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WellCare Stock Creeps Up After Disastrous Week

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The Tampa Tribune

Published: October 29, 2007

Previous Coverage:
10/27/07: Investors Continue WellCare Exodus
10/26/07: WellCare Stock Plunges In Wake Of Raid
10/25/07: FBI Agents Raid WellCare

TAMPA - Shares of WellCare Health Plans Inc. inched up in morning trading today after a Jefferies & Co. analyst said the company, which was raided last week by the FBI and other authorities, probably won't lose any of its Medicare contracts.

At 10:15 a.m. shares were up $2.09, to $33.45.

The big health insurer, which contracts with several states including Florida to manage public health programs, saw its shares drop 74.4 percent from Wednesday to Friday last week on news of the raid. The exact reasons for the raid still are not clear.

Late Friday, the Tampa-based company disclosed that the Securities & Exchange Commission had requested information from the company, but it did not disclose details of the request.

Jeffries & Co. analyst Brian Wright said uncertainty surrounding the federal investigation could last 12 to 18 months.

Wright said the investigations will hurt WellCare's 2008 Medicare Advantage enrollment, which begins in November. The company may have to pay a large fine, he said, but it probably will not lose its contracts with the Centers for Medicare & Medicaid Services.

He reduced his profit estimate for the year to $5.50 per share, down from $6.15, with a price target of $35 per share, down from $107.

"In the past, investigations involving companies of the size and sophistication of WellCare have more often resulted in substantial fines and not the loss of the ability to provide services to Medicaid and or Medicare beneficiaries," he said.

Material from The Associated Press was used in this report.

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