WellCare Issues 2019 Annual Guidance

Company Reaffirms 2018 Annual Guidance

TAMPA, Fla., Dec. 17, 2018 /PRNewswire/ — WellCare Health Plans, Inc. (NYSE: WCG) (“WellCare”) today issued full-year 2019 guidance and reaffirmed its full-year 2018 guidance. For the full-year 2019, the company expects its adjusted earnings per diluted share (EPS) to be in the range of $13.15 to $13.40. For the full-year 2018, WellCare continues to expect its adjusted EPS to be in a range of $10.90 to $11.00.

Refer to the Appendix included in this news release for specific 2019 and 2018 guidance metrics, related footnotes and basis of presentation. In addition to the information in this release, a presentation describing the highlights of WellCare’s full-year 2019 guidance can be accessed via the following link: http://ir.wellcare.com/presentations.

Full-Year 2019 Guidance Highlights

• GAAP¹ total revenue is expected to increase to a range of $25.8 billion to $26.7 billionprimarily as a result of the acquisition of Meridian in 2018 and organic growth in all three business segments.

• The GAAP and adjusted Medicaid Health Plans medical benefits ratios (MBR) are expected to be in a range of 88.8% to 89.3% and 89.5% to 90.0%, respectively, primarily reflecting new business mix as a result of the company’s expanded Medicaid contract in Florida and the acquisition of Meridian in 2018. Additionally, the GAAP Medicaid Health Plans MBR reflects the absence of Medicaid ACA industry fee reimbursement in 2019.

• The Medicare Health Plans MBR is expected to be in a range of 85.0% to 85.8%, primarily as a result of the ACA industry fee moratorium in 2019, partially offset by continued operational execution.

• The Medicare PDP MBR is expected to be in a range of 82.5% to 83.5%, primarily due to bid positioning.

• The adjusted selling, general and administrative (SG&A)² expense ratio is expected to decrease to a range of 7.65% to 7.80%, primarily as a result of operational leverage and the company’s acquisition of Meridian in 2018.

¹Generally Accepted Accounting Principles (“GAAP”)
²Refer to Guidance Footnotes and Basis of Presentation for reconciliation of adjusted item to GAAP

About WellCare Health Plans, Inc.

Headquartered in Tampa, Fla., WellCare Health Plans, Inc. (NYSE: WCG) focuses primarily on providing government-sponsored managed care services to families, children, seniors and individuals with complex medical needs primarily through Medicaid, Medicare Advantage and Medicare Prescription Drug Plans, as well as individuals in the Health Insurance Marketplace. WellCare serves approximately 5.5 million members nationwide as of September 30, 2018. For more information about WellCare, please visit the company’s website at www.wellcare.com.

Appendix: Full-Year 2019 and 2018 Guidance Metrics

Guidance Metric	2019 Guidance as of December 17, 2018	2018 Guidance As of October 30, 2018
Revenue:
GAAP Medicaid Health Plans	$17.1B to $17.6B	$12.7B to $12.9B
Adjusted Medicaid Health Plans(1)	$17.0B to $17.5B	$12.3B to $12.45B
Medicare Health Plans	$7.2B to $7.5B	$6.25B to $6.35B
Medicare PDP	$1.0B to $1.1B	$825M to $875M
Medicaid ACA industry fee reimbursement	–	$280M to $285M
Products and services	$300M to $325M	$120M to $125M
Investment and other income(2)	$125M to $135M	$101M to $105M
GAAP total revenue	$25.8B to $26.7B	$20.0B to $20.3B
Adjusted total revenue(1)	$25.6B to $26.6B	$19.6B to $19.9B
Segment MBR:
GAAP Medicaid Health Plans	88.8% to 89.3%	85.6% to 85.9%
Adjusted Medicaid Health Plans(1)	89.5% to 90.0%	88.4% to 88.8%
Medicare Health Plans	85.0% to 85.8%	84.1% to 84.7%
Medicare PDP	82.5% to 83.5%	75.0% to 76.5%
Costs of products and services	$290M to $315M	$117M to $121M
Adjusted SG&A ratio(3)(4)	7.65% to 7.80%	8.35% to 8.45%
ACA industry fee expense	–	$342M to $346M
GAAP depreciation and amortization (D&A) expense	$280M to $287M	$178M to $182M
Adjusted D&A expense(5)	$130M to $137M	$102M to $106M
Interest expense	$120M to $124M	$87M to $89M
Adjusted effective income tax rate(4)(6)	23.5% to 24.5%	34.0% to 35.0%
Diluted shares outstanding	50.7M to 51.0M	–
Adjusted EPS(4)(7)	$13.15 to $13.40	$10.90 to $11.00

⁽¹⁾  Excludes an estimated $125.0 million to $130.0 million and $130.0 million to $135.0 millionin Medicaid premium taxes for 2018 and 2019, respectively.  Excludes an estimated $280.0 million to $285.0 million in ACA industry fee reimbursement for 2018. There is no ACA industry fee reimbursement due to a one-year federal moratorium of the ACA industry fee in 2019.
⁽²⁾ Investment & other income primarily includes investment income.
⁽³⁾ SG&A expense (GAAP) less investigation costs and transaction and integration costs divided by total revenue (GAAP) less Medicaid premium taxes revenue and ACA industry fee reimbursement in 2018. SG&A expense (GAAP) less transaction and integration costs divided by total revenue (GAAP) less Medicaid premium taxes revenue in 2019.
⁽⁴⁾ WellCare is not able to estimate amounts and the timing of expense associated with acquisition-related transaction and integration costs expected to be incurred as well as 2018 investigation costs and, therefore, cannot reconcile these metrics to total projected GAAP metrics.
⁽⁵⁾  Excludes an estimated $145.0 million to $155.0 million in acquisition-related amortization expenses in 2019. Excludes an estimated $75.0 million to $77.0 million in acquisition-related amortization expenses in 2018.
⁽⁶⁾  Excludes the estimated income tax effect associated with the 2018 investigation costs, acquisition-related amortization expenses, and transaction and integration costs.
⁽⁷⁾  The company estimates adjusted earnings per diluted share guidance by adjusting net income for the estimated net-of-tax effect of acquisition-related amortization expense, transaction and integration costs and 2018 investigation costs.

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