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WellCare Reports Annual and Fourth Quarter 2009 Results

TAMPA, Fla.--(BUSINESS WIRE)-- WellCare Health Plans, Inc. (NYSE: WCG) today reported results for the year and fourth quarter ended December 31, 2009. As determined under generally accepted accounting principles (“GAAP”), the Company reported net income of $39.9 million, or $0.95 per diluted share, for the year 2009, compared with a net loss of $36.8 million, or $0.89 per diluted share, for the year 2008. Adjusted net income for the year 2009 was $126.6 million, or $3.00 per diluted share, as compared with $133.2 million, or $3.17 per diluted share, for the year 2008.

Adjusted net income for 2009 was unfavorable to 2008 primarily due to the increase in the Medicaid segment medical benefits ratio (“MBR”) as a result of premium rate changes below medical cost trend and the addition of the Company’s Hawaii aged, blind, and disabled (“ABD”) program; the performance of Medicare Prescription Drug Plans (“PDPs”) and Medicare Advantage private fee-for-service plans; and significantly lower investment and other income. Partially offsetting these unfavorable results were the performance of Medicare Advantage coordinated care plans; growth in membership and premium revenue in the Company’s Medicaid plans; and decreased selling, general, and administrative (“SG&A”) expense resulting mainly from lower sales and marketing costs and improved operating efficiencies.

“We accomplished a number of important objectives during 2009,” said Alec Cunningham, WellCare’s chief executive officer. “From a financial perspective, 2010 will be a challenging year, as we absorb the impact of last year’s private fee-for-service plans withdrawal and the CMS marketing sanction. Nevertheless, we are focused on our three longer-term priorities of improved health care quality and access, a competitive cost structure, and profitable growth through serving our members, government clients, and providers effectively.”

In addition to results determined under GAAP, net income and certain other operating results described in this news release have been adjusted for certain medical benefits and SG&A expenses, primarily related to previously disclosed government investigations, that management believes are not indicative of long-term business operations. Please refer to the schedules in this news release that provide supplemental information reconciling results determined under GAAP to adjusted results.

Highlights of Operations for the Fourth Quarter

As determined under GAAP, the Company reported net income of $11.1 million, or $0.26 per diluted share, for the fourth quarter 2009, compared with a net loss of $31.1 million, or $0.75 per diluted share, for the fourth quarter 2008. Adjusted net income for the fourth quarter 2009 was $20.0 million, or $0.47 per diluted share, as compared with $27.8 million, or $0.66 per diluted share, for the fourth quarter 2008.

Adjusted net income for the fourth quarter 2009 was unfavorable to the fourth quarter 2008 primarily due to the increase in the Medicaid segment MBR as a result of premium rate changes below medical cost trend and the addition of the Hawaii ABD program, as well as the performance of Medicare PDPs and Medicare Advantage private fee-for-service plans. Partially offsetting those factors were decreased SG&A expense, resulting mainly from lower sales and marketing costs, and the growth in membership and premium revenue in the Company’s Medicaid plans.

Membership as of December 31, 2009, decreased to 2.3 million compared with 2.5 million members as of December 31, 2008. Medicaid segment membership increased 3.8% year-over-year to 1.3 million, driven by growth in several markets and the February 2009 addition of the Hawaii ABD program. Year-over-year, Medicare Advantage membership decreased 8.5%, principally as a result of the CMS marketing sanction. Medicare stand-alone PDP membership decreased 24.2% compared with December 31, 2008, due largely to 2009 bid results and, less significantly, the CMS sanction.

Premium revenue for the fourth quarter 2009 increased 1.6% year-over-year to $1.6 billion. The growth is attributable to increased Medicaid plan premium revenue, offset in part by the decreases in Medicare Advantage and Medicare PDP premium revenue.

Investment and other income was $3 million in the fourth quarter 2009, a decrease of 56.0% year-over-year, primarily due to reduced market interest rates and, to a lesser extent, lower average investment and cash balances.

Medical benefits expense of $1.4 billion increased 5.6% from medical benefits expense in the fourth quarter of 2008. The MBR was 85.4% in the fourth quarter 2009, compared with 82.2% in 2008. The 320 basis point increase in the MBR was driven by the performance of the Medicaid segment, Medicare Advantage private fee-for-service plans, and Medicare PDPs.

SG&A expense as determined under GAAP was $211 million, a 13.1% decrease from $243 million in the fourth quarter of 2008. Adjusted SG&A expense was $199 million in the fourth quarter of 2009, or 12.2% of total revenues, compared with $226 million, or 14.1% of total revenues, for the same period last year. The decrease in adjusted SG&A expense resulted principally from lower sales and marketing costs, as well as improved operating efficiencies.

Cash Flow and Financial Condition Highlights

Net cash provided by operating activities as determined under GAAP was $58 million and $296 million for the years ended December 31, 2009 and 2008, respectively. Net cash provided by operating activities, modified for the timing of receipts from and payments to the Company’s government clients, was $93 million and $280 million for the years ended December 31, 2009 and 2008, respectively.

As of December 31, 2009, unregulated cash and short-term investments were approximately $120 million.

Days in claims payable were 53 days as of December 31, 2009, compared with 56 days as of September 30, 2009, and 54 days as of December 31, 2008.

Financial Outlook

The Company is providing its financial outlook for the year ended December 31, 2010.

  • Adjusted net income per diluted share is anticipated to be between $1.90 and $2.15.
  • Premium revenue is expected to be between $5.25 and $5.40 billion.
  • The Medicaid segment MBR is anticipated to be lower in 2010 than the 2009 MBR.
  • The 2010 Medicare segment MBR also is expected to decrease from the 2009 MBR, driven by the withdrawal from Medicare Advantage private fee-for-service plans.
  • The adjusted administrative expense ratio is expected to increase year-over-year.

Webcast

A discussion of WellCare’s annual and fourth quarter 2009 results will be webcast live on Thursday, February 18, 2010, beginning at 8:30 a.m. Eastern Time. A replay will be available beginning approximately one hour following the conclusion of the live broadcast. The webcast is available via the Company’s web site at www.wellcare.com and at www.earnings.com.

About WellCare Health Plans, Inc.

WellCare Health Plans, Inc. provides managed care services targeted to government-sponsored health care programs, focusing on Medicaid and Medicare. Headquartered in Tampa, Florida, WellCare offers a variety of health plans for families, children, and the aged, blind, and disabled, as well as prescription drug plans. The Company served approximately 2.3 million members nationwide as of December 31, 2009. For more information about WellCare, please visit the Company’s website at www.wellcare.com.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains “forward-looking” statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions are forward-looking statements. Our financial outlook contains forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause WellCare’s actual future results to differ materially from those projected or contemplated in the forward-looking statements. These risks and uncertainties include, but are not limited to, WellCare’s current projected financial outlook for 2010 and progress toward key initiatives such as increased reliability of the Company’s data and reporting and the management of costs.

Additional information concerning these and other important risks and uncertainties can be found under the captions “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” in the Company’s 2008 Annual Report on Form 10-K, as amended, Form 10-Q for the period ended September 30, 2009, and other filings by WellCare with the U.S. Securities and Exchange Commission, which contain discussions of WellCare’s business and the various factors that may affect it. WellCare undertakes no duty to update these forward-looking statements to reflect any future events, developments, or otherwise.

WELLCARE HEALTH PLANS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands except per share data)
 
  Three Months Ended

December 31,

   Year Ended

December 31,
2009   2008 2009   2008
Revenues:
Premium $ 1,621,443 $ 1,596,371 $ 6,867,252 $ 6,483,070
Investment and other income   2,537   5,765     10,912   38,837  
Total revenues   1,623,980   1,602,136     6,878,164   6,521,907  
 
Expenses:
Medical benefits 1,385,247 1,311,962 5,862,457 5,530,216
Selling, general and administrative 211,210 243,088 892,940 933,418
Depreciation and amortization 5,789 5,561 23,336 21,324
Interest 2,566 2,610 6,411 11,780
Goodwill impairment   –   78,339     –   78,339  
Total expenses   1,604,812   1,641,560     6,785,144   6,575,077  
 
Income (loss) before income taxes 19,168 (39,424 ) 93,020 (53,170 )
Income tax expense (benefit)   8,029   (8,335 )   53,149   (16,337 )
Net income (loss) $ 11,139 $ (31,089 ) $ 39,871 $ (36,833 )
 
Net income (loss) per common share:
Basic $ 0.27 $ (0.75 ) $ 0.95 $ (0.89 )
Diluted $ 0.26 $ (0.75 ) $ 0.95 $ (0.89 )
 
Weighted average common shares outstanding:
Basic 41,977,007 41,614,728 41,823,497 41,396,116
Diluted 42,758,030 41,614,728 42,150,777 41,396,116

WELLCARE HEALTH PLANS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)
  Dec. 31,

2009

   Dec. 31,

2008
ASSETS
Current Assets:
Cash and cash equivalents $ 1,158,131 $ 1,181,922
Investments 62,722 70,112
Premium and other receivables, net 285,808 215,525
Other receivables from government partners, net – 825
Funds receivable for the benefit of members 77,851 86,542
Prepaid expenses and other current assets, net 104,079 129,490
Deferred income taxes   28,874     20,154  
Total current assets 1,717,465 1,704,570
Property, equipment and capitalized software, net 61,785 66,588
Goodwill 111,131 111,131
Other intangible assets, net 12,961 14,493
Long term investments 51,710 54,972
Restricted investments 130,550 199,339
Deferred tax asset 18,745 23,263
Other assets   14,100     29,105  
Total Assets $ 2,118,447   $ 2,203,461  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Medical benefits payable $ 802,515 $ 766,179
Unearned premiums 90,496 81,197
Accounts payable 5,270 5,138
Other accrued expenses and liabilities 219,691 288,340
Current portion of amounts accrued related to investigation resolution 18,192 50,000
Other payables to government partners 38,147 8,100
Taxes payable 4,888 12,187
Debt – 152,741
Other current liabilities   871     674  
Total current liabilities 1,180,070 1,364,556
Amounts accrued related to investigation resolution 40,205 –
Other liabilities   17,272     33,076  
Total liabilities   1,237,547     1,397,632  
Commitments and contingencies – –
Stockholders’ Equity:
Preferred stock, $0.01 par value (20,000,000 authorized, no shares issued or outstanding) – –
Common stock, $0.01 par value (100,000,000 authorized, 42,361,207 and 42,261,345 shares issued and outstanding at December 31, 2009 and December 31, 2008, respectively) 424 423
Paid-in capital 425,083 390,526
Retained earnings 458,512 418,641
Accumulated other comprehensive loss   (3,119 )   (3,761 )
Total stockholders’ equity   880,900     805,829  
Total Liabilities and Stockholders’ Equity $ 2,118,447   $ 2,203,461  

WELLCARE HEALTH PLANS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)
 
 

Year Ended

December 31,
2009   2008
Cash from (used in) operating activities:
Net income (loss) $ 39,871 $ (36,833 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 23,336 21,324
Goodwill impairment – 78,339
Equity-based compensation expense 44,149 38,614
Incremental tax benefit received from option exercises – (3,686 )
Deferred taxes, net (4,202 ) (49,402 )
Provision for doubtful receivables 1,945 27,313
Changes in operating accounts:
Premium and other receivables, net (74,014 ) 70,513
Other receivables from government partners, net (564 ) (4,780 )
Prepaid expenses and other current assets, net 28,586 (16,663 )
Medical benefits payable 36,336 228,033
Unearned premiums 9,299 61,359
Accounts payable and other accrued expenses (69,440 ) (38,617 )
Other payables to government partners 30,047 (110,913 )
Amounts accrued related to investigation resolution 8,397 50,000
Taxes, net (15,645 ) 20,179
Other, net   (176 )   (38,513 )
Net cash provided by operating activities   57,925     296,427  
Cash from (used in) investing activities:
Purchases of investments (16,115 ) (135,607 )
Proceeds from sales and maturities of investments 27,466 260,413
Purchases of restricted investments (65,299 ) (120,116 )
Proceeds from maturities of restricted investments 133,665 10,274
Additions to property, equipment and capitalized software, net (16,078 ) (19,559 )
Funds received for the benefit of members   –     (86,542 )
Net cash provided by (used in) investing activities   63,639     (91,137 )
Cash from (used in) financing activities:
Proceeds from option exercises and other 1,167 1,039
Purchase of treasury stock (2,413 ) (2,720 )
Incremental tax benefit from option exercises – 3,686
Payments on debt (152,800 ) (2,000 )
Funds held for the benefit of members   8,691     (31,782 )
Net cash used in financing activities   (145,355 )   (31,777 )
Cash and cash equivalents:
(Decrease) increase during the period (23,791 ) 173,513
Balance at beginning of year   1,181,922     1,008,409  
Balance at end of year $ 1,158,131   $ 1,181,922  
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for taxes $ 80,621   $ 53,911  
Cash paid for interest $ 2,642   $ 10,150  
Non-cash additions to property, equipment and capitalized software $ 923   $ 2,084  

WELLCARE HEALTH PLANS, INC.

MEMBERSHIP STATISTICS
 
  As of December 31,
2009   2008

Membership by Program
Medicaid Membership
TANF 1,094,000 1,039,000
S-CHIP 163,000 164,000
SSI and ABD 79,000 75,000
FHP 13,000 22,000
Total Medicaid Membership 1,349,000 1,300,000
 
Medicare Membership
Medicare Advantage 225,000 246,000
Prescription Drug Plan (stand-alone) 747,000 986,000

Total Medicare Membership

972,000 1,232,000
Total Membership 2,321,000 2,532,000

 

Medicaid Membership by State

 

Florida

425,000

473,000

Georgia

546,000

483,000

Other states

378,000

344,000

Total Medicaid Membership

</td>

1,349,000

1,300,000

WELLCARE HEALTH PLANS, INC.

UNAUDITED SEGMENT AND LINE OF BUSINESS INFORMATION

(Dollars in thousands)
 
 

Three Months Ended

December 31,

   Year Ended

December 31,
2009   2008 2009   2008
Premium revenue:
Medicaid:
Florida $ 216,207 $ 244,796 $ 916,689 $ 978,709
Georgia 330,650 320,162 1,330,137 1,226,940
Other states   272,826   173,410   1,009,905   785,400
Total Medicaid   819,683   738,368   3,256,731   2,991,049
 
Medicare:
Medicare Advantage plans 632,521 641,786 2,775,442 2,436,226
Prescription Drug plans   169,239   216,217   835,079   1,055,795
Total Medicare   801,760   858,003   3,610,521   3,492,021
Total premium revenue $ 1,621,443 $ 1,596,371 $ 6,867,252 $ 6,483,070

WELLCARE HEALTH PLANS, INC.

UNAUDITED SUPPLEMENTAL INFORMATION

Reconciliation of GAAP Statements of Operations to Adjusted Statements of Operations

(Dollars in thousands except per share data)
 

The Company reports adjusted operating results on a non-GAAP basis to exclude certain expenses that management believes are not indicative of longer-term business trends and operations. Following are statements of operations and related measures for the fourth quarters and years ended December 31, 2009 and 2008, as determined under GAAP, reconciled to the adjusted statements of operations and related measures for each of the same periods.

 
  Quarter Ended December 31, 2009   Quarter Ended December 31, 2008
GAAP   Adjustments   Adjusted GAAP   Adjustments   Adjusted
Revenues:
Premium $ 1,621,443 $ – $ 1,621,443 $ 1,596,371 $ – $ 1,596,371
Investment and other income   2,537     –     2,537     5,765     –     5,765  
Total revenues   1,623,980     –     1,623,980     1,602,136     –     1,602,136  
 
Expenses:
Medical benefits 1,385,247 – 1,385,247 1,311,962 – 1,311,962
Selling, general, and administrative 211,210 (11,815 )

(a)

(b)

 199,395 243,088 (16,692 )

(a)

(b)

 226,396
Depreciation and amortization 5,789 – 5,789 5,561 – 5,561
Interest 2,566 – 2,566 2,610 – 2,610
Goodwill impairment   –     –     –     78,339     (78,339 )

(c)

   –  

Total expenses

  1,604,812     (11,815 )   1,592,997   </td>

   1,641,560     (95,031 )   1,546,529  
 
Income (loss) before income taxes 19,168 11,815 30,983 (39,424 ) 95,031 55,607
Income tax expense (benefit)   8,029     2,989     11,018    

(8,335

)   36,112     27,777  
Net income (loss) $   $ 8,826   $ 19,965   $ (31,089 ) $ 58,919   $ 27,830  
 
Weighted average shares outstanding:
Basic 41,977,007 – 41,977,007 41,614,728 – 41,614,728
Diluted 42,758,030 – 42,758,030 41,614,728 </td>

 281,894 41,896,622
 
Net income (loss) per share:
Basic $ 0.27 $ 0.21 $ 0.48 $ (0.75 ) $ 1.42 $ 0.67
Diluted $ 0.26 $ 0.21 $ 0.47 $ (0.75 ) $ 1.41 $ 0.66
 
Medical benefits ratio:
Medicaid 87.7 % 87.7 % 83.7 % 83.7 %
Medicare 83.1 % 83.1 % 80.9 % 80.9 %
Aggregate 85.4 % 85.4 % 82.2 % 82.2 %
Administrative expense ratio 13.0 % (0.7 %)

(a)

(b)

 12.3 % 15.2 % (1.1 %)

(a)

(b)

 14.1 %
Days in claims payable 53 days 53 days 54 days 54 days
 

(a) Investigation-related legal, accounting, employee retention, and other costs: Administrative expenses associated with the government and Company investigations amounted to approximately $11.8 million and $16.7 million before income taxes, respectively, in the quarters ended December 31, 2009 and 2008.

 

(b) Liability for investigation resolution: Based on the status of the government investigations, the Company recorded an expense of $0.4 million before income taxes in the quarter ended December 31, 2009.

 

(c) Goodwill impairment: As of December 31, 2008, the Company concluded that Goodwill associated with its Medicare reporting unit was impaired. To reflect the impairment, in 2008 the Company recorded expense of approximately $78.3 million before income taxes.

 

Premium taxes were $10.9 million and $22.1 million for the quarters ended December 31, 2009 and 2008, respectively.

WELLCARE HEALTH PLANS, INC.

UNAUDITED SUPPLEMENTAL INFORMATION (Continued)

Reconciliation of GAAP Statements of Operations to Adjusted Statements of Operations

(Dollars in thousands except per share data)
 
  Year Ended December 31, 2009   Year Ended December 31, 2008
GAAP   Adjustments   Adjusted GAAP   Adjustments   Adjusted
Revenues:
Premium $ 6,867,252 $ – $ 6,867,252 $ 6,483,070 $ – $ 6,483,070
Investment and other income   10,912     –     10,912     38,837     –     38,837  
Total revenues   6,878,164     –     6,878,164     6,521,907     –     6,521,907  
 
Expenses:
Medical benefits 5,862,457 – 5,862,457 5,530,216 (92,900 )

(a)

 5,437,316
Selling, general, and administrative 892,940 (104,961 )

(b)

(c)

 787,979 933,418 (102,949 )

(b)

 830,469
Depreciation and amortization 23,336 – 23,336 21,324 – 21,324
Interest 6,411 – 6,411 11,780 – 11,780
Goodwill impairment   –     –     –     78,339     (78,339 )

(d)

   –  

Total expenses

  6,785,144     (104,961 )   6,680,183     6,575,077     (274,188 )   6,300,889  
 
Income (loss) before income taxes 93,020 104,961 197,981 (53,170 ) 274,188 221,018
Income tax expense (benefit)   53,149     18,281     71,430     (16,337 )   104,191     87,854  
Net income (loss) $ 39,871   $ 86,680   $ 126,551   $ (36,833 ) $ 169,997   $ 133,164  
 
Weighted average shares outstanding:
Basic 41,823,497 – 41,823,497 41,396,116 – 41,396,116
Diluted 42,150,177 – 42,150,177 41,396,116 638,863 42,034,979
 
Net income (loss) per share:
Basic $ 0.95 $ 2.08 $ 3.03 $ (0.89 ) $ 4.11 $ 3.22
Diluted $ 0.95 $ 2.05 $ 3.00 $ (0.89 ) $ 4.06 $ 3.17
 
Medical benefits ratio:
Medicaid 86.3 % 86.3 % 84.8 % (1.3 %)

(a)

 83.5 %
Medicare 84.5 % 84.5 % 85.7 % (1.5 %) (a) 84.2 %
Aggregate 85.4 % 85.4 % 85.3 % (1.4 %) (a) 83.9 %

 

 

 

 

 

 

Administrative expense ratio 13.0 % (1.5 %)

(b)

(c)

 11.5 % 14.3 % (1.6 %) (b) 12.7 %
Days in claims payable 53 days 53 days 54 days 54 days
 

(a) Medical benefits expense: Medical benefits expense for the year ended December 31, 2008, was affected unfavorably by approximately $92.9 million before income taxes as a result of the Company’s ability to review substantially complete claims information that became available between the date of the original actuarially determined estimate and the filing date of the 2007 10-K. Had WellCare filed its 2007 10-K timely and not been able to observe substantially complete claims information, medical benefits expense for the year ended December 31, 2008, would have decreased by $92.9 million.

 

(b) Investigation-related legal, accounting, employee retention, and other costs: Administrative expenses associated with the government and Company investigations amounted to approximately $44.3 million and $103.0 million before income taxes, respectively, in the years ended December 31, 2009 and 2008.

 

(c) Liability for investigation resolution: Based on the status of the government investigations, the Company recorded an expense of $59.8 million before and after income taxes, and an expense of $0.9 million before income taxes, in the year ended December 31, 2009.

 

(d) Goodwill impairment: As of December 31, 2008, the Company concluded that goodwill associated with its Medicare reporting unit was impaired. To reflect the impairment, in 2008 the Company recorded expense of approximately $78.3 million before income taxes.

 

Premium taxes were $91.0 million and $90.2 million for the years ended December 31, 2009 and 2008, respectively.

WELLCARE HEALTH PLANS, INC.

UNAUDITED SUPPLEMENTAL INFORMATION
 

Reconciliation of GAAP Medical Benefits Ratios and Administrative Expense Ratio

to Medical Benefits Ratios and Administrative Expense Ratio Modified to Exclude Premium Taxes
 

The Company reports MBRs and administrative expense ratios on a non-GAAP basis to exclude premium taxes paid primarily on Medicaid managed care premium revenue. The Company believes that MBRs and administrative expense ratios excluding premium taxes are useful measures for investors, as premium taxes are recorded as both revenue of and expense to the Company, and therefore do not affect the Company’s net income.

 
  GAAP  

Adjustments

(see pages

9 and 10)

   Adjusted  

Impact of

Premium

Taxes

  

Excluding

Premium

Taxes
 
Quarter Ended December 31, 2009
Medical benefits ratio:
Medicaid 87.7 % 87.7 % 1.2 % 88.9 %
Medicare 83.1 % 83.1 % 83.1 %
Aggregate 85.4 % 85.4 % 0.6 % 86.0 %
 
Administrative expense ratio 13.0 % (0.7 %) 12.3 % (0.6 %) 11.7 %
 
Quarter Ended December 31, 2008
Medical benefits ratio:
Medicaid 83.7 % 83.7 % 2.6 % 86.3 %
Medicare 80.9 % 80.9 % 80.9 %
Aggregate 82.2 % 82.2 % 1.1 % 83.3 %
 
Administrative expense ratio 15.2 % (1.1 %) 14.1 % (1.2 %) 12.9 %
 
Year Ended December 31, 2009
Medical benefits ratio:
Medicaid 86.3 % 86.3 % 2.5 % 88.8 %
Medicare 84.5 % 84.5 % 84.5 %
Aggregate 85.4 % 85.4 % 1.1 % 86.5 %
 
Administrative expense ratio 13.0 % (1.5 %) 11.5 % (1.2 %) 10.3 %
 
Year Ended December 31, 2008
Medical benefits ratio:
Medicaid 84.8 % (1.3 %) 83.5 % 2.6 % 86.1 %
Medicare 85.7 % (1.5 %) 84.2 % 84.2 %
Aggregate 85.3 % (1.4 %) 83.9 % 1.2 % 85.1 %
 
Administrative expense ratio 14.3 % (1.6 %) 12.7 % (1.2 %) 11.5 %

WELLCARE HEALTH PLANS, INC.

UNAUDITED SUPPLEMENTAL INFORMATION
 

Reconciliation of GAAP Net Cash Provided by Operating Activities

to Net Cash Provided by Operating Activities Modified

for the Timing of Receipts from and Payments to Government Clients

(Dollars in thousands)
 

The Company reports cash provided by operating activities on a non-GAAP basis to exclude the changes in unearned premiums, premiums and other receivables, and other receivables to and payables from government partners. The Company believes that cash flow excluding these changes is a useful measure for investors, as the excluded changes are a function of the timing of cash receipts from and payments to federal and state agencies at the end of a period.

 
  Year Ended

December 31,
2009   2008
Net cash provided by operating activities, as reported under GAAP $ 57,925 $ 296,427
Modifications to eliminate changes in:
Premium and other receivables, net 74,014 (70,513 )
Other receivables from government partners, net 564 4,780
Unearned premiums (9,299 ) (61,359 )
Other payables to government partners   (30,047 )   110,913  

Net cash provided by operating activities, modified for the timing of receipts from and payments to government clients

$ 93,157   $ 280,248  

WellCare Health Plans, Inc.
Investor relations:
Gregg Haddad, 813-865-1284
[email protected]
or
Media relations:
Amy Knapp, 813-290-6208
[email protected]

Source: WellCare Health Plans, Inc.

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