WellCare Health Plans (WCG) Sees FY17 EPS of $6.00-$6.25, Versus the Consensus of $6.31

WellCare Health Plans, Inc. (NYSE: WCG) today issued full-year 2017 guidance and reaffirmed its full-year 2016 guidance. For the full-year 2017, the company expects its adjusted earnings per diluted share (EPS) to be in the range of $6.00 to $6.25 (**** consensus of $6.31). For the full-year 2016, WellCare continues to expect adjusted EPS to be in a range of $5.35 to $5.45.

WellCare's full-year 2017 guidance includes its pending acquisition of Care1st Health Plan Arizona, Inc. and One Care by Care1st Health Plan of Arizona, Inc. (together, "Care1st Arizona") that is expected to close on January 1, 2017, but does not include its pending acquisition of Universal American Corp. that is expected to close in the second quarter of 2017.

Refer to the Appendix of this press release for the guidance table that includes specific 2017 and 2016 guidance metrics, related footnotes and the basis of presentation. In addition to the information in this release, a presentation describing the highlights of WellCare's full-year 2017 guidance can be accessed via the following link: http://ir.wellcare.com/presentations.

Full-Year 2017 Guidance Highlights

Compared with the midpoints of WellCare's 2016 guidance metrics, the midpoints of the company's 2017 guidance metrics reflect the following assumptions:

• Total GAAP* and adjusted premium revenues are expected to increase 9 percent and 11 percent year over year, respectively, primarily as a result of organic growth in the company's Medicaid and Medicare Health Plans segments and the acquisition of Care1st Arizona.
• Medicaid Health Plans GAAP and adjusted premium revenues are expected to increase by 10 percent and 13 percent year over year, respectively, primarily reflecting:
  • ­the company's Nebraska Medicaid contract award effective January 1, 2017;
  • ­the Missouri Medicaid reprocurement that includes geographic expansion statewide and is expected to begin on May 1, 2017; and
  • ­the Care1st Arizona acquisition.
  • ­WellCare expects that the aforementioned items will be partially offset by the addition of a fourth managed care company to Georgia's Medicaid program that is anticipated to be effective on July 1, 2017.
  • ­In addition, 2017 GAAP Medicaid Health Plans premium revenue will be affected by the elimination of Medicaid reimbursement revenue associated with the Affordable Care Act Health Insurer Fee ("ACA industry fee") moratorium.
• Medicare Health Plans premium revenue is expected to increase approximately 9 percent year over year due to organic growth as a result of the company's 2017 bid positioning.
• Medicare Prescription Drug Plans (PDP) premium revenue is expected to increase approximately 4.5 percent year over year primarily due to organic growth as a result of the company's 2017 bid positioning.
• The GAAP and adjusted Medicaid Health Plans medical benefits ratios (MBR) are expected to increase 310 basis points and 75 basis points year over year, respectively, primarily reflecting:
  • ­Florida Medicaid retroactive premium revenue, recognized in 2016, related to underpayments for specific benefits in Florida for periods prior to 2016, which the company does not expect to recur in 2017;
  • ­the addition of new Medicaid business that has a higher MBR than the company's more mature Medicaid businesses; and
  • ­a low single-digit Medicaid rate increase environment.
  • ­The GAAP Medicaid Health Plans MBR will also reflect the effect of the ACA industry fee moratorium in 2017 and the resulting elimination of associated Medicaid reimbursement revenue.
  • ­WellCare expects that the aforementioned items will be partially offset by the effect of continued momentum from ongoing clinical initiatives.
• The Medicare Health Plans MBR is expected to increase 100 basis points year over year primarily as a result of increased investments in quality and bid process considerations due to the ACA industry fee moratorium partially offset by continued momentum from ongoing clinical initiatives.
• The Medicare PDP MBR is expected to increase 350 basis points year over year due to the result of the company's 2017 bid positioning.
• GAAP and adjusted depreciation and amortization (D&A) expense are expected to increase year over year due to higher capital expenditures in previous years. The GAAP D&A expense also reflects expected additional amortization expense as a result of the Care1st Arizona acquisition.
• The adjusted effective income tax rate is expected to decrease year over year primarily due to the effect of the 2017 ACA insurer fee moratorium.

The company noted that, excluding $0.22 per diluted share in out-of-period Florida retroactive premium revenue that was recorded in 2016, it expects its 2017 adjusted EPS to increase approximately 18 percent year over year compared with the 2016 adjusted EPS guidance midpoint.

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