As WellCare Health Plans prepares to combine with rival Centene Corp., the Tampa, Fla.-based insurer's first-quarter 2019 revenue and profit were helped by another acquisition.
WellCare's $2.5 billion tie-up with Meridian, which closed in September, boosted the insurer's membership rolls and premium revenue in the three months ended March 31, just as it did in the fourth quarter of 2018.
But the script is about to flip. WellCare CEO Kenneth Burdick told investment analysts Tuesday that integration planning for the Centene merger announced last month is underway and slated to close in the first half of 2020, pending approval by regulators. Medicaid membership-heavy Centene would reap the benefits of WellCare's growing Medicare membership.
"We're excited about the long-term opportunities for driving profitable growth as a combined company," Burdick said. "In the near-term, our focus continues on our commitments to our members, our partners and our shareholders."
WellCare's revenue soared 45.5% to $6.8 billion in the first quarter compared to the same period a year ago, while its net income ballooned by 48.9% to $151.4 million. The company attributed the increases in revenue and profit to the Meridian acquisition, along with organic growth across all lines of business.
WellCare's deal with Meridian, along with Medicaid contract wins in Florida and Arizona, helped boost its total membership to 6.3 million at the quarter's end, an increase of 47.4% year over year. Medicaid membership experienced the most growth, rising 52.3% to 4.1 million. Most of that membership growth was located in Illinois.
But WellCare's prescription drug plan membership also increased by more than half a million members to 1.6 million, thanks to the insurer launching a new product that "has been highly attractive in today's market," Burdick said. WellCare's Medicare health plan membership grew 10.3% to 558,000.
Membership growth lead to higher revenue across the business segments. WellCare receives the bulk of its revenue from Medicaid health plans, which brought in $4.5 billion in revenue, an increase of 59.2% over the first-quarter 2018. Medicare revenue grew 18.4% to $1.8 billion, and Medicare prescription drug plan revenue increased 11.1% to $288.8 million.
WellCare's medical loss ratio—the amount of premiums spent on medical claims and quality improvement activities—either rose or stayed flat across the business lines due to the Meridian acquisition, the company said. While the Medicaid medical loss ratio rose to 89.9% in the first quarter from 86.3% a year ago, the Medicare medical loss ratio remained at 84%. The lower the ratio, the better for the insurer.
