Exhibit 99.1
WellCare Fourth Quarter Net Income up 199%
Year-over-Year on Membership Growth of 35%
TAMPA, Fla.--(BUSINESS WIRE)--Feb. 14, 2005--WellCare Health
Plans, Inc. (NYSE: WCG):
-- Membership increased to 747,000 as of December 31, 2004,
representing 35% growth year-over-year, including 19% organic
growth
-- Total fourth quarter revenues increased 42% over prior year
fourth quarter to $397 million
-- Continued execution of Medicare expansion strategy resulted in
5% Medicare membership growth in fourth quarter and 10% growth
during 2004
WellCare Health Plans, Inc. announced results for the fourth
quarter and year ended December 31, 2004.
Net income for the fourth quarter of 2004 increased 199% to $17.7
million, or $0.46 per diluted share, based on 38.1 million weighted
average shares outstanding, compared to $5.9 million, or $0.17 per pro
forma diluted share, based on 25.2 million pro forma weighted average
shares outstanding in the prior year period. Total revenues increased
42% for the fourth quarter of 2004 to $397.3 million compared to
$279.7 million for the fourth quarter of 2003.
Net income for the year ended December 31, 2004 increased 109% to
$49.3 million, or $1.56 per diluted share, based on 31.6 million
weighted average shares outstanding, compared to $23.5 million, or
$0.73 per pro forma diluted share, based on 23.9 million pro forma
weighted average shares outstanding in 2003. Total revenues for the
year ended December 31, 2004 increased 33% to $1,395.2 million
compared to $1,046.0 million for the year ended December 31, 2003.
Year-over-year membership increased 35% to 747,000 as of December 31,
2004, representing 19% organic growth and 16% growth attributable to
the acquisition of Harmony Health Plans in June 2004.
On December 22, 2004, WellCare successfully completed a public
offering of 7,500,000 shares of common stock at $32.00 per share. Of
the shares offered, 1,500,000 shares were sold by the Company with the
remaining 6,000,000 being sold by selling stockholders. The net
proceeds to the Company of approximately $44.9 million, after
deducting underwriting discounts, commissions and other offering
costs, will be used to provide additional long-term capital to support
the growth of its business. WellCare did not receive any of the
proceeds from the shares of common stock sold by the selling
stockholders.
In commenting on these results, Todd S. Farha, President and Chief
Executive Officer of WellCare, stated, "We continue to grow by
arranging for quality care for our members while helping to achieve
cost savings for our government partners. Our strong performance in
the fourth quarter was a direct result of our ability to manage
effectively the healthcare needs of our Medicaid and Medicare
beneficiaries in the markets we serve. During the quarter, we grew
membership in all five of our Medicaid markets, a validation of the
healthy partnerships we are building throughout the communities we
serve."
Results of Operations for the Fourth Quarter
Total Revenue: Total revenue for the fourth quarter of 2004
increased $117.6 million, or 42%, to $397.3 million compared to $279.7
million for the same period last year.
Medical Benefits Expense: Medical benefits expense for the fourth
quarter of 2004 was $313.6 million, representing 79.3% of premium
revenues, compared to $227.5 million, representing 81.5% of premium
revenues, for the same period last year.
Selling, General and Administrative Expense: Selling, general and
administrative expense was $49.2 million for the fourth quarter of
2004, representing 12.4% of total revenues, compared to $39.0 million,
or 13.9% of total revenues, for the same period last year. The Company
continues its investment in technology, sales and marketing efforts
and general spending necessary to support growth.
Net Income: Net income for the fourth quarter of 2004 was $17.7
million, or $0.46 per diluted share, based on 38.1 million weighted
average shares outstanding, compared to $5.9 million, or $0.17 per pro
forma diluted share, based on 25.2 million pro forma weighted average
shares outstanding for the same period last year.
Results of Operations for the Year Ended December 31, 2004
Total Revenue: Total revenue for the year ended December 31, 2004
increased $349.2 million, or 33.4%, to $1,395.2 million compared to
$1,046.0 million for 2003.
Medical Benefits Expense: Medical benefits expense for the year
ended December 31, 2004 was $1,125.6 million, representing 80.9% of
premium revenues, compared to $861.1 million, representing 82.6% of
premium revenues, for 2003.
Selling, General and Administrative Expense: Selling, general and
administrative expense was $171.3 million for the year ended December
31, 2004, representing 12.3% of total revenues, compared to $126.1
million, or 12.1% of total revenues, for 2003. WellCare expects its
current selling, general and administrative expense ratio to stabilize
at these levels as the Company continues to invest in sales and
marketing efforts, technology and other spending on infrastructure
necessary to sustain growth efforts.
Net Income: Net income for the year ended December 31, 2004 was
$49.3 million, or $1.56 per diluted share, compared to $23.5 million,
or $0.73 per pro forma diluted share, for 2003. Earnings per share for
the year ended December 31, 2004 was positively affected by $0.03 per
share due to prepayments of certain long-term indebtedness in the
second quarter and due to the hurricanes that impacted Florida during
the third quarter.
Balance Sheet and Cash Flow Highlights
As of December 31, 2004, the Company had cash and cash equivalents
of $397.6 million as well as investments classified as current assets
of $75.5 million. For the year ended December 31, 2004, the Company
had positive cash flow from operations of $61.7 million on an adjusted
basis excluding the change in unearned premiums of $12.9 million. Cash
provided by operations was $48.8 million on a GAAP basis, which does
not include this unearned premiums adjustment. The Company believes
that excluding changes in unearned premiums is a better measure of
cash flow from operations, as changes in unearned premiums are
strictly a function of the timing of cash receipts from federal and
state agencies at the end of a period.
Days in claims payable was 56 at the end of the fourth quarter of
2004 compared to 55 at the end of the third quarter of 2004,
principally due to the timing of the claims payment process at quarter
end.
Membership and Other Operating Statistics (1):
Dec. 31, Dec. 31,
2004 2003
---------- ----------
Florida 532,000 475,000
New York 69,000 56,000
Connecticut 34,000 24,000
Illinois 67,000 -
Indiana 45,000 -
---------- ----------
Total 747,000 555,000
========== ==========
(1) Louisiana enrollment, which began in November, was less than 100
members as of December 31, 2004.
Dec. 31, Dec. 31,
2004 2003
---------- ----------
TANF 535,000 376,000
SSI 57,000 51,000
SCHIP 94,000 76,000
FHP 15,000 9,000
Medicare 46,000 42,000
Commercial - 1,000
---------- ----------
Total 747,000 555,000
========== ==========
Three Months Ended Year Ended
Dec. 31, Dec. 31,
--------------------- ---------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Medical Benefits Ratio 79.3% 81.5% 80.9% 82.6%
Selling, General
and Administrative
Expense Ratio 12.4% 13.9% 12.3% 12.1%
Dec. 31, Sept. 30,
2004 2004
---------- ----------
Days in Claims Payable 56 55
Guidance
The Company confirmed its 2005 net income guidance in the range of
$57 to $60 million, based on anticipated revenues of $1.7 billion, and
earnings per fully diluted share of $1.43 to $1.50 assuming 40 million
weighted average shares outstanding. WellCare also issued first
quarter earnings per share guidance of $0.23 to $0.25 on revenues of
$403 to $408 million.
In closing, Mr. Farha stated, "We are pleased with our results in
2004. We have achieved many milestones, including our initial public
offering and the acquisition of Harmony Health Plans. We continue to
execute on our strategy emphasizing strong organic growth. In
addition, during the second half of 2004, we successfully leveraged
our Medicaid operations to expand our Medicare business. Our momentum
in 2004 provides confidence in our ability to continue our strong
performance in 2005 and beyond."
Pro Forma Earnings Per Diluted Share
Pro forma earnings per diluted share, a non-GAAP financial
measure, is calculated giving effect to the Company's change in
capital structure effected in connection with its initial public
offering. Pro forma earnings per diluted share is reconciled to GAAP
net income per common unit in the accompanying condensed consolidated
statements of income. Because pro forma earnings per share is not a
measurement determined in accordance with accounting principles
generally accepted in the United States of America and is thus
susceptible to varying calculations, it may not be comparable to other
similarly titled measures of other companies.
Conference Call
The live broadcast of WellCare's year end conference call will
begin at 5:30 p.m. Eastern time on February 14, 2005. A 30-day online
replay will be available beginning approximately one hour following
the conclusion of the live broadcast. A link to these events can be
found on the Company's website at www.wellcare.com, under the Investor
Relations section, or at www.fulldisclosure.com.
About WellCare Health Plans, Inc.
WellCare Health Plans, Inc. provides managed care services
targeted exclusively to government-sponsored healthcare programs,
focusing on Medicaid and Medicare. Headquartered in Tampa, Florida,
WellCare serves 747,000 members in Florida, New York, Connecticut,
Illinois, Indiana and Louisiana. For more information about WellCare,
please visit the Company's website at www.wellcare.com.
Cautionary Statement Regarding Forward-Looking Statements
This release contains "forward-looking" statements that are made
pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Statements that are predictive in
nature, that depend upon or refer to future events or conditions, or
that include words such as "expects," "anticipates," "intends,"
"plans," "believes," "estimates," and similar expressions, including
statements related to WellCare's expected 2005 financial results, are
forward-looking statements. Forward-looking statements involve known
and unknown risks and uncertainties that may cause WellCare's actual
future results to differ materially from those projected or
contemplated in the forward-looking statements. These risks and
uncertainties include, but are not limited to, the potential
expiration, cancellation or suspension of WellCare's state or federal
contracts; WellCare's ability to accurately predict and effectively
manage health benefits and other operating expenses; WellCare's
ability to accurately estimate incurred but not reported medical
costs; risks associated with future changes in healthcare laws;
potential reductions in funding for government healthcare programs;
regulatory changes or developments, including that the state of
Florida may seek to recoup premiums incorrectly paid by them or that
the state of Connecticut may seek to restrict the ability to engage in
marketing activities; risks associated with WellCare's acquisition
strategy; risks associated with WellCare's substantial debt
obligations; and risks associated with WellCare's business operations,
including its ability to attract and retain qualified management
personnel. Additional information concerning these and other important
risks and uncertainties can be found under the heading "Risk Factors"
in the prospectus from WellCare's secondary public offering, as filed
with the Securities and Exchange Commission on December 17, 2004.
WellCare specifically disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future developments or otherwise.
WELLCARE HEALTH PLANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollars in thousands, except per share and unit data)
Three Months Ended Year Ended
Dec. 31, Dec. 31,
--------------------- ---------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenues:
Premium $395,281 $279,168 $1,390,896 $1,042,852
Investment and
other income 2,011 552 4,307 3,130
---------- ---------- ---------- ----------
Total revenues 397,292 279,720 1,395,203 1,045,982
Expenses:
Medical benefits 313,604 227,501 1,125,560 861,053
Selling, general
and administrative 49,182 38,986 171,257 126,106
Depreciation and
amortization 2,112 1,864 7,715 8,159
Interest 3,140 3,721 10,165 10,172
---------- ---------- ---------- ----------
Total expenses 368,038 272,072 1,314,697 1,005,490
---------- ---------- ---------- ----------
Income before income taxes 29,254 7,648 80,506 40,492
Income tax expense 11,555 1,734 31,256 16,955
---------- ---------- ---------- ----------
Net income $17,699 5,914 $49,250 23,537
========== ==========
Class A common unit yield (1,560) (5,997)
---------- ----------
Net income attributable
to common units $4,354 $17,540
========== ==========
Net income per share:
Basic $0.50 $1.70
Diluted $0.46 $1.56
Net income attributable
per common unit:
Basic $0.16 $0.66
Diluted $0.14 $0.60
Pro forma net income
attributable per share (1):
Basic $0.20 $0.82
Diluted $0.17 $0.73
Pro forma weighted average
common shares outstanding (1):
Basic 22,268,047 21,466,300
Diluted 25,214,134 23,937,664
(1) Pro forma net income attributable per share is calculated as net
income divided by pro forma weighted average common shares
outstanding and reflects the pro forma effects of automatic
conversion of all outstanding common units into shares of the
Company's common stock effective upon the closing of the
Company's initial public offering, but does not include any
common stock issued in conjunction with the initial public
offering. The Company's historical capital structure is not
indicative of its current structure due to the automatic
conversion of all units into common stock, the conversion of the
Class A Common Unit Yield into common stock, and issuance of new
common stock concurrent with the closing of the Company's initial
public offering and secondary public offering. Accordingly,
historical basic and diluted net income attributable per common
unit should not be used as an indicator of the future earnings
per common share.
WELLCARE HEALTH PLANS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands, except share and unit data)
Dec. 31, Dec. 31,
2004 2003
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $397,627 $237,321
Investments 75,515 33,778
Premiums and other receivables, net 52,170 12,792
Prepaid expenses and other current assets 6,119 3,663
Income taxes receivable 1,615 --
Deferred income taxes 15,362 12,036
---------- ----------
Total current assets 548,408 299,590
Property and equipment, net 12,587 4,717
Goodwill 180,848 158,725
Other intangibles, net 25,441 12,403
Restricted investment assets 31,473 21,392
Other assets 279 280
---------- ----------
TOTAL ASSETS $799,036 $497,107
========== ==========
LIABILITIES AND STOCKHOLDERS' AND MEMBERS' EQUITY
Current Liabilities:
Medical benefits payable $190,595 $148,297
Unearned premiums 63,449 76,248
Accounts payable and accrued expenses 35,520 29,830
Income taxes payable -- 143
Deferred income taxes -- 1,252
Current portion of notes payable
to related party -- 48,170
Current portion of long-term debt 1,600 --
---------- ----------
Total current liabilities 291,164 303,940
Note payable to related party 25,000 71,568
Long-term debt 156,901 16,017
Accrued interest 1,349 1,782
Deferred income taxes 14,818 3,971
Other liabilities 1,173 252
---------- ----------
Total liabilities 490,405 397,530
Commitments and contingencies
Stockholders' and Members' Equity:
Preferred Units, no par value (no units
issued or outstanding) -- --
Class A Common Units, no par value
(23,507,839 units issued and outstanding) -- --
Class B Common Units, no par value (no units
issued and outstanding) -- --
Class C Common Units, no par value (4,807,508
units issued and outstanding) -- --
Preferred Stock, $0.01 par value (20,000,000
authorized, no shares issued or outstanding) -- --
Common Stock, $0.01 par value (100,000,000
authorized, 38,590,655 shares issued
and outstanding) 386 --
Paid-in capital 230,804 71,382
Retained earnings 77,444 28,194
Accumulated other comprehensive income (3) 1
---------- ----------
Total stockholders' and members' equity 308,631 99,577
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
AND MEMBERS' EQUITY $799,036 $497,107
========== ==========
WELLCARE HEALTH PLANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Year Ended
Dec. 31,
---------------------
2004 2003
---------- ----------
Cash from operating activities:
Net income $49,250 $23,537
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization expense 7,715 8,159
Equity-based compensation expense 2,044 746
Accreted interest 378 903
Provision for doubtful receivables 1,195 4,247
Net gain on loan prepayment (2,697) --
Changes in operating accounts,
net of effect of acquisition:
Premiums and other receivables (23,408) 6,048
Prepaid expenses and other current assets (6,680) (1,194)
Deferred income tax asset (2,221) (3,139)
Medical benefits payable 24,138 34,627
Unearned premiums (12,901) 52,584
Accounts payable and
other accrued expenses 2,889 149
Accrued interest (433) 530
Taxes payable and deferred liability 9,913 (4,409)
Other, net (420) 10
---------- ----------
Net cash provided by operations 48,762 122,798
---------- ----------
Cash from investing activities:
Purchase of business (36,542) --
Proceeds from sale of investments 103,434 10,450
Purchases of investments (145,174) (25,012)
Purchases and depositions
of restricted investments (9,505) (709)
Additions to property and equipment, net (8,679) (3,042)
---------- ----------
Net cash used in investing activities (96,466) (18,313)
---------- ----------
Cash from financing activities:
Contribution of capital 95 400
Proceeds from debt issuance, net 159,200 14,568
Payments on debt (108,833) (28,916)
Proceeds from options exercised 82 --
Proceeds from public offerings, net 157,466 --
---------- ----------
Net cash provided by (used in)
financing activities 208,010 (13,948)
---------- ----------
Net increase in cash and cash equivalents 160,306 90,537
Cash and cash equivalents
at beginning of period 237,321 146,784
---------- ----------
Cash and cash equivalents
at end of period $397,627 $237,321
========== ==========
Supplemental disclosures
of cash flow information:
Cash paid for taxes $27,151 $16,101
========== ==========
Cash paid for interest $11,343 $7,416
========== ==========
CONTACT: WellCare Health Plans, Inc.
Jeffrey Potter, 813-290-6313
Jeff.Potter@wellcare.com