Dive Brief:
- WellCare Health Plans Inc. saw its earnings decline in December as a result of unexpectedly high costs associated with the severe flu season. The company says they faced an extra $15.1 million in medical expenses above the seasonal average.
- That hit caused WellCare's earnings to drop 82% during the last quarter, reports the Wall Street Journal. As a result the company expects full-year earnings between $3.15 and $3.40 per share, which is below previous estimates of $3.59 per share.
- WellCare, which specializes in government-backed healthcare programs, says its membership had risen 45% to 4.1 million as of Dec. 31, and that coinciding with their growth, their expenses skyrocketed 42% to $3 billion.
Dive Insight:
WellCare appears to be unusual among managed care insurers in attributing a fourth-quarter profit slide to flu costs, reports Modern Healthcare. Humana was also reportedly impacted by flu costs, but still turned a strong fourth-quarter profit.
In addition, flu costs don't entirely account for why WellCare's fourth-quarter profit came in under analysts' expectations. For 2015, analysts are predicting lower growth at WellCare than at other publicly traded insurers of comparable size such as Health Net and Humana.
"It would be hard to argue that WellCare is as well-positioned, or growing as fast as those peers," Barclays Research analyst Josh Raskin reported to investors.