WellCare beat Wall Street expectations with $7.14 billion in revenue for the third quarter as it continues to prepare for the merger with government insurer Centene.
The government plan insurer's earnings were boosted by the acquisition of government insurer Meridian in 2018 and due to organic growth, the company said Wednesday. Overall, net income for the third quarter was $241 million.
“All three business segments continue to contribute to our strong financial performance, driven by a combination of organic and acquired growth,” CEO Ken Burdick said in a statement.
The $7.14 billion in revenue is an increase compared to the $5 billion generated by WellCare in the third quarter of 2018.
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Overall, Medicare Advantage (MA) revenue was $1.8 billion for the third quarter, a 16.4% increase compared to 2018 and due to growth and the 2018 acquisition of the insurer Meridian.
Medicare prescription drug plan revenue also grew to $241.2 million in the third quarter, a 32% boost compared to the third quarter of 2018.
“The increase was primarily a result of organic growth through a new enhanced product offering in 2018,” the company said in a release.
WellCare’s Medicaid plans generated $4.8 billion in adjusted revenue in the third quarter, an increase of 55% compared to the same period in 2018.
The massive growth was “driven by the acquisition of Meridian and expanded footprint in Florida,” said Drew Asher, chief financial officer, on an investor call Wednesday.
Zacks Equity Research said Wednesday that the earnings report beat its expectations for the quarter. Zacks had anticipated that WellCare would deliver adjusted operating earnings of $4.10 per share when it actually produced $4.31 per share.
“Over the last four quarters, the company has surpassed consensus [earnings per share] estimates four times,” Zacks said in a release Wednesday.
WellCare said it is not updating its earnings outlook because of the pending merger with Centene, which the company expects to close by the first half of next year.
The two insurers have gotten the OK from 24 states for the $17 billion merger, which also needs approval from the Department of Justice (DOJ). The American Hospital Association is calling for the DOJ to scrutinize the merger, because, the association claims, it could harm MA plan competition.