Delaware | 001-32209 | 47-0937650 | ||
(State or other jurisdiction | (Commission File Number) | (IRS Employer | ||
of incorporation) | Identification No.) |
8735 Henderson Road, Renaissance One | |||
Tampa, Florida | 33634 | ||
(Address of principal executive offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit | ||
Number | Description | |
* | Furnished and not filed. |
Date: December 19, 2016 | WELLCARE HEALTH PLANS, INC. /s/ Andrew L. Asher |
Andrew L. Asher | |
Executive Vice President and Chief Financial Officer |
Exhibit | ||
Number | Description | |
* | Furnished and not filed. |
Exhibit 99.1 |
• | 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. |
*Generally Accepted Accounting Principles (“GAAP”) |
• | 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. |
Guidance Metric | 2017 Guidance as of December 19, 2016 | 2016 Guidance As of December 19, 2016 |
Segment premium revenue: | ||
GAAP Medicaid Health Plans | $10.3B to $10.7B | $9.500B to $9.575B |
Adjusted Medicaid Health Plans(1) | $10.2B to $10.6B | $9.150B to $9.225B |
Medicare Health Plans | $4.1B to $4.3B | $3.825B to $3.900B |
Medicare PDP | $825M to $900M | $800M to $850M |
Total GAAP premium revenue | $15.225B to $15.900B | $14.125B to $14.325B |
Total adjusted premium revenue(1) | $15.125B to $15.800B | $13.775B to $13.975B |
Medicaid ACA industry fee reimbursement | N/A | $240M to $244M |
Investment & other income | $18M to $21M | $15M to $16M |
Segment MBR: | ||
GAAP Medicaid Health Plans | 88.60% to 89.60% | 85.75% to 86.25% |
Adjusted Medicaid Health Plans(1) | 89.50% to 90.50% | 89.00% to 89.50% |
Medicare Health Plans | 85.50% to 86.75% | 84.75% to 85.50% |
Medicare PDP | 80.50% to 82.50% | 77.50% to 78.50% |
Adjusted SG&A ratio(2)(6) | 7.7% to 7.9% | ~7.9% |
ACA industry fee expense | N/A | $228.4M |
GAAP D&A expense | $100M to $105M | $88.5M to $89.5M |
Adjusted D&A expense(3) | $87M to $91M | $78M to $79M |
Interest expense | $58M to $60M | $59M to $60M |
Adjusted effective income tax rate(4)(6) | 37.50% to 39.00% | 54.25% to 55.50% |
Adjusted earnings per diluted share(5)(6) | $6.00 to $6.25 | $5.35 to $5.45 |
* Refer to the basis of presentation for a discussion of non-GAAP financial measures | ||
(1) Excludes an estimated $113.0 million to $118.0 million in Medicaid premium taxes in 2017. Excludes an estimated $109.0 million to $112.0 million in Medicaid premium taxes and an estimated $240.0 million to $244.0 million in Medicaid ACA industry fee reimbursement in 2016. | ||
(2) Excludes estimated Medicaid premium taxes and investigation-related costs in 2017. Excludes the following items in 2016: $1.7 million in Sterling divestiture costs; estimated Medicaid premium taxes and Medicaid ACA industry fee reimbursement; $5.2 million in Iowa SG&A costs, $4.9 million in PBM transitory costs and investigation-related costs. | ||
(3) Excludes an estimated $13.0 million to $14.0 million of acquisition-related amortization expense in 2017. Excludes an estimated $10.5 million of acquisition-related amortization expense in 2016. | ||
(4) Excludes the estimated income tax effect associated with the investigation-related costs and acquisition-related amortization expenses in 2017. Excludes the estimated income tax effect associated with the investigation-related costs, PBM transitory costs, Sterling divestiture costs, Iowa SG&A costs, and acquisition-related amortization expenses in 2016. | ||
(5) The company estimates adjusted earnings per diluted share guidance by adjusting GAAP net income for the estimated net of tax effect of investigation-related costs and acquisition-related amortization expense in 2017. The company estimates adjusted earnings per diluted share guidance by adjusting GAAP net income for the estimated net of tax effect of investigation-related costs, PBM transitory costs, Sterling divestiture costs, Iowa SG&A costs, and acquisition-related amortization expenses in 2016. | ||
(6) WellCare is not able to project the amount of future investigation-related costs and, therefore, cannot reconcile these metrics to total projected GAAP metrics. |
Investor: | Media: | |
Angie McCabe | Crystal Warwell Walker | |
Vice President, Investor Relations | Senior Director, External Communications | |
813-206-6958 | 813-206-2697 | |
angie.mccabe@wellcare.com | crystal.walker@wellcare.com |
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