Exhibit 99.1
WellCare First Quarter Net Income up 83% Year-over-Year Driven by
Membership Growth of 32%
TAMPA, Fla.--(BUSINESS WIRE)--May 9, 2005--WellCare Health Plans,
Inc. (NYSE:WCG):
-- Membership increased to 765,000 as of March 31, 2005,
representing 32% growth year-over-year, including 17% organic
growth
-- First quarter revenues increased 39% over prior year period to
$418.9 million
-- 17% Medicare membership growth in the first quarter and 23%
through May
-- Launched entry into Georgia, expanding service territory to
seven states
-- Announces intention to participate as standalone Medicare
prescription drug plan
WellCare Health Plans, Inc. (NYSE:WCG) today announced that net
income for the first quarter of 2005 increased 83% to $10.6 million,
or $0.27 per diluted share, based on 39.5 million weighted average
shares outstanding, compared with $5.8 million, or $0.16 per pro forma
diluted share, based on 26.2 million pro forma weighted average shares
outstanding in the prior year period. Total revenues for the first
quarter of 2005 increased 39% to $418.9 million compared with $301.8
million for the first quarter of 2004.
"Strong membership growth in both our Medicare and Medicaid
segments continues to drive our financial performance," stated Todd S.
Farha, President and Chief Executive Officer of WellCare. "Our
Medicare growth has exceeded our expectations, and with 23% membership
growth through May, we have nearly achieved our full year Medicare
growth target. During the quarter, we have continued to advance our
mission of improving the health and well-being of our members,
strengthening our relationships with healthcare providers and
providing savings to our government partners in the seven states we
serve, including Georgia as our newest addition."
Results of Operations for the First Quarter
Total Revenue: Total revenue for the first quarter of 2005
increased $117.0 million, or 39%, to $418.9 million compared with
$301.8 million for the same period last year, principally attributable
to the Company's 17% organic membership growth and 15% growth in
membership related to the acquisition of Harmony.
Medical Benefits Expense: Medical benefits expense for the first
quarter of 2005 was $344.9 million, representing 82.9% of premium
revenues, compared with $251.4 million, representing 83.5% of premium
revenues, for the same period last year.
Selling, General and Administrative Expense: Selling, general and
administrative expense was $51.2 million for the first quarter of
2005, representing 12.2% of total revenues, compared with $36.8
million, or 12.2% of total revenues, for the same period last year.
The Company continues its investment in technology, sales and
marketing efforts as well as general spending necessary to support its
growth strategy.
Net Income: Net income for the first quarter of 2005 was $10.6
million, or $0.27 per diluted share, based on 39.5 million weighted
average shares outstanding, compared with $5.8 million, or $0.16 per
pro forma diluted share, based on 26.2 million pro forma weighted
average shares outstanding for the same period last year.
Balance Sheet and Cash Flow Highlights
As of March 31, 2005, the Company had cash and cash equivalents of
$340.7 million as well as investments classified as current assets of
$173.7 million. For the quarter ended March 31, 2005, the Company had
positive cash flow from operations of $42.3 million on an adjusted
basis excluding the change in unearned premiums of $1.0 million. Cash
provided by operations was $43.3 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 54 at the end of the first quarter of
2005, compared with 56 at the end of the fourth quarter of 2004 and
consistent with 54 days for the first quarter of 2004, principally due
to the timing of the claims payment process at quarter end.
Membership and Other Operating Statistics:
March 31, March 31,
2005 2004
-------- ---------
Florida 530,000 495,000
New York 75,000 60,000
Connecticut 33,000 26,000
Illinois 68,000 --
Indiana 58,000 --
Louisiana (1) 600 --
-------- --------
Total 764,600 581,000
======== ========
(1) Louisiana enrollment began in November 2004.
March 31, March 31,
2005 2004
-------- --------
TANF 553,000 390,000
SSI 58,500 52,500
SCHIP 82,000 84,000
FHP 17,500 11,000
Medicare 53,600 43,000
Commercial -- 500
-------- --------
Total 764,600 581,000
======== ========
Three Months Ended
March 31,
2005 2004
-------- --------
Medical Benefits Ratio 82.9% 83.5%
Selling, General and
Administrative Expense Ratio 12.2% 12.2%
March 31, Dec. 31,
2005 2004
-------- --------
Days in Claims Payable 54 56
Growth Initiatives
Georgia: In March 2005, WellCare was granted a license to offer
Medicare health plans in Georgia. The Company is also participating in
the state's Request for Proposal process to be able to offer managed
Medicaid and related plans in Georgia.
Medicare Expansion: In addition to its 32 active Medicare
counties, the Company has applications on file with the Centers for
Medicare & Medicaid Services (CMS) for expansion into 18 additional
counties in four of its states to offer Medicare services representing
nearly one million eligibles. If all of these applications are
approved, the Company will be active in 50 counties representing five
million Medicare eligibles.
Prescription Drug Plan: The Company has notified CMS of its intent
to offer a prescription drug plan under Part D of the Medicare
Prescription Drug Improvement and Modernization Act of 2003.
Guidance
The Company raised its 2005 net income guidance from the range of
$57 to $60 million to the range of $60 to $62 million, based on
anticipated revenues of $1.72 to $1.75 billion, and earnings per fully
diluted share of $1.50 to $1.55 assuming 40 million weighted average
shares outstanding. WellCare also issued second quarter earnings per
share guidance of $0.32 to $0.34 on revenues of $430 million to $435
million. This guidance excludes future costs associated with the
Company's participation as a standalone prescription drug plan.
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 first quarter conference call
will begin at 8:30 a.m. Eastern time on May 10, 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.earnings.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 approximately 765,000 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; the potential denial by the Centers for Medicare & Medicaid
Services of WellCare's expansion or prescription drug plan
applications; WellCare's lack of prior operating history, including
lack of experience with network providers and health benefits
management, in expansion markets or in the prescription drug plan
business; 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 potential marketing
restrictions or sanctions and premium recoupment; potential fines,
penalties or operating restrictions resulting from regulatory audits,
examinations, investigations, or other inquiries; 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 WellCare's Form 10-K filed with the
Securities and Exchange Commission on February 15, 2005. 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
March 31,
-------------------
2005 2004
-------- --------
Revenues:
Premium $415,866 $301,250
Investment and other income 3,015 586
-------- --------
Total revenues 418,881 301,836
Expenses:
Medical benefits 344,926 251,435
Selling, general and administrative 51,248 36,791
Depreciation and amortization 2,042 1,659
Interest 3,205 2,265
-------- --------
Total expenses 401,421 292,150
-------- --------
Income before income taxes 17,460 9,686
Income tax expense 6,820 3,864
-------- --------
Net income $10,640 5,822
========
Class A common unit yield (1,571)
--------
Net income attributable to common units $4,251
========
Net income per share:
Basic $0.29
Diluted $0.27
Net income attributable per common unit:
Basic $0.15
Diluted $0.13
Pro forma net income attributable per share (1):
Basic $0.19
Diluted $0.16
(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 data)
March 31, December 31,
2005 2004
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $340,745 $397,627
Investments 173,746 75,515
Premiums and other receivables, net 44,534 52,170
Prepaid expenses and other current assets 5,512 6,119
Income taxes receivable -- 1,615
Deferred income taxes 18,123 15,362
-------- --------
Total current assets 582,660 548,408
Property and equipment, net 13,943 12,587
Goodwill 180,848 180,848
Other intangibles, net 24,140 25,441
Restricted investment assets 31,502 31,473
Other assets 256 279
-------- --------
TOTAL ASSETS $833,349 $799,036
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Medical benefits payable $206,931 $190,595
Unearned premiums 64,453 63,449
Accounts payable and accrued expenses 34,474 35,520
Income taxes payable 5,631 --
Current portion of long-term debt 1,600 1,600
-------- --------
Total current liabilities 313,089 291,164
Notes payable to related party 25,000 25,000
Long-term debt 156,541 156,901
Deferred income taxes 15,588 14,818
Other liabilities 2,743 2,522
-------- --------
Total liabilities 512,961 490,405
Commitments and contingencies
Stockholders' Equity:
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, 38,768,293 and 38,590,655 shares
issued and outstanding) 388 386
Paid-in capital 231,912 230,804
Retained earnings 88,084 77,444
Accumulated other comprehensive income (expense) 4 (3)
-------- --------
Total stockholders' equity 320,388 308,631
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $833,349 $799,036
======== ========
WELLCARE HEALTH PLANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended
March 31,
-------------------
2005 2004
-------- --------
Cash from operating activities:
Net income $10,640 $5,822
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization expense 2,042 1,659
Realized gains on investments 7 --
Equity-based compensation expense 719 260
Accreted interest 40 277
Deferred taxes, net (1,991) (909)
Provision for doubtful receivables -- 1,416
Changes in operating accounts, net
of effect of acquisition:
Premiums and other receivables 7,636 (5,347)
Prepaid expenses and other current assets 590 (769)
Medical benefits payable 16,336 106
Unearned premiums 1,004 (24,215)
Accounts payable and other accrued expenses (1,169) (4,675)
Accrued interest 257 (1,514)
Taxes payable 7,246 3,732
Other liabilities (53) --
-------- --------
Net cash provided by (used in) operations 43,304 (24,157)
-------- --------
Cash from investing activities:
Proceeds from sale of investments
of investments, net 25,174 48
Purchases of investments (123,405) (5,201)
Purchases and depositions
of restricted investments (29) (4,847)
Additions to property and equipment, net (2,098) (774)
-------- --------
Net cash used in investing activities (100,358) (10,774)
-------- --------
Cash from financing activities:
Proceeds from options 572 --
Payments on debt (400) (3,591)
-------- --------
Net cash provided by (used in)
financing activities 172 (3,591)
-------- --------
Net decrease in cash and cash equivalents (56,882) (38,522)
Cash and cash equivalents
at beginning of period 397,627 237,321
-------- --------
Cash and cash equivalents at end of period $340,745 $198,799
======== ========
Supplemental disclosures of
cash flow information:
Cash paid for taxes $1,571 $1,040
======== ========
Cash paid for interest $2,643 $2,002
======== ========
CONTACT: WellCare Health Plans Inc., Tampa
Thad Waugh, 813-865-1284
thad.waugh@wellcare.com