Why Shares of WellCare Health Plans, Inc. Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of WellCare Health Plans  (NYSE: WCG  ) were getting an A-OK from investors today, climbing as much as 10% after reporting first-quarter earnings this morning.

So what: The health insurance provider said adjusted per-share profit jumped from $0.63 to $1.13, blowing earnings estimates of $0.04 per share out of the water. Those low estimates were due to projections earlier in the year from WellCare of a decline in profits due to fees relating to Obamacare. However, a number of factors drove the improvement in the quarter, including a benefit from a gain resulting from its acquisition of Windsor Health Group. Operating profits grew briskly as well, improving 63% as CEO Dave Gallitano attributed the jump to the "strong and growth performance of our Medicaid health plans." 

Now what: Looking ahead, WellCare lifted its full-year guidance because of the Windsor-related gain, "Medicaid results and outlook, greater traction in medical cost management initiatives, and productivity improvements." Management now expects full-year earnings of $4.40 to $4.75, up from a previous range of $3.75 to $4.05, and well ahead of analyst estimates at $3.97. The company also lifted its premium revenue guidance to $12-$12.1 billion, ahead of expectations, as premiums grew 32% in the first quarter. With growth like that, I wouldn't be surprised to see WellCare shares continue to move higher. 

Invest in the next wave of health care innovation
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And the technology behind is poised to set off one of the most remarkable health care revolutions in decades. The Motley Fool's exclusive research presentation dives into this technology's true potential, and its ability to make life-changing medical solutions never thought possible. To learn how you can invest in this unbelievable new technology, click here now to see our free report.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2945987, ~/Articles/ArticleHandler.aspx, 7/28/2014 5:53:53 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement