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WellCare Health Plans Expected to Report Solid Rise in EPS in 2017

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Revenue guidance

In its 1Q17 earnings release, WellCare Health Plans (WCG) raised its guidance for total adjusted premium revenues from the previously projected range of ~$15.2 billion–$15.8 billion to the new range of ~$16.5 billion to ~$16.9 billion.

The company’s total GAAP[1. generally accepted accounting principles] premium revenues are expected to fall in the range of ~$16.6 billion to ~$17.0 billion, which is significantly higher than the previously projected range of ~$15.2 billion–$15.9 billion.

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Rise in EPS

WellCare Health Plans has updated its earnings per share (or EPS) guidance from the previously estimated range of $6.00–$6.25 to the new range of $6.55–$6.80. This update is mainly attributed to the acquisition of Universal American Corp. and certain Medicaid assets in Arizona acquired from Phoenix Health Plan.

Wall Street analysts expect WellCare Health Plans to report GAAP EPS close to $6.20 in 2017, which would be a year-over-year (or YoY) increase of ~13.4%.

If the company can surpass this projection, it may have a positive impact on its stock as well as the First Trust Health Care AlphaDEX ETF (FXH). WellCare Health Plans makes up about 2.1% of FXH’s total portfolio holdings.

In 2017, WellCare’s peers Humana (HUM), Aetna (AET), and Cigna (CI) are expected to earn GAAP EPS close to $14.90, $5.20, and $8.90, respectively.

Segment performance

In 2017, WellCare Health Plans’ GAAP Medicaid business revenues are expected to fall in the range of $10.5 billion–$10.7 billion. The midpoint of this estimate is $100 million higher than the previously projected range of $10.3 billion–$10.7 billion. This is mainly driven by robust organic growth in Medicaid membership as well as new members added through acquisitions.

In 2017, WellCare Health Plans’ GAAP Medicare Health Plans’ business revenues are expected to fall in the range of $5.2 billion to ~$5.4 billion, significantly higher than the previously projected range of $4.1 billion–$4.3 billion.

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