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What: Shares of WellCare Health Plans (NYSE:WCG) were looking reinvigorated today, climbing as much as 12% after reporting earnings this morning.
So what: Sales hit $1.99 billion for the quarter, ahead of estimates of $1.89 billion, and adjusted earnings of $1.32 beat the Street by $0.07. Per-share profits were still down considerably from a year ago, when they hit $1.96, because of rising costs. The health insurer was also boosted by a 7% premium increase for its Medicaid program in Kentucky that went into effect Jan. 1, and a 3% increase scheduled for July 1. Because of that increase, WellCare increased its 2013 revenue outlook to $8.7 billion to $8.8 billion. Analysts had expected $8.5 billion.
Now what: Its EPS forecast for 2013 was still below estimates, however, as the company struggles to deal with increasing expenses. CEO Alec Cunningham touted his company's diversified portfolio, saying it began 2013 with a number of promising growth opportunities in attractive markets, but that WellCare's rising costs underscore the risks of investing in health care insurers, especially with the uncertainty from the Affordable Care Act. I'd be more comfortable investing in WellCare if profits were growing along with revenues.
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