effectively, the satisfaction of the closing conditions for the acquisitions and the receipt of regulatory approval for the acquisitions.
Additional information concerning these and other important risks and uncertainties can be found in the Company’s filings with the U.S. Securities and Exchange Commission (the SEC), included under the captions “Forward-Looking Statements” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, and other subsequent filings by WellCare with the SEC, which contain discussions of WellCare’s business and the various factors that may affect it. WellCare undertakes no duty to update these forward-looking statements to reflect any future events, developments, or otherwise.
-MORE-
WCG Reports Third Quarter 2013 Results
Page 5
November 1, 2013
WELLCARE HEALTH PLANS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME DATA
(Unaudited; dollars in thousands except share and per share data)
|
For the Three Months Ended September 30,
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For the Nine Months Ended September 30,
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|||||||||||||||
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2013
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2012
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2013
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2012
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Revenues:
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||||||||||||||||
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Premium
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$ | 2,478,612 | $ | 1,795,796 | $ | 7,016,093 | $ | 5,353,083 | ||||||||
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Medicaid premium taxes
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16,947 | 20,581 | 59,161 | 61,048 | ||||||||||||
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Total premium
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2,495,559 | 1,816,377 | 7,075,254 | 5,414,131 | ||||||||||||
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Investment and other income
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4,851 | 2,018 | 13,933 | 6,772 | ||||||||||||
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Total revenues
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2,500,410 | 1,818,395 | 7,089,187 | 5,420,903 | ||||||||||||
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Expenses:
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Medical benefits
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2,144,672 | 1,549,456 | 6,147,863 | 4,617,411 | ||||||||||||
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Selling, general and administrative
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218,790 | 176,797 | 637,590 | 497,493 | ||||||||||||
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Medicaid premium taxes
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16,947 | 20,581 | 59,161 | 61,048 | ||||||||||||
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Depreciation and amortization
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11,057 | 8,193 | 31,819 | 22,704 | ||||||||||||
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Interest
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2,171 | 1,016 | 5,932 | 3,163 | ||||||||||||
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Total expenses
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2,393,637 | 1,756,043 | 6,882,365 | 5,201,819 | ||||||||||||
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Income before taxes
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106,773 | 62,352 | 206,822 | 219,084 | ||||||||||||
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Income tax expense
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42,779 | 24,065 | 74,410 | 83,123 | ||||||||||||
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Net income
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$ | 63,994 | $ | 38,287 | $ | 132,412 | $ | 135,961 | ||||||||
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Net income per common share:
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Basic
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$ | 1.47 | $ | 0.89 | $ | 3.05 | $ | 3.16 | ||||||||
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Diluted
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$ | 1.45 | $ | 0.87 | $ | 3.01 | $ | 3.11 | ||||||||
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Weighted average common shares outstanding:
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Basic
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43,608,626 | 43,149,455 | 43,470,758 | 43,070,113 | ||||||||||||
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Diluted
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44,037,922 | 43,844,223 | 43,972,446 | 43,785,424 | ||||||||||||
-MORE-
WCG Reports Third Quarter 2013 Results
Page 6
November 1, 2013
CONSOLIDATED BALANCE SHEETS
(Unaudited; Dollars in thousands except share data)
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Sept. 30,
2013
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Dec. 31,
2012
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|||||||
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ASSETS
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||||||||
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Current Assets:
|
||||||||
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Cash and cash equivalents
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$ | 1,390,563 | $ | 1,100,495 | ||||
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Investments
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317,587 | 220,344 | ||||||
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Premiums receivable, net
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449,809 | 387,294 | ||||||
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Pharmacy rebates receivable, net
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145,172 | 126,832 | ||||||
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Funds receivable for the benefit of members
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119,438 | 126,646 | ||||||
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Income taxes receivable
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– | 15,615 | ||||||
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Prepaid expenses and other current assets, net
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111,594 | 96,276 | ||||||
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Deferred income tax asset
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25,058 | 27,208 | ||||||
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Total current assets
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2,559,221 | 2,100,710 | ||||||
|
|
||||||||
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Property, equipment and capitalized software, net
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144,273 | 131,518 | ||||||
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Goodwill
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236,756 | 223,839 | ||||||
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Other intangible assets, net
|
68,345 | 53,028 | ||||||
|
Long-term investments
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86,994 | 96,700 | ||||||
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Restricted investments
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82,326 | 67,364 | ||||||
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Other assets
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2,637 | 2,357 | ||||||
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Total Assets
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$ | 3,180,552 | $ | 2,675,516 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
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Current Liabilities:
|
||||||||
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Medical benefits payable
|
$ | 964,844 | $ | 732,994 | ||||
|
Unearned premiums
|
178 | 146 | ||||||
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Accounts payable
|
16,441 | 18,582 | ||||||
|
Income taxes payable
|
27,484 | – | ||||||
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Other accrued expenses and liabilities
|
168,357 | 221,055 | ||||||
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Current portion of amount payable related to investigation resolution
|
35,958 | 37,305 | ||||||
|
Current portion of long-term debt
|
39,875 | 15,000 | ||||||
|
Other payables to government partners
|
65,417 | 88,344 | ||||||
|
Total current liabilities
|
1,318,554 | 1,113,426 | ||||||
|
|
||||||||
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Deferred income tax liability
|
50,264 | 42,058 | ||||||
|
Amount payable related to investigation resolution
|
33,828 | 68,171 | ||||||
|
Long-term debt
|
296,625 | 120,000 | ||||||
|
Other liabilities
|
6,678 | 8,697 | ||||||
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Total liabilities
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1,705,949 | 1,352,352 | ||||||
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|
||||||||
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Commitments and contingencies
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– | – | ||||||
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||||||||
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Stockholders' Equity:
|
||||||||
|
Preferred stock, $0.01 par value (20,000,000 authorized, no shares
issued or outstanding)
|
– | – | ||||||
|
Common stock, $0.01 par value (100,000,000 authorized, 43,699,105
and 43,212,375 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively)
|
437 | 432 | ||||||
|
Paid-in capital
|
489,097 | 469,434 | ||||||
|
Retained earnings
|
986,498 | 854,086 | ||||||
|
Accumulated other comprehensive loss
|
(1,429 | ) | (788 | ) | ||||
|
Total stockholders' equity
|
1,474,603 | 1,323,164 | ||||||
|
Total Liabilities and Stockholders' Equity
|
$ | 3,180,552 | $ | 2,675,516 | ||||
-MORE-
WCG Reports Third Quarter 2013 Results
Page 7
November 1, 2013
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; dollars in thousands)
|
For the Nine Months Ended September 30,
|
||||||||
|
2013
|
2012
|
|||||||
|
Cash provided by (used in) operating activities:
|
||||||||
|
Net income
|
$ | 132,412 | $ | 135,961 | ||||
|
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
|
||||||||
|
Depreciation and amortization
|
31,819 | 22,704 | ||||||
|
Equity-based compensation expense
|
12,438 | 13,534 | ||||||
|
Loss on disposal of fixed assets, including asset impairment charges
|
9,036 | 164 | ||||||
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Incremental tax benefit from equity-based compensation
|
(2,998 | ) | (3,666 | ) | ||||
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Deferred taxes, net
|
9,142 | 15,296 | ||||||
|
Provision for doubtful receivables
|
7,023 | 10,272 | ||||||
|
Changes in operating accounts, net of effects from acquisitions:
|
||||||||
|
Premiums receivable, net
|
(32,917 | ) | (184,632 | ) | ||||
|
Pharmacy rebates receivable, net
|
(18,340 | ) | (12,046 | ) | ||||
|
Prepaid expenses and other current assets, net
|
(10,652 | ) | (6,162 | ) | ||||
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Medical benefits payable
|
160,415 | (73,634 | ) | |||||
|
Unearned premiums
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32 | (23 | ) | |||||
|
Accounts payable and other accrued expenses
|
(54,980 | ) | (11,895 | ) | ||||
|
Other payables to government partners
|
(22,927 | ) | 20,172 | |||||
|
Amount payable related to investigation resolution
|
(35,690 | ) | (46,604 | ) | ||||
|
Income taxes receivable/payable, net
|
45,784 | (16,289 | ) | |||||
|
Other, net
|
107 | 2,454 | ||||||
|
Net cash provided by (used in) operating activities
|
229,704 | (134,394 | ) | |||||
|
|
||||||||
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Cash used in investing activities:
|
||||||||
|
Acquisitions, net of cash acquired
|
(40,493 | ) | – | |||||
|
Purchases of investments
|
(354,565 | ) | (357,214 | ) | ||||
|
Proceeds from sale and maturities of investments
|
304,002 | 342,963 | ||||||
|
Purchases of restricted investments
|
(41,714 | ) | (30,973 | ) | ||||
|
Proceeds from maturities of restricted investments
|
28,391 | 24,821 | ||||||
|
Additions to property, equipment and capitalized software, net
|
(48,952 | ) | (47,665 | ) | ||||
|
Net cash used in investing activities
|
(153,331 | ) | (68,068 | ) | ||||
|
|
||||||||
|
Cash provided by financing activities:
|
||||||||
|
Proceeds from debt, net of financing costs paid
|
228,513 | (585 | ) | |||||
|
Proceeds from exercises of stock options
|
8,614 | 9,227 | ||||||
|
Incremental tax benefit from equity-based compensation
|
2,998 | 3,666 | ||||||
|
Repurchase and retirement of shares to satisfy tax withholding requirements
|
(4,069 | ) | (6,344 | ) | ||||
|
Payments on debt
|
(28,500 | ) | (7,500 | ) | ||||
|
Payments on capital leases
|
(1,069 | ) | (1,538 | ) | ||||
|
Funds received (paid) for the benefit of members, net
|
7,208 | (57,222 | ) | |||||
|
Net cash provided by (used in) financing activities
|
213,695 | (60,296 | ) | |||||
|
|
||||||||
|
Increase (decrease) in cash and cash equivalents
|
290,068 | (262,758 | ) | |||||
|
Balance at beginning of period
|
1,100,495 | 1,325,098 | ||||||
|
Balance at end of period
|
$ | 1,390,563 | $ | 1,062,340 | ||||
|
|
||||||||
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
|
Cash paid for taxes
|
$ | 22,316 | $ | 100,010 | ||||
|
Cash paid for interest
|
$ | 5,291 | $ | 2,707 | ||||
|
|
||||||||
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:
|
||||||||
|
Non-cash additions to property, equipment, and capitalized software
|
$ | 2,384 | $ | 1,898 | ||||
-MORE-
WCG Reports Third Quarter 2013 Results
Page 8
November 1, 2013
WELLCARE HEALTH PLANS, INC.
MEMBERSHIP STATISTICS
(Unaudited)
|
As of September 30,
|
||||||||
|
2013
|
2012
|
|||||||
|
Membership by Program
|
||||||||
|
Medicaid Membership
|
||||||||
|
TANF
|
1,315,000 | 1,183,000 | ||||||
|
CHIP
|
217,000 | 183,000 | ||||||
|
SSI, ABD and duals
|
199,000 | 128,000 | ||||||
|
Other programs
|
26,000 | 21,000 | ||||||
|
Total Medicaid Membership
|
1,757,000 | 1,515,000 | ||||||
|
|
||||||||
|
Medicare Membership
|
||||||||
|
Medicare Advantage
|
283,000 | 167,000 | ||||||
|
Prescription Drug Plan
|
784,000 | 879,000 | ||||||
|
Total Medicare Membership
|
1,067,000 | 1,046,000 | ||||||
|
Total Membership
|
2,824,000 | 2,561,000 | ||||||
|
|
||||||||
|
Medicaid Membership by State
|
||||||||
|
Georgia
|
552,000 | 566,000 | ||||||
|
Florida
|
474,000 | 434,000 | ||||||
|
Kentucky
|
291,000 | 159,000 | ||||||
|
Illinois
|
145,000 | 137,000 | ||||||
|
Missouri
|
106,000 | – | ||||||
|
Ohio
|
– | 106,000 | ||||||
|
Other States
|
189,000 | 113,000 | ||||||
|
Total Medicaid Membership
|
1,757,000 | 1,515,000 | ||||||
-MORE-
WCG Reports Third Quarter 2013 Results
Page 9
November 1, 2013
WELLCARE HEALTH PLANS, INC.
SEGMENT INFORMATION
(Unaudited; dollars in thousands)
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
|||||||||||||
|
Premium revenue:
|
||||||||||||||||
|
Medicaid:
|
||||||||||||||||
|
Georgia
|
$ | 413,214 | $ | 348,322 | $ | 1,142,673 | $ | 1,090,386 | ||||||||
|
Kentucky
|
373,717 | 174,624 | 951,822 | 498,033 | ||||||||||||
|
Florida
|
289,244 | 243,205 | 814,639 | 713,424 | ||||||||||||
|
Other states
|
399,240 | 310,197 | 1,216,442 | 906,119 | ||||||||||||
|
Medicaid premium taxes
|
16,947 | 20,581 | 59,161 | 61,048 | ||||||||||||
|
Total Medicaid
|
1,492,362 | 1,096,929 | 4,184,737 | 3,269,010 | ||||||||||||
|
|
||||||||||||||||
|
Medicare:
|
||||||||||||||||
|
Medicare Advantage plans
|
807,344 | 470,756 | 2,286,230 | 1,364,505 | ||||||||||||
|
Prescription Drug plans
|
195,853 | 248,692 | 604,287 | 780,616 | ||||||||||||
|
Total Medicare
|
1,003,197 | 719,448 | 2,890,517 | 2,145,121 | ||||||||||||
|
Total Premium Revenue
|
$ | 2,495,559 | $ | 1,816,377 | $ | 7,075,254 | $ | 5,414,131 | ||||||||
|
|
||||||||||||||||
|
Medical benefits ratios:
|
||||||||||||||||
|
Medicaid, including premium tax
|
88.1 | % | 89.3 | % | 86.9 | % | 87.0 | % | ||||||||
|
Medicaid
|
89.1 | % | 91.1 | % | 88.1 | % | 88.7 | % | ||||||||
|
Medicare Advantage
|
84.9 | % | 86.8 | % | 86.1 | % | 83.1 | % | ||||||||
|
Prescription Drug Plans
|
73.7 | % | 64.7 | % | 89.9 | % | 81.9 | % | ||||||||
|
Company, including premium tax
|
85.9 | % | 85.3 | % | 86.9 | % | 85.3 | % | ||||||||
|
Company
|
86.5 | % | 86.3 | % | 87.6 | % | 86.3 | % | ||||||||
-MORE-
WCG Reports Third Quarter 2013 Results
Page 10
November 1, 2013
WELLCARE HEALTH PLANS, INC.
SUPPLEMENTAL INFORMATION
Reconciliation of Certain GAAP Financial Information
Associated with Government Investigation-Related Matters
(Unaudited; dollars in thousands except per share data)
The Company reports adjusted operating results on a non-GAAP basis to exclude certain expenses that management believes are not indicative of longer-term business trends and operations. Following is certain financial information for the three months ended September 30, 2013 and 2012, as determined under GAAP, reconciled to the adjusted financial information for the same periods.
|
For the Three Months Ended
September 30, 2013
|
For the Three Months Ended
September 30, 2012
|
|||||||||||||||||||||||||
|
GAAP
|
Adjustments
|
Adjusted (Non-GAAP)
|
GAAP
|
Adjustments
|
Adjusted
(Non-GAAP)
|
|||||||||||||||||||||
|
Selling, general, and administrative expense
|
$ | 218,790 | $ | (7,298 | ) |
(a)
(b)
|
$ | 211,492 | $ | 176,797 | $ | (12,202 | ) |
(a)
(b)
|
$ | 164,595 | ||||||||||
|
Income tax expense
|
42,779 | 2,436 |
(c)
|
45,215 | 24,065 | 4,332 |
(c)
|
28,397 | ||||||||||||||||||
|
Net income
|
63,994 | 4,862 | 68,856 | 38,287 | 7,870 | 46,157 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||||
|
Net income per share:
|
||||||||||||||||||||||||||
|
Basic
|
$ | 1.47 | $ | 0.11 | $ | 1.58 | $ | 0.89 | $ | 0.18 | $ | 1.07 | ||||||||||||||
|
Diluted
|
$ | 1.45 | $ | 0.11 | $ | 1.56 | $ | 0.87 | $ | 0.18 | $ | 1.05 | ||||||||||||||
|
(a)
|
Investigation-related legal, accounting, and other costs: Administrative expenses associated with the government investigations and related litigation amounted to $6.8 million and $11.4 million, respectively, during the three months ended September 30, 2013 and 2012.
|
|
(b)
|
Liability for government investigation-related litigation resolution: Based on the status of government investigation-related litigation, the Company recorded expense of $0.5 million and $0.8 million, respectively, during the three months ended September 30, 2013 and 2012.
|
|
(c)
|
Income tax expense: Had the Company not recorded the government investigation-related items described above, the Company estimates that its income tax expense would be increased by $2.4 million and $4.3 million, respectively, during the three months ended September 30, 2013 and 2012, based on the effective income tax rates applicable to adjusted (non-GAAP) results.
|
-MORE-
WCG Reports Third Quarter 2013 Results
Page 11
November 1, 2013
WELLCARE HEALTH PLANS, INC.
SUPPLEMENTAL INFORMATION (Continued)
Reconciliation of Certain GAAP Financial Information
Associated with Government Investigation-Related Matters
(Unaudited; dollars in thousands except per share data)
The Company reports adjusted operating results on a non-GAAP basis to exclude certain expenses that management believes are not indicative of longer-term business trends and operations. Following is certain financial information for the nine months ended September 30, 2013 and 2012, as determined under GAAP, reconciled to the adjusted financial information for the same periods.
|
For the Nine Months Ended
September 30, 2013
|
For the Nine Months Ended
September 30, 2012
|
|||||||||||||||||||||||||
|
GAAP
|
Adjustments
|
Adjusted (Non-GAAP)
|
GAAP
|
Adjustments
|
Adjusted
(Non-GAAP)
|
|||||||||||||||||||||
|
Selling, general, and administrative expense
|
$ | 637,590 | $ | (48,469 | ) |
(a)
(b)
|
$ | 589,121 | $ | 497,493 | $ | (37,457 | ) |
(a)
(b)
|
$ | 460,036 | ||||||||||
|
Income tax expense
|
74,410 | 25,384 |
(c)
|
99,794 | 83,123 | 15,452 |
(c)
|
98,575 | ||||||||||||||||||
|
Net income
|
132,412 | 23,085 | 155,497 | 135,961 | 22,005 | 157,966 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||||
|
Net income per share:
|
||||||||||||||||||||||||||
|
Basic
|
$ | 3.05 | $ | 0.53 | $ | 3.58 | $ | 3.16 | $ | 0.51 | $ | 3.67 | ||||||||||||||
|
Diluted
|
$ | 3.01 | $ | 0.53 | $ | 3.54 | $ | 3.11 | $ | 0.50 | $ | 3.61 | ||||||||||||||
|
(a)
|
Investigation-related legal, accounting, and other costs: Administrative expenses associated with the government investigations and related litigation amounted to $46.6 million and $34.5 million, respectively, during the nine months ended September 30, 2013 and 2012.
|
|
(b)
|
Liability for government investigation-related litigation resolution: Based on the status of government investigation-related litigation, the Company recorded expense of $1.9 million and $3.0 million, respectively, during the nine months ended September 30, 2013 and 2012.
|
|
(c)
|
Income tax expense: Had the Company not recorded the government investigation-related items described above, the Company estimates that its income tax expense would be increased by $25.4 million and $15.5 million, respectively, during the nine months ended September 30, 2013 and 2012, based on the effective income tax rates applicable to adjusted (non-GAAP) results.
|
-MORE-
WCG Reports Third Quarter 2013 Results
Page 12
November 1, 2013
|
|
WELLCARE HEALTH PLANS, INC.
|
SUPPLEMENTAL INFORMATION (Continued)
Reconciliation of Administrative Expense Ratios
(Unaudited; dollars in thousands)
The Company reports the administrative expense ratio on an adjusted or non-GAAP basis modified to reflect the impact of Medicaid premium taxes and expenses associated with government investigations and related litigation on this ratio.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
|||||||||||||
|
Company premium revenue:
|
||||||||||||||||
|
As determined under GAAP
|
$ | 2,495,559 | $ | 1,816,377 | $ | 7,075,254 | $ | 5,414,131 | ||||||||
|
Medicaid premium taxes
|
16,947 | 20,581 | 59,161 | 61,048 | ||||||||||||
|
Total premium revenue net of Medicaid premium taxes (non-GAAP)
|
$ | 2,478,612 | $ | 1,795,796 | $ | 7,016,093 | $ | 5,353,083 | ||||||||
|
|
||||||||||||||||
|
Administrative expense ratio:
|
||||||||||||||||
|
As determined under GAAP
|
8.8 | % | 9.7 | % | 9.0 | % | 9.2 | % | ||||||||
|
Impact of Medicaid premium taxes
|
0.0 | % | 0.1 | % | 0.1 | % | 0.1 | % | ||||||||
|
Excluding Medicaid premium taxes
|
8.8 | % | 9.8 | % | 9.1 | % | 9.3 | % | ||||||||
|
Selling, general and administrative expense adjustments(a)
|
(0.3 | %) | (0.6 | %) | (0.7 | %) | (0.7 | %) | ||||||||
|
Adjusted (non-GAAP)
|
8.5 | % | 9.2 | % | 8.4 | % | 8.6 | % | ||||||||
|
(a)
|
Results from expenses associated with government investigation-related legal, accounting, and other costs, as well as liabilities for litigation resolution for each of the respective periods, which dollar amounts are disclosed on the schedules above.
|
Reconciliation of GAAP Net Cash Provided by or Used in Operating Activities
to Net Cash Provided by Operating Activities,
Modified for the Timing of Receipts from, and Payments to, Government Customers
(Unaudited; dollars in thousands)
The Company reports cash used in or provided by operating activities on a non-GAAP basis modified to exclude the changes in premium receivables, provision for doubtful receivables, unearned premiums, and other net receivables from, and payables to, government customers. The Company believes that cash used in or provided by operating activities modified to exclude these changes is a useful measure for investors, as the excluded changes are a function of the timing of cash receipts from, and payments to, federal and state government agencies at the end of each period.
|
Nine Months Ended September 30,
|
||||||||
|
2013
|
2012
|
|||||||
|
Net cash provided by (used in) operating activities, as reported under GAAP
|
$ | 229,704 | $ | (134,394 | ) | |||
|
Modifications to eliminate changes in:
|
||||||||
|
Premiums receivable, net
|
32,917 | 184,632 | ||||||
|
Provision for doubtful receivables
|
(7,023 | ) | (10,272 | ) | ||||
|
Unearned premiums
|
(32 | ) | 23 | |||||
|
Other payables to government partners
|
22,927 | (20,172 | ) | |||||
|
Net cash provided by operating activities, modified for the timing of receipts from and payments to government clients
|
$ | 278,493 | $ | 19,817 | ||||
-END-