As baby boomers reach retirement age, government-sponsored health plans such as Medicare and Medicaid will only continue to grow. This trend will be gladly embraced by managed care provider WellCareHealth Plans
The Florida-based company contracts with health-care providers to deliver health-care services to its members. On Nov. 1, WellCare turned in a monster third quarter 2006: revenues for this quarter increased 104% to $1 billion, compared with $495.5 million for the third quarter of 2005. Total membership grew to 2.2 million members, representing a 151% growth in membership on a year-over-year basis. The impressive results triggered a revised full-year forecast for both revenues and EPS. "We doubled the size of the company over the past year and retained our focus on execution and operational discipline," stated Todd S. Farha, chairman and chief executive officer.
The company's growth is the result of multiple factors. WellCare began offering a prescription drug plan (PDP) on a nationwide basis on Jan. 1 of this year; by the end of the third quarter, the PDP had grown to 911,000. WellCare was the only health plan selected to provide Medicaid services on a statewide basis in Georgia, and at the beginning of June, the company launched new Medicaid health plans in the state. As of Sept. 30, WellCare had approximately 410,000 members from Georgia.
I believe this stock provides Fools with greater upside potential than megacap health-care service companies such as an Aetna
Fool contributor Billy Fisher does not own shares of any of the companies mentioned.