WellCare takes 1Q loss on legal reserve charges

WellCare Health Plans Inc. said Monday it took a loss in the first quarter due to millions of dollars in payments connected to fraud investigations into the company.

WellCare has been under government investigation since October 2007 and restated its results from 2004 to 2007. Its most recent report, filed in January 2009, covered the first quarter of 2008.

For the three months ended March 31, the company said it lost $36.9 million, or 89 cents per share, as it set aside $44.8 million for payments related to government investigations, and $11.5 million in administrative expenses related to the government's investigation and WellCare's own internal investigation.

In the first quarter of 2008, WellCare said it earned $1.3 million, or 3 cents per share _ or $21.7 million, or 52 cents per share excluding one-time costs.

Excluding items tied to the investigations, WellCare reported an adjusted profit of $12.3 million, or 29 cents per share in the first quarter.

Revenue rose 10 percent to $1.8 billion from $1.64 billion as premiums increased.

Thomson Reuters says analysts were expecting a profit of 18 cents per share and revenue of $1.76 billion, on average. Analysts typically exclude special items from their estimates.

WellCare shares fell $2, or 9.9 percent, to $18.15 in afternoon trading.

In the first quarter, WellCare reported greater medical benefits expenses for Medicare private fee-for-service plans, and said Medicaid premium revenue grew less than usual. It spent 85.2 percent of its Medicaid premiums on care, up from 83.3 percent a year ago. A total of 87.8 percent of Medicare benefits were spent on care, down from 88.6 percent a year ago.

Total premium revenue grew 11 percent to $1.79 billion. WellCare's membership increased 10 percent, to 1.36 million.

The company is the target of federal and state investigations, as well as class action lawsuits, related to alleged Medicaid fraud. on Tuesday, WellCare agreed to pay $80 million in restitution to avoid being criminally prosecuted. But the investigation is not over, and WellCare executives and employees could still be charged.

WellCare will pay $40 million in restitution to Florida Medicaid and Healthy Kids, and $40 million in a civil forfeiture.