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Medicaid Business—A Key Revenue Driver for WellCare Health Plans in 2017

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Medicaid business in Nebraska

In 1Q17, WellCare Health Plans’ (WCG) Medicaid business reported revenues close to $2.6 billion, which equals year-over-year (or YoY) growth of ~11.8%. This is mainly attributed to the participation of the company in Nebraska’s Medicaid Managed Care program, Heritage Health, since January 1, 2017.

On March 31, 2017, WellCare Health Plans offered Medicaid services to 77,000 members in Nebraska, which is significantly more than the 71,000 members served by the company on January 1, 2017. 

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WellCare Health Plans’ acquisitions of Advicare and Care1st Arizona, completed in 2016, also added to its Medicaid revenues in 1Q17. In addition to increasing its membership, WellCare Health Plans also benefited from rate increases as well as expanding its membership in several existing Medicaid markets in 1Q17.

If WellCare Health Plans expands its presence in existing and new Medicaid markets in 2017, it may have a positive impact on the company’s stock price and the iShares Russell MidCap Growth ETF (IWP). WellCare Health Plans makes up ~0.24% of IWP’s total portfolio holdings.

The above diagram shows the major states in which WellCare Health Plans offers Medicaid services. WellCare Health Plans poses tough competition to other Medicaid players such as UnitedHealth Group (UNH), Centene (CNC), and Anthem (ANTM).

Medicaid business in Arizona

Besides new members from Nebraska, WellCare Health Plans also added 117,000 Medicaid members from Arizona through the acquisition of Care1st Arizona. The company added another 44,000 Medicaid members due to the acquisition of certain assets of Phoenix Health Plan, completed on May 1, 2017. In Arizona, WellCare Health Plans serves 160,000 Medicaid members.

Medicaid business in Missouri

WellCare Health Plans (WCG) secured a new Medicaid contract in Missouri, effective on May 1, 2017. This new contract is expanding Missouri’s HealthNet Managed Care program across four major regions in the state.

WellCare Health Plans has emerged as a leader during the open enrollment period in Missouri. This ranking is based on total membership among the three plans that were offering services under the program. The company’s success is attributed to the company’s robust relationships with healthcare providers as well as other stakeholders.

In the next article, we’ll discuss WellCare Health Plans’ Medicare business in greater detail.

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