WellCare shares jump on probe payment

NEW YORK (Reuters) - Shares of WellCare Health Plans Inc (WCG.N) jumped about 15 percent on Tuesday as a $35.2 million payment to U.S. authorities signaled to investors that the company is moving to put a government probe behind it.

Shares of WellCare, which provides health plans through government programs, have been under a cloud since last October, when federal and state agents raided the company's Tampa, Florida, headquarters. The scope of the probe has been unclear.

In its disclosure late on Monday, WellCare said the payment related to accounting errors in its Florida Medicaid behavioral health contracts, but that it was not a settlement. It said the payment does not include any penalties that may be imposed against it.

Still, analysts said the development was positive.

"The company appears to be making progress and moving closer to putting these events behind them," Goldman Sachs analyst Matthew Borsch said in a research note.

Borsch also said the $35.2 million was "fairly small" although a much larger amount could be due in the future.

Wachovia analyst Matt Perry said in a research note the news was "incrementally positive" but "the legal uncertainty is not lifted as the case is not settled and the possibility of further civil or criminal actions is possible."

WellCare shares rose $5.73 to $43.97 in morning trade on the New York Stock Exchange. They traded at over $122 last October.

(Reporting by Lewis Krauskopf, editing by Dave Zimmerman)