WellCare Health Plans Inc. (WCG, Financial) filed Quarterly Report for the period ended 2012-06-30.
Wellcare Health Plans, Inc. has a market cap of $2.84 billion; its shares were traded at around $55.13 with a P/E ratio of 8.9 and P/S ratio of 0.5.
Premium revenue for the three months ended June 30, 2012 increased by approximately $323.9 million, or 21.8%, compared to the same period in the prior year. Premium revenue for the six months ended June 30, 2012 increased by approximately $640.0 million, or 21.6%, compared to the same period in the prior year. The increase is primarily attributable to membership growth in our Medicaid and MA segments and rate increases in certain of our Medicaid markets. Premium revenue includes $20.1 million and $40.5 million of Medicaid premium taxes for the three and six months ended June 30, 2012, respectively, and $18.1 million and $37.0 million for the same three and six months in 2011, respectively.
Excluding total investigation-related litigation and other resolution costs, our SG&A expense for the three months ended June 30, 2012, increased approximately $11.6 million, or 8.6%, to $146.5 million from $134.9 million for the same period in 2011. Similarly, our SG&A expense for the six months ended June 30, 2012, increased approximately $20.3 million, or 7.3%, to $295.4 million from $275.1 million for the same period in 2011. The increase in both periods was due to technology investments, including those required by regulatory changes, as well as medical cost initiatives, increased spending related to the launch of our Kentucky Medicaid program and other growth initiatives. These increases were partially offset by improvements in operating efficiency. Our SG&A expense as a percentage of total revenue, excluding premium taxes (“SG&A ratio”), was 8.9% for the three months ended June 30, 2012 compared to 10.0% for the same period in 2011. After excluding the investigation-related litigation and other resolution costs, our SG&A ratio for the three months ended June 30, 2012 was 8.2% compared to 9.2% for the same period in 2011. Our SG&A ratio was 9.0% for the six months ended June 30, 2012 compared to 10.2% for the same period in 2011. After excluding the investigation-related litigation and other resolution costs, our SG&A ratio for the six months ended June 30, 2012 was 8.3% compared to 9.4% for the same period in 2011. The improvement in our SG&A ratio, excluding investigation-related litigation and other resolution costs, is related to the growth in premium revenue and improvement in our administrative cost structure driven by business simplification projects, process management in our shared services functions, and continued evaluation of our organizational design. The improvement was partially offset by costs incurred for growth and regulatory and quality initiatives.
Medicaid premium taxes incurred for the three and six months ended June 30, 2012 were $20.1 million and $40.5 million, respectively, compared to $18.1 million and $37.0 million, respectively, for the same three and six month periods in 2011. The increase corresponds to the increase in related premium revenues.
Our term loan bears interest at 2.00% as of June 30, 2012. Loans designated by us at the time of borrowing as Alternate Base Rate (“ABR”) Loans that are outstanding under the credit facility bear interest at a rate per annum equal to (i) the greatest of (a) the prime rate in effect on such day; (b) the federal funds effective rate in effect on such day plus 0.50%; and (c) the adjusted London Inter-Bank Offered Rate (“Adjusted LIBOR”) for a one-month interest period on such day plus 1% plus (ii) the applicable margin. Loans designated by us at the time of borrowing as “Eurodollar Loans” that are outstanding under the credit facility bear interest at a rate per annum equal to the Adjusted LIBOR for the interest period in effect for such borrowing plus the applicable margin. The “applicable margin” means a percentage ranging from 0.50% to 2.00% per annum for ABR Loans and a percentage ranging from 1.50% to 3.00% per annum for Eurodollar Loans, depending upon our ratio of total debt to consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”). Unutilized commitments under the Credit Agreement are subject to a fee of 0.25% to 0.45% depending upon the Company s ratio of total debt to cash flow. Interest on the term loan is payable based on the LIBOR election period, which ranges from one to six months based upon our election, with interest on the unutilized commitment payable quarterly. Interest on the unutilized revolving credit facility and borrowings under the term loan were $0.2 million and $1.6 million, respectively, for a total interest expense amount of $1.8 million for the six month period ended June 30, 2012. As of June 30, 2012 interest payable for the term loan was $0.2 million.
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Wellcare Health Plans, Inc. has a market cap of $2.84 billion; its shares were traded at around $55.13 with a P/E ratio of 8.9 and P/S ratio of 0.5.
Highlight of Business Operations:
For the three and six months ended June 30, 2012, our net income was $46.4 million and $97.7 million, respectively, compared to net income of $69.6 million and $90.9 million for the same three and six month periods in 2011. Excluding investigation-related litigation and other resolution costs of $8.0 million and $7.1 million, net of tax, for the three months ended June 30, 2012 and 2011, respectively, net income decreased by $22.2 million, or 29%, in 2012 compared to the same three month period in 2011. Excluding investigation-related litigation and other resolution costs of $14.1 million and $13.9 million, net of tax, for the six months ended June 30, 2012 and 2011, respectively, net income increased by $6.9 million, or 7%, in 2012 compared to the same six month period in 2011. The decrease for the three months ended June 30, 2012 compared to the same period in 2011 resulted mainly from a decrease in our Medicaid segment results, higher selling, general and administrative expense (“SG&A”) expense and a higher effective income tax rate, partially offset by improved results in our MA and PDP segments. The increase for the six months ended June 30, 2012 resulted from improved results in our MA and PDP segments, partially offset by a decrease in our Medicaid segment results and increased SG&A expense. The decreases in our Medicaid segment results were due to the impact of higher net favorable development of prior period medical benefits payable experienced in 2011 and the relatively higher MBR in the Kentucky Medicaid program, partially offset by the impact of higher membership and related premium revenues and the impact of rate increases in certain markets. The improved results in our MA segment were due to increased membership and related premium revenues, while the improvement in the PDP segment resulted mainly from favorable claims experience. The increase in SG&A was driven primarily by higher membership, but the rate of increase was lower than the overall increase in premium revenues.Premium revenue for the three months ended June 30, 2012 increased by approximately $323.9 million, or 21.8%, compared to the same period in the prior year. Premium revenue for the six months ended June 30, 2012 increased by approximately $640.0 million, or 21.6%, compared to the same period in the prior year. The increase is primarily attributable to membership growth in our Medicaid and MA segments and rate increases in certain of our Medicaid markets. Premium revenue includes $20.1 million and $40.5 million of Medicaid premium taxes for the three and six months ended June 30, 2012, respectively, and $18.1 million and $37.0 million for the same three and six months in 2011, respectively.
Excluding total investigation-related litigation and other resolution costs, our SG&A expense for the three months ended June 30, 2012, increased approximately $11.6 million, or 8.6%, to $146.5 million from $134.9 million for the same period in 2011. Similarly, our SG&A expense for the six months ended June 30, 2012, increased approximately $20.3 million, or 7.3%, to $295.4 million from $275.1 million for the same period in 2011. The increase in both periods was due to technology investments, including those required by regulatory changes, as well as medical cost initiatives, increased spending related to the launch of our Kentucky Medicaid program and other growth initiatives. These increases were partially offset by improvements in operating efficiency. Our SG&A expense as a percentage of total revenue, excluding premium taxes (“SG&A ratio”), was 8.9% for the three months ended June 30, 2012 compared to 10.0% for the same period in 2011. After excluding the investigation-related litigation and other resolution costs, our SG&A ratio for the three months ended June 30, 2012 was 8.2% compared to 9.2% for the same period in 2011. Our SG&A ratio was 9.0% for the six months ended June 30, 2012 compared to 10.2% for the same period in 2011. After excluding the investigation-related litigation and other resolution costs, our SG&A ratio for the six months ended June 30, 2012 was 8.3% compared to 9.4% for the same period in 2011. The improvement in our SG&A ratio, excluding investigation-related litigation and other resolution costs, is related to the growth in premium revenue and improvement in our administrative cost structure driven by business simplification projects, process management in our shared services functions, and continued evaluation of our organizational design. The improvement was partially offset by costs incurred for growth and regulatory and quality initiatives.
Medicaid premium taxes incurred for the three and six months ended June 30, 2012 were $20.1 million and $40.5 million, respectively, compared to $18.1 million and $37.0 million, respectively, for the same three and six month periods in 2011. The increase corresponds to the increase in related premium revenues.
Our term loan bears interest at 2.00% as of June 30, 2012. Loans designated by us at the time of borrowing as Alternate Base Rate (“ABR”) Loans that are outstanding under the credit facility bear interest at a rate per annum equal to (i) the greatest of (a) the prime rate in effect on such day; (b) the federal funds effective rate in effect on such day plus 0.50%; and (c) the adjusted London Inter-Bank Offered Rate (“Adjusted LIBOR”) for a one-month interest period on such day plus 1% plus (ii) the applicable margin. Loans designated by us at the time of borrowing as “Eurodollar Loans” that are outstanding under the credit facility bear interest at a rate per annum equal to the Adjusted LIBOR for the interest period in effect for such borrowing plus the applicable margin. The “applicable margin” means a percentage ranging from 0.50% to 2.00% per annum for ABR Loans and a percentage ranging from 1.50% to 3.00% per annum for Eurodollar Loans, depending upon our ratio of total debt to consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”). Unutilized commitments under the Credit Agreement are subject to a fee of 0.25% to 0.45% depending upon the Company s ratio of total debt to cash flow. Interest on the term loan is payable based on the LIBOR election period, which ranges from one to six months based upon our election, with interest on the unutilized commitment payable quarterly. Interest on the unutilized revolving credit facility and borrowings under the term loan were $0.2 million and $1.6 million, respectively, for a total interest expense amount of $1.8 million for the six month period ended June 30, 2012. As of June 30, 2012 interest payable for the term loan was $0.2 million.
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