WellCare Health reports surprise quarterly loss, shares plunge
July 25 (Reuters) - Shares of WellCare Health Plans Inc fell 22 percent on Friday, a day after the healthcare provider reported a surprise loss due to high costs for Medicaid plans in Florida and the company halved its forecast for full-year adjusted profit.
Higher provisions for claims and a charge related to the acquisition of Medicaid provider Easy Choice Health Plan Inc in 2012 also weighed on WellCare's second-quarter results.
Wedbush analyst Sarah James said the negative development in Medicaid and high costs in Florida were surprising as such issues typically would affect the whole industry.
" ... Two large peers in the same markets have reported without similar issues," she wrote in a note.
Centene Corp and UnitedHealth Group Inc, which are also part of the Florida Medicaid program, reported stronger-than-expected revenue and profit earlier this month.
WellCare cut its 2014 adjusted profit forecast to $2.20-$2.50 per share from $4.40-$4.75.
Analysts were expecting a full-year profit of $4.23 per share, according to Thomson Reuters I/B/E/S.
WellCare reported a net loss of $7.5 million, or 17 cents per share, for the second quarter ended June 30 compared with a net income of $46.9 million, or $1.07 per share, a year earlier.
On an adjusted basis, the company had a net loss of 7 cents per share. Analysts had expected a profit of 90 cents per share.
WellCare's premiums revenue rose 35 percent to $3.1 billion, compared with the average analyst estimate of $3.03 billion.
Wells Fargo cut its rating on the company's stock to "market perform" from "outperform".
Of the 16 analysts covering the stock, 8 have a "buy" or higher rating, 6 have a "hold" and 2 have a "sell" rating.
WellCare's shares were down 17 percent at $63.75 in morning trading on the New York Stock Exchange. (Reporting by Amrutha Penumudi in Bangalore; Editing by Kirti Pandey)