Yesterday’s 50%+ drop in stock price seems to revolve around a myriad of issues:
- Debt is coming due in 6 months as they are in default on $153.2 million loan facility. Company is working with Goldman-Sachs to raise capital. This is problem is compounded by #’s 2, 3, 4 and 5 below which may create difficulty in obtaining the funds or getting the funds with unfavorable terms.
- Criminal investigation now compounded by “whistle-blower” allegations which are costing money to defend.
- Turmoil in the credit markets and weak economy.
- Wellcare has not filed a financial report since October of 2007 which may jeopardize their listing on the stock exchange as well.
- Announcement that they are being hit by unanticipated costs in their Medicare drug plans and PFFS plans which is increasing their Medical Loss Ratio (MLR) by 200 to 400 basis points.
Here is the Bloomberg article.
I don’t act as an FMO for this company, but I know a lot of agents do write Medicare Advantage for them. In spite of their troubles, they increased enrollment in the past 12 months by 50% from 160,000 to 240,000 as of 9/30/08. Their products are competitive which is what makes them attractive.
This stock peaked at over $122/share a little over a year ago, now trades for less than $10/share.
On October 24, 2007 FBI agents raided the Tampa headquarters of WellCare. The FBI siezed boxes of records and computer systems. CMS reported that 40% of WellCare’s clients were denied coverage for legitimate claims, and WellCare failed to respond to appeals from clients that were denied coverage. Now we have this extremely bad financial report about WellCare. Do you really want to risk your reputation by placing new business with this carrier?
Not sure on Wellcare. They should be give a chance to bounce back, but the writing seems to be on the wall that they will either tank and ask for bail-out or get bought out by another carrier. As a licensed professional, I think you need to always guage whether or not the company is viable enough to have support to process claims, etc. Your E&O and your State Insurance Department would want this to be part of a professional review. Looks like their comps are higher than H’s. Sure wish we had comp info from the markets that are viable in our area this year. Has anyone received compensation information from all of their carriers yet?
Wellcare has attractive PDP this year. Need I be worried putting clients into them?
Anyone?
I am no longer doing any PDP analysis for new people.
Takes too much time to run the medicare rx. program not enough compensation and so many nasty and unappreciative people. PDP only for new medicare beneficiaries buying medigap from me. Where is the original agent that got them their PDP?
He/she doesn’t want to be bothered /no money! And if it was a captive Humana agent we all know the story!
I am no longer going to be a non-paid social worker.
And yes, there will be more churn then ever.
Boycot Humana!! Don’t sell it!!
Sorry I missed that short. There’a still Toyota.
Craig — Thanks for that news. We were looking for current info to see how they are faring since the investigation and rather large fine, etc. If you hear anything else please pass it on. Thanks again.