TAMPA, Fla. (AP) — WellCare Health Plans' second-quarter earnings inched up 1 percent, as a jump in medical benefits and other expenses countered a revenue spike for the Medicaid and Medicare coverage provider.
The Tampa, Fla., company topped Wall Street expectations for the quarter and also raised its 2013 earnings forecast. Its shares rose almost 8 percent in trading Wednesday.
WellCare Health Plans Inc. earned $46.9 million, or $1.07 per share, in the three months that ended June 30, up from $46.4 million, or $1.06 per share, in last year's quarter.
Adjusted earnings, after accounting for one-time items, totaled $1.35 per share. Analysts surveyed by FactSet expected earnings of $1.22 per share, on average,
Total revenue soared 29 percent to $2.33 billion from $1.81 billion a year ago. Analysts expected $2.28 billion in revenue.
WellCare mostly administers the state and federally funded Medicaid program, which provides coverage for poor and disabled people. It also sells Medicare prescription drug coverage and Medicare Advantage plans, which are privately run versions of the government's Medicare program for elderly and disabled people.
Acquisitions and enrollment growth fueled a rise in premium revenue for both WellCare's Medicare Advantage and Medicaid coverage. For instance, gains in Missouri, South Carolina, Kentucky and Florida helped its Medicaid membership grow 18 percent to 1.8 million people.
Medicare Advantage membership soared 72 percent to 272,000 people.
Goldman Sachs analyst Matthew Borsch said in a research note that there were concerns that WellCare's rapid growth in Medicare Advantage would hurt its earnings, so the market will probably see the quarter's results "in a favorable light."
The company's medical benefits expense also rose 30 percent to more than $2 billion, and selling, general and administrative costs climbed 29 percent to $205.4 million.
WellCare now expects adjusted earnings of between $4.70 and $4.90 per share for 2013. That's up from its previous forecast for adjusted earnings of $4.60 and $4.90 per share.
Analysts expect, on average, earnings of $4.83 per share.
Shares of WellCare jumped 7.8 percent, or $4.71, to $65.28 in trading Wednesday. Its shares have climbed almost 36 percent so far this year.