What: Shares of WellCare Health Plans (NYSE:WCG), a provider of government-sponsored health insurance, were down more than 10% today on much heavier than normal volume after the company reported third-quarter earnings.

So what: Reported revenue for the period only grew 1% over the year-ago period to $3.44 billion, which came up a bit short of the $3.48 billion that Wall Street was expecting. While that number was disappointing, the company did manage to beat expectations on the bottom line -- adjusted earnings of $44.6 million, or $1.00 per share, came in a nickel higher than what analysts were predicting.

Revenue growth was driven by adding a net 147,000 new members to the company's Medicaid Health Plans, which grew by about 6.5% to 2.4 million when compared to the year ago period. However, those gains were offset by a 4.3% decline in its Medicare Advantage membership.

Membership growth should pick up next year a recently-announced contract with the Iowa Department of Human Services to service its Medicaid Managed Care program. That three year contract starts on January 1, 2016, so the company expects to see its fourth quarter expenses grow between $6.0 million to $9.0 million to get that program off the ground. In addition, the company is planning on booking a pre-tax premium deficiency reserve of $85 million to $95 million in the fourth quarter of 2015.  

Excluding those costs, the company expects to report revenue for the full year between $13.52 billion and $13.67 billion, and for earnings to fall between $3.35 to $3.45, both of which fall within its previously-reported guidance.

Investors appear to be bidding down its shares today due to the slight miss on revenue and the higher-than-expected costs coming next quarter.

Now what: While the start-up costs to get the Iowa business off the ground will certainly dig into profitability next quarter, they appear to be one-time in nature and are certainly necessary to help fuel the company's growth in the coming years. 

In the press release Kenneth Burdick, WellCare's CEO, stated:

"We expect our Iowa Medicaid business to be a meaningful contributor to our results in the long-term after investments that we are making to ramp up operations and transition members to this new managed Medicaid program."

After today's fall, shares are trading for roughly 17 times estimated 2016 earnings, which could prove to be an attractive price if the company is able to meet its projected profit growth rate of more than 18% over the coming 5 years. 

Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.