- WellCare announced plans in May to buy Meridian Health Plans of Illinois and Michigan and the MeridianRx pharmacy benefit management company for $2.5 billion.
- WellCare executives said Meridian’s PBM has an opportunity to attract business beyond Meridian’s existing markets.
WellCare Health Plans Tuesday said it plans to use its acquisition of new Meridian health plans and pharmacy benefit manager as a platform for multi-state growth in managing Medicaid and Medicare health and drug benefits.
WellCare announced plans in May to buy Meridian Health Plans of Illinois and Michigan and the MeridianRx pharmacy benefit management company for $2.5 billion. The deal, which is still working its way through regulatory hurdles, will give WellCare new business in two states and a PBM, a business it doesn’t have now.
WellCare executives said Tuesday Meridian’s PBM has an opportunity to attract business beyond Meridian’s existing markets.
Wellcare CEO Ken Burdick told analysts on the company’s second quarter earnings call Tuesday morning that executives are “impressed with the capabilities” of the MeridianRx PBM and how it is “so closely integrated” into their business. “We want to better understand the capabilities and capacity,” Burdick told analysts.
It’s unclear how any expansion of Meridian’s PBM would impact WellCare’s relationship with CVS Health and its PBM , which has a contract with WellCare to manage pharmacy benefits of its health plan members through 2020.
The biggest share of Meridian’s business comes from Medicaid with more than 1 million enrollees in such plans for low income Americans. In addition, Meridian has 27,000 enrollees in Medicare Advantage plans, which are becoming a major growth area for insurers.
Growth in Medicare and Medicaid managed care helped WellCare’s profits more than double in the second quarter to $151.6 million, or $3.35 per diluted share compared to $74.1 million, or $1.65 per diluted share in the second quarter of last year. Revenue rose nearly 8% to $4.6 billion.
WellCare added more than 100,000 Medicaid members in the second quarter to end the period with 2.8 million in its Medicaid health plans. Meanwhile, WellCare’s Medicare health plans ended the quarter with 510,000 members, a 5% increase from the second quarter of last year.
“We are excited about the growth opportunities ahead of us,” Burdick told analysts.
Given WellCare’s growth prospects, the company Tuesday raised its profit forecast for the rest of the year. WellCare is increasing its full-year adjusted earnings-per-share guidance “to a range of $10.70 to $10.90 from its previous guidance range of $10.00 to $10.30 per diluted share,” the company said in its second-quarter earnings report.
WellCare is in a competitive battle with Aetna, Humana, UnitedHealth Group and the nation’s Blue Cross and Blue Shield plans to capture bigger shares of a fast-growing market of aging baby boomers turning 65 years old and becoming eligible for Medicare coverage. Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines, with some even providing vision and dental care and wellness programs.
“We are bullish on MA,” Burdick told analysts. “It’s highly competitive.”
Date: August 2, 2018
Source: Forbes