WellCare
Health Plans, Inc.
|
(Exact
Name of Registrant as Specified in Its
Charter)
|
Delaware
|
47-0937650
|
|||
(State
or Other Jurisdiction of Incorporation Organization)
|
(I.R.S.
Employer Identification No.)
|
|||
8725
Henderson Road, Renaissance One
Tampa,
Florida
|
33634
|
|||
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
(813)
290-6200
|
||
Registrant’s
telephone number, including area code
|
Common
Stock, par value $0.01 per share
|
New
York Stock Exchange
|
|||
(Title
of Class)
|
(Name
of Each Exchange on which Registered)
|
Page
|
||
PART
1
|
||
PART
II
|
||
PART
III
|
||
PART
IV
|
||
December
31,
2006
|
December
31,
2005
|
||||||
Medicaid
|
|||||||
TANF
|
1,069,000
|
621,000
|
|||||
S-CHIP
|
95,000
|
82,000
|
|||||
SSI
|
51,000
|
58,000
|
|||||
FHP
|
30,000
|
25,000
|
|||||
1,245,000
|
786,000
|
||||||
Medicare
|
|||||||
MA
|
90,000
|
69,000
|
|||||
PDP
|
923,000
|
-
|
|||||
1,013,000
|
69,000
|
||||||
Total
|
2,258,000
|
855,000
|
· |
Primary
Care Case Management Programs.
Programs established by the states through contracts with primary
care
providers to provide to the Medicaid recipient primary care services,
on a
non-capitated, non-risk basis, as well as to provide limited oversight
over other services.
|
· |
Commercial
HMOs.
National and regional commercial managed care organizations that
have
Medicaid members in addition to members in private commercial
plans.
|
· |
Medicaid
HMOs.
Managed care organizations that focus solely on providing healthcare
services to Medicaid recipients, typically on a capitated, full-risk
basis. Many of these competitors operate in a single or small number
of
geographic locations. There are a few multi-state Medicaid-only
organizations that tend to be larger in size and therefore able to
leverage their infrastructure over a larger membership
base.
|
· |
we
have an adequate provider network;
|
· |
our
quality and utilization management processes comply with state
requirements;
|
· |
we
have procedures in place for responding to member and provider complaints
and grievances;
|
· |
our
systems are capable of processing providers’ claims in a timely fashion
and for collecting and analyzing the information needed to manage
our
business; and
|
· |
we
have the financial resources necessary to pay our anticipated medical
care
expenses and the infrastructure needed to account for our
costs.
|
· |
we
will comply with certain guidelines and regulatory limitations relating
to
our sales and marketing activities.
|
· |
establishes
its own eligibility standards;
|
· |
determines
the type, amount, duration and scope of
services;
|
· |
sets
the rate of payment for services;
and
|
· |
administers
its own program.
|
· |
we
must measure provider access and availability in terms of the time
needed
for a member to reach the doctor’s office using public
transportation;
|
· |
our
quality improvement programs must emphasize member education and
outreach
and include measures designed to promote utilization of preventative
services;
|
· |
we
must have linkages with schools, city or county health departments,
and
other community-based providers of healthcare, in order to demonstrate
our
ability to coordinate all of the sources from which our members may
receive care;
|
· |
we
must have the capability to meet the needs of disabled members and
others
with “special needs”;
|
· |
our
providers and member service representatives must be able to communicate
with members who do not speak English or who are hearing impaired;
and
|
· |
our
member handbook, newsletters and other communications must be written
at
the prescribed reading level and must be available in languages other
than
English.
|
· |
an
initial annual deductible of $265;
|
· |
cost
sharing of 25% for the beneficiary and 75% for the Part D plan on
the next
$2,135 of prescription drug costs up to an initial limit of
$2,400;
|
· |
no
insurance coverage for annual drug costs of the beneficiary between
$2,400
and $5,451 (sometimes referred to as the “donut hole”);
and
|
· |
once
the beneficiary has spent $3,850 in out-of-pocket drug costs in a
year,
the beneficiary pays the greater of 5% of the drug costs or $2 for
generic
drugs and $5 for brand name drugs.
|
· |
protect
the privacy and security of patient health information through the
implementation of appropriate administrative, technical and physical
safeguards; and
|
· |
establish
the capability to receive and transmit electronically certain
administrative healthcare transactions, such as claims payments,
in a
standardized format.
|
· |
an
increase in the cost of healthcare services and supplies, including
pharmaceuticals, whether as a result of inflation or
otherwise;
|
· |
higher
than expected utilization of healthcare services;
|
· |
periodic
renegotiation of hospital, physician and other provider
contracts;
|
· |
the
occurrence of catastrophes, major epidemics, terrorism or
bio-terrorism;
|
· |
changes
in the demographics of our members and medical trends affecting them;
and
|
· |
new
mandated benefits or other changes in healthcare laws, regulations
and/or
practices.
|
· |
forfeiture
or recoupment of amounts we have been paid pursuant to our government
contracts;
|
· |
imposition
of significant civil or criminal penalties, fines or other sanctions
on us
and/or our key employees;
|
· |
loss
or limitation of our right to participate in government-sponsored
programs, including Medicaid and
Medicare;
|
· |
damage
to our reputation in various
markets;
|
· |
increased
difficulty in marketing our products and
services;
|
· |
inability
to obtain approval for future service or geographic expansion;
and
|
· |
suspension
or loss of one or more of our licenses to act as an insurer, health
maintenance organization or third party administrator or to otherwise
provide a service.
|
· |
Legislative:
The current Congress is expected to make changes to the Medicare
program
this year, which may include changes to the Part D benefit. We cannot
predict what these changes might include or what effect they might
have on
our revenues or plans for growth.
|
· |
Regulatory
and administration:
Medicare Part D is a new program and CMS may alter the program in
a manner
that could be detrimental to us. In addition, historically CMS has
experienced challenges in the administration of the program which
has
affected our ability to accurately determine our membership and revenues
from our PDP plans.
|
· |
Utilization
of benefits:
We are making actuarial assumptions about the utilization of benefits
in
our PDP plans. Because this continues to be a new program both for
the
Federal government and for us, there is limited historical basis
for these
assumptions, and we cannot assure you that these assumptions will
prove to
be correct or that premiums will be sufficient to cover the benefits
provided.
|
· |
Competition:
We
have encountered competition from other PDP plans, some of which
may have
significantly greater resources and brand recognition than we do
and new
PDP plans are entering the business. We have entered into a marketing
arrangement with Walgreens which is non-exclusive and Walgreens may
enter
into marketing arrangements with our competitors. We cannot predict
whether we will be able to continue to effectively compete in this
new
market.
|
· |
Membership:
Medicare beneficiaries who are dual-eligibles generally are able
to
disenroll and choose another PDP plan at any time, and certain Medicare
beneficiaries also have a limited ability to disenroll from the plan
they
initially select and choose a different PDP plan. Medicare beneficiaries
who are not dually eligible will be able to change PDP plans during
the
annual open enrollment period. We may not be able to retain the
auto-assigned members or those members who affirmatively choose our
PDP
plans, and we may not be able to attract new PDP
members.
|
· |
additional
employees, whom we refer to as associates, who are not familiar with
our
operations;
|
· |
new
provider networks, which may operate on terms different from our
existing
networks;
|
· |
additional
members, who may decide to transfer to other healthcare providers
or
health plans;
|
· |
disparate
information, claims processing and record keeping
systems;
|
· |
integration
efforts may divert attention of our management team away from our
core
business; and
|
· |
accounting
policies, including those which require a high degree of judgment
or
complex estimation processes, such as estimates of medical claims
incurred
but not reported, accounting for goodwill, intangible assets, stock-based
compensation and income tax
matters.
|
· |
the
time and costs associated with obtaining the necessary license to
operate
in the new area or the expansion of our licensed service area, if
necessary;
|
· |
our
inability to develop a network of physicians, hospitals and other
healthcare providers that meets our requirements and those of government
regulators;
|
· |
competition,
which increases the costs of recruiting members;
|
· |
the
cost of providing healthcare services in those areas; and
|
· |
demographics
and population density.
|
· |
Plans
now offer various products, including regional preferred provider
organizations, or PPOs, pursuant to the MMA. Medicare PPOs allow
their
members more flexibility to select physicians than the MCC plans,
such as
HMOs, which often require members to coordinate their care through
a
primary care physician. The Secretary of Health and Human Services
created
26 regions for the regional Medicare PPO program. Regional Medicare
PPO
plans compete with MCC plans and PFFS plans, such as
ours.
|
· |
In
order to participate in the Medicare Advantage regional PPO program,
a
plan must meet certain requirements, including having an adequate
provider
network throughout the region. The MMA provides some incentives for
certain hospitals to join the network. Although we currently do not
participate in any Medicare Advantage regional PPO programs, if in
the
future we decide to participate in the programs, we cannot assure
you that
we will be able to contract with a sufficient number of providers
throughout our regions to satisfy the network adequacy requirements
under
the MMA that would enable us to participate in the regional
product.
|
· |
The
payments for the local and regional Medicare Advantage plans are
based on
a competitive bidding process that may decrease the amount of premiums
paid to us or cause us to increase the benefits we
offer.
|
· |
Organizations
that offer MCC plans of the type we offer are required to offer
prescription drug benefits in at least one plan in every area they
serve.
In addition, most Medicare Advantage enrollees choosing to obtain
prescription drug benefits are required to do so from their Medicare
Advantage plan. Enrollees may prefer a stand-alone drug plan and
may
disenroll from the Medicare Advantage plan altogether in order to
participate in a stand-alone drug plan. Accordingly, the new Medicare
Part
D prescription drug benefit could reduce our profitability and membership
enrollment.
|
· |
In
2006, we began offering stand-alone PDP plans to Medicare beneficiaries
who are not enrolled in one of our Medicare Advantage plans. In addition,
Medicare began auto-assigning Medicare dual-eligibles to our stand-alone
PDP plans, and as of 2007 we are eligible for auto-assignment in
all 50
states. Because PDP plans are still relatively new to Medicare and
to the
health insurance market generally, we cannot guarantee future profits
from
this Medicare line of business.
|
· |
Some
enrollees may have chosen our MCC plans in the past rather than an
original Medicare fee-for-service plan because of the added drug
benefit
that we offer with our MCC plans. Following the implementation of
the new
prescription drug benefit, Medicare beneficiaries have the opportunity
to
obtain a drug benefit without joining a managed care plan which could
affect our membership.
|
· |
Beginning
in 2006, dual-eligibles began to receive their drug coverage from
Medicare
rather than from Medicaid. Because Medicaid is no longer directly
responsible for most drug coverage for dual-eligibles, Medicaid payments
to plans have been reduced. Accordingly, this change in Medicaid
payments
could have an adverse effect on our operating results. Further,
dual-eligibles who are auto-enrolled into our PDP plans have the
right to
switch plans at any time. As a result, there can be no assurance
that the
dual-eligible beneficiaries who are automatically assigned to us
will stay
in our PDP plans.
|
· |
imposing
additional license, registration and/or capital
requirements;
|
· |
increasing
our administrative and other costs;
|
· |
requiring
us to undergo a corporate
restructuring;
|
· |
increasing
mandated benefits;
|
· |
limiting
our ability to engage in intra-company transactions with our affiliates
and subsidiaries;
|
· |
requiring
us to restructure our relationships with providers;
or
|
· |
requiring
us to implement additional or different programs and
systems.
|
● |
increasing
our vulnerability to adverse economic, regulatory and industry conditions,
and placing us at a disadvantage compared to our competitors that
are less
leveraged;
|
● |
limiting
our ability to compete and our flexibility in planning for, or reacting
to, changes in our business and the industry in which we
operate;
|
● |
limiting
our ability to borrow additional funds for working capital, capital
expenditures, acquisitions and general corporate or other purposes;
and
|
● |
exposing
us to greater interest rate risk since the interest rate on borrowings
under our senior credit facilities is
variable.
|
High
|
Low
|
|||||||||
2006 |
|
|||||||||
First
Quarter ended March 31, 2006
|
$
|
45.44
|
$
|
37.27
|
||||||
Second
Quarter ended June 30, 2006
|
$
|
50.05
|
$
|
39.41
|
||||||
Third
Quarter ended September 30, 2006
|
$
|
60.00
|
$
|
49.06
|
||||||
Fourth
Quarter ended December 31, 2006
|
$
|
70.72
|
$
|
56.00
|
||||||
2005 |
|
|||||||||
First
Quarter ended March 31, 2005
|
$
|
37.95
|
$
|
27.80
|
||||||
Second
Quarter ended June 30, 2005
|
$
|
36.25
|
$
|
28.31
|
||||||
Third
Quarter ended September 30, 2005
|
$
|
43.36
|
$
|
35.53
|
||||||
Fourth
Quarter ended December 31, 2005
|
$
|
42.74
|
$
|
30.23
|
||||||
|
7/1/04
|
12/31/04
|
12/31/05
|
12/31/06
|
WellCare
Health Plans, Inc.
|
$100
|
$191
|
$240
|
$405
|
S&P
500 Index
|
$100
|
$108
|
$114
|
$132
|
Custom
Composite Index
|
$100
|
$140
|
$201
|
$186
|
Securities
Authorized for Issuance Under Equity Compensation
Plans
|
|||
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants andrights
($)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in
column
(a))
|
(a)
|
(b)
|
(c)
|
|
Equity
compensation plans approved by security holders(1)
|
2,169,213
|
38.24
|
2,678,052
|
Equity
compensation plans not approved by security holders(2)
|
737,147
|
8.28
|
__
|
Total
|
2,906,360
|
30.64
|
2,678,052
|
(1) |
The
WellCare Health Plans, Inc. 2004 Equity Incentive Plan (the “2004 Equity
Plan”) was approved by our shareholders in June 2004 and the WellCare
Health Plans, Inc. 2005 Employee Stock Purchase Plan (the “ESPP”) was
approved by our shareholders in June 2005. As of December 31, 2006,
there
were 2,297,438 shares reserved for future issuance under the 2004
Equity
Plan and 380,614 shares reserved for future issuance under the ESPP.
The
total number of shares of common stock subject to the granting of
awards
under our 2004 Equity Plan may be increased on January 1 of each
year,
commencing on January 1, 2005 and ending on January 1, 2013, in an
amount
equal to the lesser of 3% of the number of shares of common stock
outstanding on each such date, 1,200,000 shares, or such lesser amount
determined by our board of directors. The total number of shares
of common
stock subject to the granting of awards under our 2004 Equity Plan
was
increased by 1,182,840 shares effective January 1, 2006. In addition
to
options, shares may be issued in restricted stock awards, performance
awards and other stock-based awards under the 2004 Equity
Plan.
|
(2) |
Equity
compensation plans not approved by our shareholders include the WellCare
Holdings, LLC 2002 Employee Option Plan (the “2002 Plan”) and an aggregate
of seven stock option agreements (the “Non-Plan Grants”) entered into with
individuals prior to our initial public offering. The 2002 Plan was
adopted by our board of directors in September 2002 and is administered
by
our compensation committee. Under the 2002 Plan, certain employees
were
granted non-qualified stock options to purchase shares of our common
stock
at an exercise price per share equal to the fair market value of
our stock
on the date of grant as determined by our board. Generally, option
awards
granted under the 2002 Plan vest as to 25% of the shares subject
to the
award on the first anniversary of the date of grant, and as to 2.083%
upon
the end of each full calendar month thereafter, and expire on the
tenth
anniversary of the date of grant. Subject to certain exemptions and
conditions, if a grantee ceases to be an employee of ours for any
reason
other than death, all of the grantee’s options that were exercisable on
the date of termination of employment will remain exercisable for
60 days
after the date of such termination. In the case of death, all of
the
grantee’s options that were exercisable on the date of death will remain
exercisable for a period of 180 days from such date. Unvested options
will
terminate upon a change in control. Options issued under the 2002
Plan may
not be sold, pledged, assigned, transferred or otherwise disposed
of other
than pursuant to applicable laws of descent and distribution or for
estate
planning purposes if approved by the board. The board generally has
the
power and authority to amend or terminate the 2002 Plan at any time
without approval from our stockholders; however, no amendment may,
in any
material respect, adversely impair the rights of any grantee without
the
grantee’s written consent. No option awards have been granted under the
2002 Plan since June 2004 and no options remain available for future
issuance under this plan. The terms of the Non-Plan Grants are materially
similar to the terms of options granted under the 2002 Plan. Six
of the
Non-Plan Grants, exercisable for an aggregate of 23,780 shares of
common
stock, were issued to individuals other than our directors or executive
officers. The weighted-average exercise price of those six outstanding
option grants is $4.72 per share. The vesting schedule of those six
Non-Plan Grants is as follows: (a) three options, exercisable for
an
aggregate of 18,494 shares, vested as to 25% after one year, and
as to
2.083% upon the end of each full calendar month thereafter, (b) one
option, exercisable for an aggregate of 4,066 shares, vested in full
on
the grant date, and (c) two options, exercisable for an aggregate
of 1,220
shares, vest as to 4.167% upon the end of each full calendar month
following the grant date. In November 2004, our board of directors
determined to fully accelerate the vesting of four out of the five
option
grants listed in both subsections (a) and (c) above. The remaining
Non-Plan Grant was issued to one of our directors, Christian Michalik.
On
December 31, 2003, Mr. Michalik was granted options to purchase 40,657
shares at a per share exercise price of $6.47. These options expire
on
December 31, 2013, vested as to 25% of the shares subject thereto
on June
30, 2004, and vest as to 2.083% upon the end of each full calendar
month
thereafter.
|
Predecessor
|
Successor
|
||||||||||||||||||
Seven-Month
Period Ended July 31,
2002
|
Five-Month
Period Ended December 31, 2002
|
Year
Ended December 31, 2003
|
Year
Ended December 31, 2004
|
Year
Ended December 31, 2005
|
Year
Ended December 31, 2006
|
||||||||||||||
(in
thousands, except per unit/share data)
|
|||||||||||||||||||
Consolidated
and Combined Statements of Income:
|
|||||||||||||||||||
Revenues:
|
|||||||||||||||||||
Premium:
|
|||||||||||||||||||
Medicaid
|
$
|
329,164
|
$
|
267,911
|
$
|
740,078
|
$
|
1,055,000
|
$
|
1,357,995
|
$
|
1,927,616
|
|||||||
Medicare
|
170,073
|
120,814
|
288,330
|
334,760
|
504,502
|
1,785,429
|
|||||||||||||
Other(1)
|
17,976
|
9,928
|
14,444
|
1,136
|
—
|
—
|
|||||||||||||
Total
premium
|
517,213
|
398,653
|
1,042,852
|
1,390,896
|
1,862,497
|
3,713,045
|
|||||||||||||
Investment
and other income
|
2,819
|
3,152
|
3,130
|
4,307
|
17,042
|
49,881
|
|||||||||||||
Total
revenues
|
520,032
|
401,805
|
1,045,982
|
1,395,203
|
1,879,539
|
3,762,926
|
|||||||||||||
Expenses:
|
|||||||||||||||||||
Medical
benefits:
|
|||||||||||||||||||
Medicaid
|
274,672
|
222,007
|
609,233
|
851,153
|
1,099,901
|
1,556,466
|
|||||||||||||
Medicare
|
145,768
|
107,384
|
238,933
|
275,348
|
412,208
|
1,455,697
|
|||||||||||||
Other(1)
|
14,484
|
12,372
|
12,887
|
(941
|
)
|
—
|
—
|
||||||||||||
Total
medical benefits
|
434,924
|
341,763
|
861,053
|
1,125,560
|
1,512,109
|
3,012,163
|
|||||||||||||
Selling,
general and administrative
|
54,492
|
45,384
|
126,106
|
171,257
|
259,491
|
492,808
|
|||||||||||||
Depreciation
and amortization
|
1,239
|
3,734
|
8,159
|
7,715
|
9,204
|
17,170
|
|||||||||||||
Interest
|
1,446
|
1,462
|
10,172
|
10,165
|
13,562
|
14,087
|
|||||||||||||
Total
expenses
|
492,101
|
392,343
|
1,005,490
|
1,314,697
|
1,794,366
|
3,536,228
|
|||||||||||||
Income
before income taxes
|
27,931
|
9,462
|
40,492
|
80,506
|
85,173
|
226,698
|
|||||||||||||
Income
tax expense(2)
|
—
|
4,805
|
16,955
|
31,256
|
33,245
|
87,511
|
|||||||||||||
Net
income
|
$
|
27,931
|
$
|
4,657
|
$
|
23,537
|
$
|
49,250
|
$
|
51,928
|
$
|
139,187
|
|||||||
Net
income per share:
|
|||||||||||||||||||
Net
income per share - basic
|
$
|
1.70
|
$
|
1.38
|
$
|
3.54
|
|||||||||||||
Net
income per share - diluted
|
$
|
1.56
|
$
|
1.32
|
$
|
3.43
|
|||||||||||||
Net
income attributable per common unit:
|
|||||||||||||||||||
Net
income attributable per unit - basic
|
$
|
0.09
|
$
|
0.66
|
|||||||||||||||
Net
income attributable per unit - diluted
|
$
|
0.08
|
$
|
0.60
|
|||||||||||||||
Pro
forma net income per common share:(3)
|
|||||||||||||||||||
Basic
|
$
|
0.82
|
|||||||||||||||||
Diluted
|
$
|
0.73
|
|||||||||||||||||
Pro
forma common shares outstanding:(3)
|
|||||||||||||||||||
Basic
|
21,466,300
|
||||||||||||||||||
Diluted
|
23,937,664
|
As
of December 31,
|
||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||
Operating
Statistics:
|
||||||||||||||||
Medical
benefits ratio - consolidated(4)
|
84.8
|
%
|
82.6
|
%
|
80.9
|
%
|
81.2
|
%
|
81.1
|
%
|
||||||
Medical
benefits ratio - Medicaid(4)
|
83.2
|
%
|
82.3
|
%
|
80.7
|
%
|
81.0
|
%
|
80.7
|
%
|
||||||
Medical
benefits ratio - Medicare(4)
|
87.0
|
%
|
82.9
|
%
|
82.3
|
%
|
81.7
|
%
|
81.5
|
%
|
||||||
Medical
benefit ratio - other(4)
|
96.2
|
%
|
89.2
|
%
|
(82.8
|
%)
|
—
|
—
|
||||||||
Selling,
general and administrative expense ratio(5)
|
10.8
|
%
|
12.1
|
%
|
12.3
|
%
|
13.8
|
%
|
13.1
|
%
|
||||||
Members
- consolidated
|
470,000
|
555,000
|
747,000
|
855,000
|
2,258,000
|
|||||||||||
Members
- Medicaid
|
420,000
|
512,000
|
701,000
|
786,000
|
1,245,000
|
|||||||||||
Members
- Medicare
|
42,000
|
42,000
|
46,000
|
69,000
|
1,013,000
|
|||||||||||
Members
- commercial
|
8,000
|
1,000
|
—
|
—
|
—
|
As
of December 31,
|
||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||
Balance
Sheet Data:
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
146,784
|
$
|
237,321
|
$
|
397,627
|
$
|
421,766
|
$
|
964,542
|
||||||
Total
assets
|
409,504
|
497,107
|
799,036
|
887,489
|
1,663,965
|
|||||||||||
Long-term
debt (including current maturities)
|
156,295
|
135,755
|
184,200
|
182,600
|
155,621
|
|||||||||||
Total
liabilities
|
334,587
|
397,530
|
490,405
|
517,365
|
1,100,910
|
|||||||||||
Total
stockholders’/members’ equity(6)
|
74,917
|
99,577
|
308,631
|
370,124
|
563,055
|
(1) |
Other
premium revenue and other medical benefits relates to our commercial
business, which was no longer operated beginning May
2004.
|
(2) |
Income
tax expense was not recorded by the Predecessor because its tax structure
included entities that had elected subchapter S status under the
Internal
Revenue Code, the income of which was taxed at the stockholder level,
as
well as entities that were subject to tax, but did not generate tax
liabilities or benefits due to operating losses. Pro forma tax expense
for
the seven months ended July 31, 2002 at an estimated tax rate of
42% (our
effective tax rate as the Successor in 2003) is
$11,731.
|
(3) |
Pro
forma net income per share is computed using the pro forma weighted
average number of common shares outstanding, which gives effect to
the
automatic conversion of all outstanding common units of WellCare
Holdings,
LLC into shares of common stock of WellCare Health Plans, Inc. upon
the
closing of our initial public offering. For a discussion of the difference
between pro forma net income per common share and net income attributable
per common unit, see Note 13 to the consolidated financial statements
of
WellCare Health Plans, Inc.
|
(4) |
Medical
benefits ratio represents medical benefits expense as a percentage
of
premium revenue.
|
(5) |
Selling,
general and administrative expense ratio represents selling, general
and
administrative expense as a percentage of total revenue and excludes
depreciation and amortization expense for purposes of determining
the
ratio.
|
(6) |
Total
stockholders’/members’ equity reflects limited liability company
membership interests during 2002 and 2003 and reflects stockholders’
equity for Successor as of December 31, 2004, 2005 and
2006.
|
December
31,
2006
|
December
31,
2005
|
||
Medicaid
|
|||
TANF
|
1,069,000
|
621,000
|
|
S-CHIP
|
95,000
|
82,000
|
|
SSI
|
51,000
|
58,000
|
|
FHP
|
30,000
|
25,000
|
|
1,245,000
|
786,000
|
||
Medicare
|
|||
MA
|
90,000
|
69,000
|
|
PDP
|
923,000
|
-
|
|
1,013,000
|
69,000
|
||
Total
|
2,258,000
|
855,000
|
December
31, 2006
|
|
%
of Total
|
|
December
31, 2005
|
|
%
of Total
|
|||||||
(in
thousands)
|
|||||||||||||
Claims
adjudicated, but not yet paid
|
$
|
43,066
|
9.2
|
%
|
$
|
12,428
|
5.1
|
%
|
|||||
IBNR
|
422,515
|
90.8
|
%
|
228,947
|
94.9
|
%
|
|||||||
Total
Medical benefits payable
|
$
|
465,581
|
$
|
241,375
|
Year
Ended December 31, 2004
|
Year
Ended December 31, 2005
|
Year
Ended December 31, 2006
|
||||||||
(in
thousands)
|
||||||||||
Balances
as of beginning of period
|
$
|
148,297
|
$
|
190,595
|
241,375
|
|||||
Opening
medical benefits payable related to Harmony Acquisition
|
18,160
|
—
|
—
|
|||||||
Medical
benefits incurred related to:
|
||||||||||
Current
period
|
1,151,948
|
1,538,495
|
3,059,300
|
|||||||
Prior
periods
|
(26,388
|
)
|
(26,386
|
)
|
(47,137
|
)
|
||||
Total
|
1,125,560
|
1,512,109
|
3,012,163
|
|||||||
Medical
benefits paid related to:
|
||||||||||
Current
period
|
(985,844
|
)
|
(1,331,914
|
)
|
(2,610,713
|
)
|
||||
Prior
periods
|
(115,578
|
)
|
(129,415
|
)
|
(177,244
|
)
|
||||
Total
|
(1,101,422
|
)
|
(1,461,329
|
)
|
(2,787,957
|
)
|
||||
Balances
as of end of period
|
$
|
190,595
|
$
|
241,375
|
$
|
465,581
|
Percentage
of Revenues
|
||||||||||
Consolidated
Year Ended December 31, 2004
|
Consolidated
Year Ended December 31, 2005
|
Consolidated
Year Ended December 31, 2006
|
||||||||
Statement
of Operations Data:
|
||||||||||
Revenues
|
||||||||||
Premium
|
99.7
|
%
|
99.1
|
%
|
98.7
|
%
|
||||
Investment
and other income
|
0.3
|
%
|
0.9
|
%
|
1.3
|
%
|
||||
Total
revenues
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||
Expenses:
|
||||||||||
Medical
benefits
|
80.7
|
%
|
80.5
|
%
|
80.0
|
%
|
||||
Selling,
general and administrative
|
12.3
|
%
|
13.8
|
%
|
13.1
|
%
|
||||
Depreciation
and amortization
|
0.6
|
%
|
0.5
|
%
|
0.5
|
%
|
||||
Interest
|
0.7
|
%
|
0.7
|
%
|
0.4
|
%
|
||||
Total
expenses
|
94.3
|
%
|
95.5
|
%
|
94.0
|
%
|
||||
Income
before income taxes
|
5.7
|
%
|
4.5
|
%
|
6.0
|
%
|
||||
Income
tax expense
|
2.2
|
%
|
1.8
|
%
|
2.3
|
%
|
||||
Net
income
|
3.5
|
%
|
2.7
|
%
|
3.7
|
%
|
Medicaid
Revenues and Membership
|
|||||||
For
the Year Ended December 31,
|
|||||||
2006
|
2005
|
||||||
Revenues
|
$
|
1,927.6
|
$
|
1,358.0
|
|||
%
of Total Premium Revenues
|
51.9
|
%
|
72.9
|
%
|
|||
Membership
|
1,245,000
|
786,000
|
|||||
%
of Total Membership
|
55.1
|
%
|
91.9
|
%
|
Medicare
Revenues and Membership
|
|||||||
For
the Year Ended December 31,
|
|||||||
2006
|
2005
|
||||||
Revenues
|
$
|
1,785.4
|
$
|
504.5
|
|||
%
of Total Premium Revenues
|
48.1
|
%
|
27.1
|
%
|
|||
Membership
|
1,013,000
|
69,000
|
|||||
%
of Total Membership
|
44.9
|
%
|
8.1
|
%
|
Medicaid
Medical Benefits Expense
|
|||||||
For
the Year Ended December 31,
|
|||||||
2006
|
2005
|
||||||
Medical
Benefits
|
$
|
1,556.5
|
$
|
1,099.9
|
|||
MBR
|
80.7
|
%
|
81.0
|
%
|
Medicare
Medical Benefits Expense
|
|||||||
For
the Year Ended December 31,
|
|||||||
2006
|
2005
|
||||||
Medical
Benefits
|
$
|
1,455.7
|
$
|
412.2
|
|||
MBR
|
81.5
|
%
|
81.7
|
%
|
Selling,
General and Administrative Expense
|
|||||||
For
the Year Ended December 31,
|
|||||||
2006
|
2005
|
||||||
SG&A
|
$
|
492.8
|
$
|
259.5
|
|||
SG&A
expense to total revenue ratio
|
13.1
|
%
|
13.8
|
%
|
Income
Tax Expense
|
|||||||
For
the Year Ended December 31,
|
|||||||
2006
|
2005
|
||||||
Income
tax expense
|
$
|
87.5
|
$
|
33.2
|
|||
Effective
tax rate
|
38.6
|
%
|
39.0
|
%
|
Net
Income
|
|||||||
For
the Year Ended December 31,
|
|||||||
2006
|
2005
|
||||||
Net
income
|
$
|
139.2
|
$
|
51.9
|
|||
Net
income per diluted share
|
$
|
3.43
|
$
|
1.32
|
Medicaid
Revenues and Membership
|
|||||||
For
the Year Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Revenues
|
$
|
1,358.0
|
$
|
1,055.0
|
|||
%
of Total Premium Revenues
|
72.9
|
%
|
75.9
|
%
|
|||
Membership
|
786,000
|
701,000
|
|||||
%
of Total Membership
|
91.9
|
%
|
93.8
|
%
|
Medicare
Revenues and Membership
|
|||||||
For
the Year Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Revenues
|
$
|
504.5
|
$
|
334.8
|
|||
%
of Total Premium Revenues
|
27.1
|
%
|
24.1
|
%
|
|||
Membership
|
69,000
|
46,000
|
|||||
%
of Total Membership
|
8.1
|
%
|
6.2
|
%
|
Medicaid
Medical Benefits Expense
|
|||||||
For
the Year Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Medical
Benefits
|
$
|
1,100.0
|
$
|
851.2
|
|||
MBR
|
81.0
|
%
|
80.7
|
%
|
Medicare
Medical Benefits Expense
|
|||||||
For
the Year Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Medical
Benefits
|
$
|
412.2
|
$
|
275.3
|
|||
MBR
|
81.7
|
%
|
82.3
|
%
|
Selling,
General and Administrative Expense
|
|||||||
For
the Year Ended December 31,
|
|||||||
2005
|
2004
|
||||||
SG&A
|
$
|
259.5
|
$
|
171.3
|
|||
SG&A
expense to total revenue ratio
|
13.8
|
%
|
12.3
|
%
|
Income
Tax Expense
|
|||||||
For
the Year Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Income
tax expense
|
|||||||
Income
tax expense
|
$
|
33.2
|
$
|
31.3
|
|||
Effective
tax rate
|
39.0
|
%
|
38.8
|
%
|
Net
Income
|
|||||||
For
the Year Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Net
income
|
$
|
51.9
|
$
|
49.3
|
|||
Net
income per diluted share
|
$
|
1.32
|
$
|
1.56
|
2006
|
2005
|
2004
|
||||||||
Net
cash provided by operations
|
512,654
|
$
|
81,447
|
$
|
48,762
|
|||||
Net
cash used in investing activities
|
(91,852
|
)
|
(59,330
|
)
|
(96,466
|
)
|
||||
Net
cash provided by financing activities
|
121,974
|
2,022
|
208,010
|
Agency
|
Outlook
|
Credit
Rating
|
|
Moody’s
|
Positive
|
Ba3
|
|
Standard
& Poor’s
|
Positive
|
BB-
|
Payments
due to period
|
||||||||||||||||
Contractual
Obligations at
December
31, 2006
|
Total
|
Less
Than
1
Year
|
1-3
Years
|
3-5
Years
|
More
than
5
Years
|
|||||||||||
(in
thousands)
|
||||||||||||||||
Long-term
debt(1)
(2)
|
$
|
168,255
|
$
|
1,886
|
$
|
166,369
|
$
|
—
|
$
|
—
|
||||||
Operating
leases
|
73,094
|
11,906
|
24,603
|
20,278
|
16,307
|
|||||||||||
Other
liabilities
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Purchase
obligations
|
4,895
|
3,605
|
1,290
|
—
|
—
|
|||||||||||
Total
|
$
|
246,244
|
$
|
17,397
|
$
|
192,262
|
$
|
20,278
|
$
|
16,307
|
(1) |
Long-term
debt (including current maturities) at December 31, 2006 includes
total
short and long-term debt of $167,876 plus the unamortized portion
of the
discount on the term loan of $379.
|
(2) |
Long-term
debt (including current maturities) at December 31, 2006 includes
interest
at an assumed (current) rate of 7.875%.
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of
WellCare
Health Plans, Inc. and subsidiaries
Tampa,
Florida
We
have audited management's assessment, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting, that
WellCare Health Plans, Inc. and subsidiaries (the “Company”) maintained
effective internal control over financial reporting as of December
31,
2006, based on criteria established in Internal
Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company's management is responsible for maintaining
effective internal control over financial reporting and for its
assessment
of the effectiveness of internal control over financial reporting.
Our
responsibility is to express an opinion on management's assessment
and an
opinion on the effectiveness of the Company's internal control
over
financial reporting based on our audit.
We
conducted our audit in accordance with the standards of the Public
Company
Accounting Oversight Board (United States). Those standards require
that
we plan and perform the audit to obtain reasonable assurance about
whether
effective internal control over financial reporting was maintained
in all
material respects. Our audit included obtaining an understanding
of
internal control over financial reporting, evaluating management's
assessment, testing and evaluating the design and operating effectiveness
of internal control, and performing such other procedures as we
considered
necessary in the circumstances. We believe that our audit provides
a
reasonable basis for our opinions.
A
company's internal control over financial reporting is a process
designed
by, or under the supervision of, the company's principal executive
and
principal financial officers, or persons performing similar functions,
and
effected by the company's board of directors, management, and other
personnel to provide reasonable assurance regarding the reliability
of
financial reporting and the preparation of financial statements
for
external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting
includes
those policies and procedures that (1) pertain to the maintenance
of
records that, in reasonable detail, accurately and fairly reflect
the
transactions and dispositions of the assets of the company; (2)
provide
reasonable assurance that transactions are recorded as necessary
to permit
preparation of financial statements in accordance with generally
accepted
accounting principles, and that receipts and expenditures of the
company
are being made only in accordance with authorizations of management
and
directors of the company; and (3) provide reasonable assurance
regarding
prevention or timely detection of unauthorized acquisition, use,
or
disposition of the company's assets that could have a material
effect on
the financial statements.
Because
of the inherent limitations of internal control over financial
reporting,
including the possibility of collusion or improper management override
of
controls, material misstatements due to error or fraud may not
be
prevented or detected on a timely basis. Also, projections of any
evaluation of the effectiveness of the internal control over financial
reporting to future periods are subject to the risk that the controls
may
become inadequate because of changes in conditions, or that the
degree of
compliance with the policies or procedures may deteriorate.
In
our opinion, management's assessment that the Company maintained
effective
internal control over financial reporting as of December 31, 2006,
is
fairly stated, in all material respects, based on the criteria
established
in Internal
Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission.
Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December
31,
2006, based on the criteria established in Internal
Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission.
We
have also audited, in accordance with the standards of the Public
Company
Accounting Oversight Board (United States), the consolidated financial
statements and financial statement schedule, as of and for the
year ended
December 31, 2006 of the Company and our report dated February
15, 2007
expressed an unqualified opinion on those consolidated financial
statements and financial statement schedule.
/s/
Deloitte & Touche LLP
Certified
Public Accountants
Tampa,
Florida
February
15, 2007
|
WELLCARE
HEALTH PLANS, INC.
|
||
Date:
February 15, 2007
|
By:
|
/s/
Todd S. Farha
|
Todd
S. Farha
|
||
Chairman,
President and Chief Executive
Officer
|
Signature
|
|
Title
|
Date
|
|
/s/
Todd S. Farha
|
Chairman,
President and Chief Executive Officer
|
February
15, 2007
|
||
Todd
S. Farha
|
(Principal
Executive Officer)
|
|||
/s/
Paul L. Behrens
|
Chief
Financial Officer (Principal Financial and
|
February
15, 2007
|
||
Paul
L. Behrens
|
Accounting
Officer)
|
|||
/s/
Regina Herzlinger
|
Director
|
February
15, 2007
|
||
Regina
Herzlinger
|
||||
/s/
Kevin Hickey
|
Director
|
February
15, 2007
|
||
Kevin
Hickey
|
||||
/s/
Alif Hourani
|
Director
|
February
15, 2007
|
||
Alif
Hourani
|
||||
/s/
Ruben Jose King-Shaw, Jr.
|
Director
|
February
15, 2007
|
||
Ruben
Jose King-Shaw, Jr.
|
||||
/s/
Christian P. Michalik
|
Director
|
February
15, 2007
|
||
Christian
P. Michalik
|
||||
/s/
Neal Moszkowski
|
Director
|
February
15, 2007
|
||
Neal
Moszkowski
|
||||
/s/
Jane Swift
|
Director
|
February
15, 2007
|
||
Jane
Swift
|
Page
|
|
December
31,
|
December
31,
|
||||||
|
2006
|
2005
|
|||||
Assets
|
|
|
|||||
Current
Assets:
|
|
|
|||||
Cash
and cash equivalents
|
$
|
964,542
|
$
|
421,766
|
|||
Investments
|
126,422
|
94,160
|
|||||
Premiums
and other receivables, net
|
102,465
|
47,567
|
|||||
Other
receivables from government partners, net
|
40,902
|
-
|
|||||
Prepaid
expenses and other current assets
|
87,507
|
19,036
|
|||||
Income
taxes receivable
|
-
|
11,575
|
|||||
Deferred
income taxes
|
16,576
|
11,353
|
|||||
Total
current assets
|
1,338,414
|
605,457
|
|||||
Property,
equipment, and capitalized software, net
|
62,005
|
37,057
|
|||||
Goodwill
|
189,470
|
185,779
|
|||||
Other
intangibles, net
|
18,855
|
21,668
|
|||||
Restricted
investment assets
|
53,382
|
37,308
|
|||||
Other
assets
|
1,839
|
220
|
|||||
Total
Assets
|
$
|
1,663,965
|
$
|
887,489
|
|||
Liabilities
and Stockholders' Equity
|
|
|
|||||
Current
Liabilities:
|
|
|
|||||
Medical
benefits payable
|
$
|
465,581
|
$
|
241,375
|
|||
Unearned
premiums
|
23,806
|
12,606
|
|||||
Accounts
payable
|
8,015
|
4,867
|
|||||
Other
accrued expenses
|
172,043
|
52,976
|
|||||
Other
payables to government partners
|
104,076
|
-
|
|||||
Taxes
payable
|
13,181
|
-
|
|||||
Deferred
income taxes
|
1,735
|
1,260
|
|||||
Current
notes payable to related party
|
-
|
25,000
|
|||||
Current
portion of long-term debt
|
1,600
|
1,600
|
|||||
Funds
held for the benefit of members
|
113,652
|
-
|
|||||
Other
current liabilities
|
418
|
358
|
|||||
Total
current liabilities
|
904,107
|
340,042
|
|||||
Long-term
debt
|
154,021
|
155,461
|
|||||
Deferred
income taxes
|
34,666
|
16,577
|
|||||
Other
liabilities
|
8,116
|
5,285
|
|||||
Total
liabilities
|
1,100,910
|
517,365
|
|||||
Commitments
and contingencies (see Note 10)
|
|
|
|||||
Stockholders'
Equity:
|
|
|
|||||
Preferred
stock, $0.01 par value (20,000,000 authorized, no shares issued
or
outstanding)
|
-
|
-
|
|||||
Common
stock, $0.01 par value (100,000,000 authorized,40,900,134 and 39,428,032
shares
|
|
|
|||||
issued
and outstanding at December 31, 2006 and 2005,
respectively)
|
409
|
394
|
|||||
Paid-in
capital
|
294,443
|
240,337
|
|||||
Retained
earnings
|
268,559
|
129,372
|
|||||
Accumulated
other comprehensive (expense) income
|
(356
|
)
|
21
|
||||
Total
stockholders' equity
|
563,055
|
370,124
|
|||||
Total
Liabilities and Stockholders' Equity
|
$
|
1,663,965
|
$
|
887,489
|
|||
|
|
|
Year
Ended December 31, 2006
|
|
Year
Ended December 31, 2005
|
|
Year
Ended December 31, 2004
|
|||||
Revenues:
|
||||||||||
Premium
|
$
|
3,713,045
|
$
|
1,862,497
|
$
|
1,390,896
|
||||
Investment
and other income
|
49,881
|
17,042
|
4,307
|
|||||||
Total
revenues
|
3,762,926
|
1,879,539
|
1,395,203
|
|||||||
Expenses:
|
||||||||||
Medical
benefits
|
3,012,163
|
1,512,109
|
1,125,560
|
|||||||
Selling,
general and administrative
|
492,808
|
259,491
|
171,257
|
|||||||
Depreciation
and amortization
|
17,170
|
9,204
|
7,715
|
|||||||
Interest
|
14,087
|
13,562
|
10,165
|
|||||||
Total
expenses
|
3,536,228
|
1,794,366
|
1,314,697
|
|||||||
Income
before income taxes
|
226,698
|
85,173
|
80,506
|
|||||||
Income
tax expense
|
87,511
|
33,245
|
31,256
|
|||||||
Net
income
|
$
|
139,187
|
$
|
51,928
|
$
|
49,250
|
||||
Net
income per share (see Note 3):
|
||||||||||
Net
income per share — basic
|
$
|
3.54
|
$
|
1.38
|
$
|
1.70
|
||||
Net
income per share — diluted
|
$
|
3.43
|
$
|
1.32
|
$
|
1.56
|
Common
Stock
|
Common
Units Outstanding
|
Paid
in
|
Retained
|
Accumulated
Other Comprehensive
|
Total
Stockholders’/ Members’
|
|||||||||||||||||||||||
|
Shares
|
Amount
|
Class
A
|
Class
B
|
Class
C
|
Capital
|
Earnings
|
Income
|
Equity
|
|||||||||||||||||||
Balance
at December 31, 2003
|
—
|
$
|
—
|
23,507,839
|
—
|
4,842,508
|
$
|
71,382
|
$
|
28,194
|
$
|
1
|
$
|
99,577
|
||||||||||||||
Issuance
of common units
|
22,386
|
2,287,037
|
95
|
95
|
||||||||||||||||||||||||
Forfeiture
of common units
|
(35,000
|
)
|
—
|
|||||||||||||||||||||||||
Issuance
of common stock
|
8,833,333
|
89
|
157,079
|
157,168
|
||||||||||||||||||||||||
Common
stock issued for stock options
|
21,565
|
83
|
83
|
|||||||||||||||||||||||||
Conversion
of common units to common stock
|
24,902,513
|
297
|
(23,530,225
|
)
|
(2,287,037
|
)
|
(4,807,508
|
)
|
297
|
|||||||||||||||||||
Conversion
of Class A Common Yield to Common stock
|
4,833,244
|
—
|
—
|
|||||||||||||||||||||||||
Equity-based
compensation expense
|
2,165
|
2,165
|
||||||||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
49,250
|
49,250
|
||||||||||||||||||||||||||
Change
in unrealized gain/loss on investments, net of deferred taxes
of $1
|
(4
|
)
|
(4
|
)
|
||||||||||||||||||||||||
Comprehensive
income
|
49,246
|
|||||||||||||||||||||||||||
Balance
at December 31, 2004
|
38,590,655
|
$
|
386
|
—
|
—
|
—
|
$
|
230,804
|
$
|
77,444
|
$
|
(3
|
)
|
$
|
308,631
|
Common
Stock
|
Paid
in
|
Retained
|
Accumulated
Other Comprehensive
|
Total
Stockholders’
|
|||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
|
Equity
|
||||||||||||||
Balance
at December 31, 2004
|
38,590,655
|
$
|
386
|
$
|
230,804
|
$
|
77,444
|
$
|
(3
|
)
|
$
|
308,631
|
|||||||
Common
stock issued for stock options
|
386,819
|
4
|
3,842
|
3,846
|
|||||||||||||||
Purchase
of treasury stock
|
(7,780
|
)
|
(1
|
)
|
(228
|
)
|
(229
|
)
|
|||||||||||
Restricted
stock grants (forfeitures), net
|
458,338
|
5
|
5,650
|
5,655
|
|||||||||||||||
Other
Equity-based compensation expense
|
269
|
269
|
|||||||||||||||||
Comprehensive
income:
|
|||||||||||||||||||
Net
income
|
51,928
|
51,928
|
|||||||||||||||||
Change
in unrealized gain/loss on investments, net of deferred taxes of
$15
|
24
|
24
|
|||||||||||||||||
Comprehensive
income
|
51,952
|
||||||||||||||||||
Balance
at December 31, 2005
|
39,428,032
|
$
|
394
|
$
|
240,337
|
$
|
129,372
|
$
|
21
|
$
|
370,124
|
Common
Stock
|
Paid
in
|
Retained
|
Accumulated
Other Comprehensive
|
Total
Stockholders’
|
|||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
|
Equity
|
||||||||||||||
Balance
at December 31, 2005
|
39,428,032
|
$
|
394
|
$
|
240,337
|
$
|
129,372
|
$
|
21
|
$
|
370,124
|
||||||||
Common
stock issued for stock options
|
554,192
|
6
|
8,994
|
9,000
|
|||||||||||||||
Issuance
of common stock
|
580,205
|
6
|
21,989
|
21,995
|
|||||||||||||||
Purchase
of treasury stock
|
(17,037
|
)
|
(1
|
)
|
(721
|
)
|
(722
|
)
|
|||||||||||
Restricted
stock grants (forfeitures), net
|
354,742
|
4
|
6,847
|
6,851
|
|||||||||||||||
Other
Equity-based compensation expense
|
13,348
|
13,348
|
|||||||||||||||||
Incremental
tax benefit from option exercises
|
3,649
|
3,649
|
|||||||||||||||||
Comprehensive
income:
|
|||||||||||||||||||
Net
income
|
139,187
|
139,187
|
|||||||||||||||||
Change
in unrealized gain/loss on investments, net of deferred taxes of
$165
|
(377
|
)
|
(377
|
)
|
|||||||||||||||
Comprehensive
income
|
138,810
|
||||||||||||||||||
Balance
at December 31, 2006
|
40,900,134
|
$
|
409
|
$
|
294,443
|
$
|
268,559
|
$
|
(356
|
)
|
$
|
563,055
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
|||||
|
|
2006
|
|
2005
|
|
2004
|
||||
Cash
from operating activities:
|
||||||||||
Net
income
|
$
|
139,187
|
$
|
51,928
|
$
|
49,250
|
||||
Adjustments
to reconcile net income to
net cash provided by operating activities:
|
||||||||||
Depreciation
and amortization expense
|
17,170
|
9,204
|
7,715
|
|||||||
Disposal
of property and equipment
|
1,658
|
42
|
-
|
|||||||
Gain
on extinguishment of debt
|
(1,000
|
)
|
-
|
(2,697
|
)
|
|||||
Realized
gain on investments
|
(377
|
)
|
-
|
-
|
||||||
Equity-based
compensation expense, net of tax benefit
|
23,848
|
5,959
|
2,044
|
|||||||
Incremental
tax benefit received for option exercises
|
(3,649
|
)
|
-
|
-
|
||||||
Accreted
interest
|
160
|
160
|
378
|
|||||||
Deferred
taxes, net
|
13,341
|
7,028
|
(2,221
|
)
|
||||||
Provision
for doubtful receivables
|
17,429
|
1,635
|
1,195
|
|||||||
Changes
in operating accounts, net of effect of acquisitions:
|
||||||||||
Premiums
and other receivables
|
(74,592
|
)
|
2,885
|
(23,408
|
)
|
|||||
Other
receivables from government partners
|
(40,902
|
)
|
-
|
-
|
||||||
Prepaid
expenses and other current assets
|
(66,206
|
)
|
(11,720
|
)
|
(6,680
|
)
|
||||
Medical
benefits payable
|
224,206
|
50,780
|
24,138
|
|||||||
Unearned
premiums
|
11,200
|
(50,843
|
)
|
(12,901
|
)
|
|||||
Accounts
payable and other accrued expenses
|
121,077
|
22,425
|
2,456
|
|||||||
Other
payables to government partners
|
104,076
|
-
|
-
|
|||||||
Taxes
receivable, net
|
24,756
|
(9,960
|
)
|
9,913
|
||||||
Other,
net
|
1,272
|
1,924
|
(420
|
)
|
||||||
Net
cash provided by operations
|
512,654
|
81,447
|
48,762
|
|||||||
Cash
from investing activities:
|
||||||||||
Purchase
of business, net of cash acquired
|
(7,976
|
)
|
(5,931
|
)
|
(36,542
|
)
|
||||
Proceeds
from sale and maturities of investments
|
113,536
|
208,457
|
103,434
|
|||||||
Purchases
of investments
|
(145,798
|
)
|
(227,078
|
)
|
(145,174
|
)
|
||||
Purchases
and dispositions of restricted investments, net
|
(16,074
|
)
|
(5,835
|
)
|
(9,505
|
)
|
||||
Additions
to property, equipment, and capitalized software
|
(35,540
|
)
|
(28,943
|
)
|
(8,679
|
)
|
||||
Net
cash used in investing activities
|
(91,852
|
)
|
(59,330
|
)
|
(96,466
|
)
|
||||
Cash
from financing activities:
|
||||||||||
Contribution
of capital
|
-
|
-
|
95
|
|||||||
Proceeds
from options exercised
|
9,000
|
3,850
|
82
|
|||||||
Purchase
of treasury stock
|
(722
|
)
|
(228
|
)
|
-
|
|||||
Incremental
tax benefit from option exercises
|
3,649
|
-
|
-
|
|||||||
Proceeds
from debt issuance, net
|
-
|
-
|
159,200
|
|||||||
Payments
on debt
|
(25,600
|
)
|
(1,600
|
)
|
(108,833
|
)
|
||||
Proceeds
from initial and secondary public offerings, net
|
21,995
|
-
|
157,466
|
|||||||
Funds
held for the benefit of members
|
113,652
|
-
|
-
|
|||||||
Net
cash provided by financing activities
|
121,974
|
2,022
|
208,010
|
|||||||
Cash
and cash equivalents:
|
||||||||||
Increase
during year
|
542,776
|
24,139
|
160,306
|
|||||||
Balance
at beginning of year
|
421,766
|
397,627
|
237,321
|
|||||||
Balance
at end of year
|
$
|
964,542
|
$
|
421,766
|
$
|
397,627
|
||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION -
|
||||||||||
Cash
paid for taxes
|
$
|
50,266
|
$
|
33,150
|
$
|
27,151
|
||||
Cash
paid for interest
|
$
|
13,539
|
$
|
12,983
|
$
|
11,343
|
||||
Year
Ended
December
31, 2005
|
Year
Ended
December
31, 2004
|
|||
Net
income, as reported
|
$51,928
|
$49,250
|
||
Total
stock-based employee compensation expense included in the determination
of
reported net income, net of related tax effect of $1,735 and $790,
respectively.
|
2,713
|
1,256
|
||
Total
stock-based compensation expense determined under fair value based
method
for all awards, net of related tax effects of $6,025 and $2,132,
respectively.
|
(9,424)
|
(3,392)
|
||
Pro
forma net income for calculation of basic and diluted earnings per
share
|
$45,217
|
$47,114
|
||
Net
income per common share:
|
||||
Basic-as
reported
|
$1.38
|
$1.70
|
||
Basic-pro
forma
|
$1.20
|
$1.62
|
||
Diluted-as
reported
|
$1.32
|
$1.56
|
||
Diluted-pro
forma
|
$1.15
|
$1.51
|
Year
Ended December
31
|
|||||||
2006
|
2005
|
||||||
Weighted
average risk-free interest rate
|
4.89
|
%
|
4.00
|
%
|
|||
Range
of risk-free rates
|
4.28%-5.22
|
%
|
3.65%-4.50
|
%
|
|||
Expected
term (in years)
|
3.91
|
4.53
|
|||||
Expected
dividend yield
|
0
|
%
|
0
|
%
|
|||
Expected
volatility
|
41.61
|
%
|
46.4
|
%
|
Shares
|
Weighted-Average
Exercise Price
|
Weighted-Average
Remaining Contractual Life (Years)
|
Aggregate
Intrinsic Value
|
||||||||||
Outstanding
at January 1, 2006
|
|
|
2,834,196
|
|
$
|
21.32
|
|
|
|
|
|
|
|
Options
granted
|
|
|
977,817
|
|
|
48.64
|
|
|
|
|
|
|
|
Options
exercised
|
|
|
(554,192)
|
|
|
16.21
|
|
|
|
|
|
|
|
Options
cancelled
|
|
|
(351,461)
|
|
|
28.26
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2006
|
|
|
2,906,360
|
|
|
30.64
|
|
|
6.8
|
|
$
|
89,065
|
|
Exercisable
at December 31, 2006
|
|
|
956,790
|
|
|
20.54
|
|
|
6.9
|
|
$
|
19,656
|
|
Shares
|
Weighted-Average
Grant-Date Fair Value
|
|||||
Nonvested
balance at January 1, 2006
|
1,070,308
|
$
|
16.36
|
||||
Changes
during the period:
|
|||||||
Shares
granted
|
407,479
|
45.36
|
|||||
Shares
vested
|
(506,157
|
)
|
5.39
|
||||
Shares
forfeited
|
(65,118
|
)
|
24.34
|
||||
Nonvested
balance at December 31, 2006
|
906,512
|
34.54
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
Year
Ended
December
31,
2004
|
||||||||
Numerator:
|
||||||||||
Net
income - basic and diluted
|
$
|
139,187
|
$
|
51,928
|
$
|
49,250
|
||||
Denominator:
|
||||||||||
Weighted
average common shares outstanding - basic
|
39,335,313
|
37,714,286
|
29,011,115
|
|||||||
Dilutive
effect of:
|
||||||||||
Unvested
restricted common shares
|
486,262
|
754,087
|
2,077,990
|
|||||||
Stock
options
|
799,896
|
824,971
|
506,075
|
|||||||
Weighted
average common shares outstanding - diluted
|
40,621,471
|
39,293,344
|
31,595,180
|
|||||||
Net
income per common share - basic
|
$
|
3.54
|
$
|
1.38
|
$
|
1.70
|
||||
Net
income per common share - diluted
|
$
|
3.43
|
$
|
1.32
|
$
|
1.56
|
Year
Ended
December
31,
2006
|
Year
Ended
December
31,
2005
|
Year
Ended
December
31,
2004
|
||||||||
Balances
as of beginning of period
|
$
|
241,375
|
$
|
190,595
|
$
|
148,297
|
||||
Opening
medical benefits payable related to Harmony acquisition
|
—
|
—
|
18,160
|
|||||||
Medical
benefits incurred related to:
|
||||||||||
Current
period
|
3,059,300
|
1,538,495
|
1,151,948
|
|||||||
Prior
periods
|
(47,137
|
)
|
(26,386
|
)
|
(26,388
|
)
|
||||
Total
|
3,012,163
|
1,512,109
|
1,125,560
|
|||||||
Medical
benefits paid related to:
|
||||||||||
Current
period
|
(2,610,713
|
)
|
(1,331,914
|
)
|
(985,844
|
)
|
||||
Prior
periods
|
(177,244
|
)
|
(129,415
|
)
|
(115,578
|
)
|
||||
Total
|
(2,787,957
|
)
|
(1,461,329
|
)
|
(1,101,422
|
)
|
||||
Balances
as of end of period
|
$
|
465,581
|
$
|
241,375
|
$
|
190,595
|
Balance
as of December 31, 2004
|
$
|
180,848
|
||
Goodwill
increase during the year ended 2005
|
4,931
|
|||
Balance
as of December 31, 2005
|
185,779
|
|||
Goodwill
increase during the year ended 2006
|
3,691
|
|||
Balance
as of December 31, 2006
|
$
|
189,470
|
December
31,
|
|||||||||||||
2006
|
2005
|
||||||||||||
Gross
Carrying Amount
|
Accumulated
Amortization
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
||||||||||
Provider
network
|
$
|
4,878
|
$
|
(2,955
|
)
|
$
|
5,517
|
$
|
(2,806
|
)
|
|||
Membership
contracts
|
11,960
|
(11,452
|
)
|
11,960
|
(9,275
|
)
|
|||||||
Trademark
|
10,443
|
(2,630
|
)
|
10,443
|
(1,937
|
)
|
|||||||
Non-compete
agreements
|
3,972
|
(2,967
|
)
|
4,433
|
(2,296
|
)
|
|||||||
Licenses
and permits
|
5,270
|
(401
|
)
|
985
|
(224
|
)
|
|||||||
State
contracts
|
3,336
|
(599
|
)
|
5,467
|
(599
|
)
|
|||||||
$
|
39,859
|
$
|
(21,004
|
)
|
$
|
38,805
|
$
|
(17,137
|
)
|
2007
|
$
|
2,566
|
||
2008
|
1,790
|
|||
2009
|
1,530
|
|||
2010
|
1,530
|
|||
2011
|
1,530
|
|||
2012
and thereafter
|
9,909
|
|||
$
|
18,855
|
Weighted-Average
Amortization
Period
(In
Years)
|
||||
Provider
network
|
11.2
|
|||
Membership
contracts
|
4.5
|
|||
Trademark
|
15.1
|
|||
Non-compete
agreements
|
4.9
|
|||
Licenses
and permits
|
15.0
|
|||
State
contracts
|
15.0
|
|||
Total
intangibles
|
10.4
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||||
December
31, 2006
|
|||||||||||||
Available
for sale:
|
|||||||||||||
Municipal
variable rate bonds
|
$
|
95,938
|
$
|
—
|
$
|
—
|
$
|
95,938
|
|||||
Certificates
of deposit
|
30,484
|
—
|
—
|
30,484
|
|||||||||
$
|
126,422
|
$
|
—
|
$
|
—
|
$
|
126,422
|
||||||
December
31, 2005
|
|||||||||||||
Available
for sale:
|
|||||||||||||
Municipal
variable rate bonds
|
$
|
9,545
|
$
|
—
|
$
|
—
|
$
|
9,545
|
|||||
Certificates
of deposit
|
58,823
|
—
|
—
|
58,823
|
|||||||||
Treasury
bills
|
25,790
|
2
|
—
|
25,792
|
|||||||||
$
|
94,158
|
$
|
2
|
$
|
—
|
$
|
94,160
|
Total
|
Within
1
Year
|
1
Through 5
Years
|
5
Through 10
Years
|
Thereafter
|
||||||||||||
December
31, 2006
|
||||||||||||||||
Available
for sale:
|
||||||||||||||||
Municipal
variable rate bonds
|
$
|
95,938
|
$
|
430
|
$
|
—
|
$
|
—
|
$
|
95,508
|
||||||
Certificates
of deposit
|
30,484
|
30,484
|
—
|
—
|
—
|
|||||||||||
$
|
126,422
|
$
|
30,914
|
$
|
—
|
$
|
—
|
$
|
95,508
|
|||||||
December
31, 2005
|
||||||||||||||||
Available
for sale:
|
||||||||||||||||
Municipal
variable rate bonds
|
$
|
9,545
|
$
|
—
|
$
|
770
|
$
|
—
|
$
|
8,775
|
||||||
Certificates
of deposit
|
58,823
|
58,201
|
622
|
—
|
—
|
|||||||||||
Treasury
bills
|
25,792
|
25,792
|
—
|
—
|
—
|
|||||||||||
$
|
94,160
|
$
|
83,993
|
$
|
1,392
|
$
|
—
|
$
|
8,775
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||||
December
31, 2006
|
|||||||||||||
Cash
|
$
|
3,650
|
$
|
—
|
$
|
—
|
$
|
3,650
|
|||||
Certificates
of deposit
|
1,588
|
—
|
—
|
1,588
|
|||||||||
Treasury
bonds
|
536
|
65
|
—
|
601
|
|||||||||
Money
market funds
|
36,814
|
—
|
—
|
36,814
|
|||||||||
Treasury
bills
|
10,739
|
—
|
(10
|
)
|
10,729
|
||||||||
$
|
53,327
|
$
|
65
|
$
|
(10
|
)
|
$
|
53,382
|
|||||
December
31, 2005
|
|||||||||||||
Certificates
of deposit
|
$
|
5,042
|
$
|
—
|
$
|
—
|
$
|
5,042
|
|||||
Municipal
bonds
|
3,307
|
19
|
—
|
3,326
|
|||||||||
Money
market funds
|
27,322
|
—
|
—
|
27,322
|
|||||||||
Treasury
bills
|
1,618
|
—
|
—
|
1,618
|
|||||||||
$
|
37,289
|
$
|
19
|
$
|
—
|
$
|
37,308
|
Total
|
Within
1
Year
|
1
Through 5
Years
|
5
Through 10
Years
|
Thereafter
|
||||||||||||
December
31, 2006
|
||||||||||||||||
Available
for sale:
|
||||||||||||||||
Cash
|
$
|
3,650
|
$
|
3,650
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Certificates
of deposit
|
1,588
|
1,588
|
—
|
—
|
—
|
|||||||||||
Treasury
bonds
|
601
|
—
|
—
|
601
|
—
|
|||||||||||
Money
market funds
|
36,814
|
36,814
|
—
|
—
|
—
|
|||||||||||
Treasury
bills
|
10,729
|
5,999
|
4,172
|
558
|
—
|
|||||||||||
$
|
53,382
|
$
|
48,051
|
$
|
4,172
|
$
|
1,159
|
$
|
—
|
December
31,
|
|||||||
2006
|
2005
|
||||||
Leasehold
improvements
|
$
8,807
|
$
5,859
|
|||||
Computer
equipment and software
|
55,782
|
27,561
|
|||||
Furniture
and equipment
|
14,655
|
10,489
|
|||||
79,244
|
43,909
|
||||||
Less
accumulated depreciation
|
(17,239
|
)
|
(6,852
|
)
|
|||
$
|
62,005
|
$
|
37,057
|
December
31,
2006
|
December
31,
2005
|
||||||
Line
of credit
|
$
|
—
|
$
|
—
|
|||
Note
payable to related party
|
—
|
25,000
|
|||||
Term
loan facility
|
155,621
|
157,061
|
|||||
Total
|
155,621
|
182,061
|
|||||
Less:
current portion of long-term debt
|
(1,600
|
)
|
(26,600
|
)
|
|||
$
|
154,021
|
$
|
155,461
|
2007
|
$
1,600
|
|||
2008
|
1,600
|
|||
2009
|
152,421
|
|||
$
|
155,621
|
2007
|
$
|
11,906
|
||
2008
|
12,247
|
|||
2009
|
12,356
|
|||
2010
|
11,163
|
|||
2011
|
9,115
|
|||
2012
and thereafter
|
16,307
|
|||
$
|
73,094
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Current:
|
||||||||||
Federal
|
$
|
62,643
|
$
|
20,100
|
$
|
23,411
|
||||
State
|
10,143
|
4,531
|
4,065
|
|||||||
72,786
|
24,631
|
27,476
|
||||||||
Deferred:
|
||||||||||
Federal
|
13,063
|
7,624
|
3,335
|
|||||||
State
|
1,662
|
990
|
445
|
|||||||
14,725
|
8,614
|
3,780
|
||||||||
Total
|
$
|
87,511
|
$
|
33,245
|
$
|
31,256
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Income
tax expense at statutory rate
|
$
|
79,344
|
$
|
29,811
|
$
|
28,176
|
||||
Increase
(reduction) resulting from:
|
||||||||||
State
income tax, net of federal benefit
|
8,256
|
3,936
|
2,932
|
|||||||
Provision
to return differences
|
(154
|
)
|
(369
|
)
|
—
|
|||||
Effect
on non-deductible expenses and other, net
|
65
|
(133
|
)
|
148
|
||||||
Total
income tax expense
|
$
|
87,511
|
$
|
33,245
|
$
|
31,256
|
December
31,
|
|||||||
2006
|
2005
|
||||||
Deferred
tax assets:
|
|||||||
Medical
and other benefits discounting
|
$
|
7,160
|
$
|
8,257
|
|||
Unearned
premium discounting
|
1,820
|
926
|
|||||
Tax
basis assets
|
2,268
|
—
|
|||||
Accrued
expenses and other
|
5,328
|
2,170
|
|||||
16,576
|
11,353
|
||||||
Deferred
tax liabilities:
|
|||||||
Goodwill,
other intangibles and other
|
21,385
|
16,577
|
|||||
Depreciation
|
3,034
|
—
|
|||||
Software
Development Costs
|
10,247
|
—
|
|||||
Prepaid
liabilities
|
1,735
|
1,260
|
|||||
36,401
|
17,837
|
||||||
Net
deferred tax asset (liability)
|
($19,825
|
)
|
($6,484
|
)
|
Year
Ended
December
31, 2006
|
Year
Ended
December
31, 2005
|
Year
Ended
December
31, 2004
|
||||||||
Premium
Revenue:
|
||||||||||
Medicaid
|
$
|
1,927,616
|
$
|
1,357,995
|
$
|
1,055,000
|
||||
Medicare
|
1,785,429
|
504,502
|
334,760
|
|||||||
Corporate
and other
|
—
|
—
|
1,136
|
|||||||
3,713,045
|
1,862,497
|
1,390,896
|
||||||||
Medical
benefits expense:
|
||||||||||
Medicaid
|
1,556,466
|
1,099,901
|
851,153
|
|||||||
Medicare
|
1,455,697
|
412,208
|
275,348
|
|||||||
Corporate
and other
|
—
|
—
|
(941
|
)
|
||||||
3,012,163
|
1,512,109
|
1,125,560
|
||||||||
Gross
Margin:
|
||||||||||
Medicaid
|
371,150
|
258,094
|
203,847
|
|||||||
Medicare
|
329,732
|
92,294
|
59,412
|
|||||||
Corporate
and other
|
—
|
—
|
2,077
|
|||||||
$
|
700,882
|
$
|
350,388
|
$
|
265,336
|
For
the Three-Month Period Ended
|
|||||||||||||
|
March
31,
2006
|
|
|
June
30,
2006
|
|
|
September
30,
2006
|
|
|
December
31,
2006
|
|||
Total
revenues
|
$
|
730,385
|
$
|
852,811
|
$
|
1,008,561
|
$
|
1,171,170
|
|||||
Income
before income taxes
|
27,562
|
36,353
|
70,724
|
92,058
|
|||||||||
Net
income
|
$
|
16,768
|
$
|
22,174
|
43,281
|
56,962
|
|||||||
Income
per share - basic
|
$
|
0.43
|
$
|
0.56
|
$
|
1.09
|
$
|
1.43
|
|||||
Income
per share - diluted
|
$
|
0.42
|
$
|
0.55
|
$
|
1.06
|
$
|
1.38
|
|||||
Period
end membership
|
1,542,500
|
2,011,000
|
2,165,000
|
2,258,000
|
For
the Three-Month Period Ended
|
|||||||||||||
March
31,
2005
|
June
30,
2005
|
September
30,
2005
|
December
31,
2005
|
||||||||||
Total
revenues
|
$
|
418,881
|
$
|
453,676
|
$
|
495,455
|
$
|
511,527
|
|||||
Income
before income taxes
|
17,460
|
23,165
|
26,754
|
17,794
|
|||||||||
Net
income
|
$
|
10,640
|
$
|
14,154
|
$
|
16,295
|
$
|
10,839
|
|||||
Income
per share - basic
|
$
|
0.29
|
$
|
0.38
|
$
|
0.43
|
$
|
0.28
|
|||||
Income
per share - diluted
|
$
|
0.27
|
$
|
0.36
|
$
|
0.41
|
$
|
0.27
|
|||||
Period
end membership
|
764,600
|
808,000
|
862,000
|
855,000
|
Balance
at
Beginning
of
Period
|
Charged
to
Costs
and
Expenses
|
Deduction
|
Balance
at
End
of
Period
|
||||||||||
Year
Ended
|
|||||||||||||
December
31, 2006
|
|||||||||||||
Deducted
from assets:
|
|||||||||||||
Allowance
for uncollectible accounts:
|
|||||||||||||
Medical
Advances
|
$
|
5,939
|
$
|
—
|
$
|
2,265
|
$
|
3,674
|
|||||
Premiums
receivable
|
1,718
|
18,094
|
—
|
19,812
|
|||||||||
Other
receivables from government partners
|
—
|
1,600
|
—
|
1,600
|
|||||||||
$
|
7,657
|
$
|
19,694
|
$
|
2,265
|
$
|
25,086
|
||||||
Year
Ended
|
|||||||||||||
December
31, 2005
|
|||||||||||||
Deducted
from assets:
|
|||||||||||||
Allowance
for uncollectible accounts:
|
|||||||||||||
Medical
Advances
|
$
|
6,022
|
$
|
988
|
$
|
1,071
|
$
|
5,939
|
|||||
Premium
Receivable
|
—
|
1,718
|
—
|
1,718
|
|||||||||
$
|
6,022
|
$
|
2,706
|
$
|
1,071
|
$
|
7,657
|
||||||
Year
Ended
|
|||||||||||||
December
31, 2004
|
|||||||||||||
Deducted
from assets:
|
|||||||||||||
Allowance
for uncollectible accounts:
|
|||||||||||||
Medical
Advances
|
$
|
4,827
|
$
|
1,858
|
$
|
663
|
$
|
6,022
|
INCORPORATED
BY REFERENCE
|
|||||
Exhibit
Number
|
Description
|
Form
|
Filing
Date with
SEC
|
Exhibit
Number
|
|
2.1
|
Agreement
and Plan of Merger, dated as of February 12, 2004, between WellCare
Holdings, LLC and WellCare Group, Inc.
|
S-1/A
|
June
8, 2004
|
2.1
|
|
3.1
|
Amended
and Restated Certificate of Incorporation
|
10-Q
|
August
13, 2004
|
3.1
|
|
3.2
|
Amended
and Restated Bylaws of WellCare Health Plans, Inc.
|
10-Q
|
August
13, 2004
|
3.2
|
|
4.1
|
Specimen
common stock certificate
|
S-1/A
|
June
29, 2004
|
4.1
|
|
10.1
|
Purchase
Agreement, dated as of May 17, 2002, by and among WellCare Holdings,
LLC,
WellCare Acquisition Company, the stockholders listed on the signature
page thereto, Well Care HMO, Inc., HealthEase of Florida, Inc.,
Comprehensive Health Management of Florida, Inc. and Comprehensive
Health
Management, L.C.
|
S-1
|
February
13, 2004
|
10.5
|
|
10.2
|
Registration
Rights Agreement, dated as of September 6, 2002, by and among WellCare
Holdings, LLC and certain equity holders
|
S-1
|
February
13, 2004
|
10.13
|
|
10.3
|
WellCare
Holdings, LLC 2002 Senior Executive Equity Plan*
|
S-1
|
February
13, 2004
|
10.14
|
|
10.4
|
Form
of Subscription Agreement under 2002 Senior Executive Equity
Plan*
|
S-1
|
February
13, 2004
|
10.15
|
|
10.5
|
Form
of Restricted Stock Agreement under Registrant’s 2004 Equity Incentive
Plan*
|
8-K
|
March
17, 2005
|
10.1
|
|
10.6
|
Form
of Director Subscription Agreement*
|
10-K
|
February
14, 2006
|
10.14
|
|
10.7
|
WellCare
Holdings, LLC 2002 Employee Option Plan*
|
S-1
|
February
13, 2004
|
10.16
|
|
10.8
|
Form
of Time Vesting Option Agreement under 2002 Employee Option
Plan*
|
S-1
|
February
13, 2004
|
10.17
|
|
10.9
|
Registrant’s
2004 Equity Incentive Plan*
|
10-Q
|
August
13, 2004
|
10.4
|
|
10.10
|
Form
of Non-Qualified Stock Option Agreement under Registrant’s 2004 Equity
Incentive Plan*
|
10-Q
|
August
13, 2004
|
10.5
|
|
10.11
|
Form
of Incentive Stock Option Agreement under Registrant’s 2004 Equity
Incentive Plan*
|
10-Q
|
August
13, 2004
|
10.6
|
|
10.12
|
Form
of Non-Plan Time Vesting Option Agreement*
|
10-K
|
February
14, 2006
|
10.20
|
|
10.13
|
2005
Employee Stock Purchase Plan (No. 333-120257)*
|
S-8
|
November
5, 2004
|
4.7
|
|
10.14
|
Amendment
Number 1 to 2005 Employee Stock Purchase Plan*
|
8-K
|
September
29, 2006
|
10.1
|
|
10.15
|
Amended
and Restated Employment Agreement, dated as of June 6, 2005, by and
among
WellCare Health Plans, Inc., Comprehensive Health Management, Inc.
and
Todd S. Farha*
|
8-K
|
June
8, 2005
|
10.1
|
|
10.16
|
Non-Qualified
Stock Option Agreement, dated as of June 6, 2005, by and between
WellCare
Health Plans, Inc. and Todd S. Farha*
|
8-K
|
June
8, 2005
|
10.2
|
|
10.17
|
Restricted
Stock Award Agreement, dated as of June 6, 2005, by and between WellCare
Health Plans, Inc. and Todd S. Farha*
|
8-K
|
June
8, 2005
|
10.3
|
|
10.18
|
Performance
Share Award Agreement, dated as of June 6, 2005, by and between WellCare
Health Plans, Inc. and Todd S. Farha*
|
8-K
|
June
8, 2005
|
10.4
|
|
10.19
|
Employment
Agreement, dated as of November 18, 2002, among WellCare Health Plans,
Inc., Comprehensive Health Management, Inc. and Thaddeus
Bereday*
|
S-1/A
|
June
29, 2004
|
10.22
|
|
10.20
|
Employment
Agreement dated as of September 15, 2003, among WellCare Health Plans,
Inc., Comprehensive Health Management, Inc. and Paul
Behrens*
|
S-1/A
|
June
29, 2004
|
10.23
|
|
10.21
|
Form
of Indemnification Agreement*
|
S-1/A
|
June
8, 2004
|
10.24
|
|
10.22
|
Offer
letter to Imtiaz (MT) Sattaur, dated December 5,
2003*
|
10-Q
|
May
10, 2005
|
10.18
|
|
10.24
|
Credit
Agreement, dated as of May 13, 2004, by and among WellCare Holdings,
LLC,
WellCare Health Plans, Inc., The WellCare Management Group, Inc.,
Comprehensive Health Management, Inc. and Credit Suisse First Boston,
as
Administrative Agent
|
S-1/A
|
June
8, 2004
|
10.29
|
10.25
|
First
Amendment to Credit Agreement, dated as of September 1, 2005, by
and
among, the Registrant, certain subsidiaries of the Registrant, certain
lenders and Wachovia Bank, National Association
|
8-K
|
September
1, 2005
|
10.1
|
|
10.26
|
Second
Amendment to Credit Agreement, dated as of September 28, 2006, by
and
among, the Registrant, certain subsidiaries of the Registrant, certain
lenders and Wachovia Bank, National Association
|
8-K
|
September
29, 2006
|
10.2
|
|
10.27
|
Contract
No. FAR001 between the State of Florida, Agency for Healthcare
Administration and HealthEase of Florida, Inc. (Medicaid Reform
2006-2009)
|
8-K
|
September
1, 2006
|
10.1
|
|
10.28
|
Contract
No. FAR009 between the State of Florida, Agency for Healthcare
Administration and WellCare of Florida, Inc. d/b/a/ Staywell Health
Plan
of Florida (Medicaid Reform 2006-2009)
|
8-K
|
September
1, 2006
|
10.2
|
|
10.29
|
Amendment
to Contract No. FAR001 between the State of Florida, Agency for Healthcare
Administration and HealthEase of Florida, Inc. (Medicaid Reform
2006-2009)
|
8-K
|
September
18, 2006
|
10.3
|
|
10.30
|
Amendment
to Contract No. FAR009 between the State of Florida, Agency for Healthcare
Administration and WellCare of Florida, Inc. d/b/a/ Staywell Health
Plan
of Florida (Medicaid Reform 2006-2009)
|
8-K
|
September
18, 2006
|
10.2
|
|
10.31
|
Contract
No. FA619 between the State of Florida, Agency for Healthcare
Administration and HealthEase of Florida, Inc. (Medicaid Non-Reform
2006-2009)
|
8-K
|
September
18, 2006
|
10.2
|
|
10.32
|
Contract
No. FA615 between the State of Florida, Agency for Healthcare
Administration and WellCare of Florida, Inc. d/b/a/ Staywell Health
Plan
of Florida (Medicaid Non-Reform 2006-2009)
|
8-K
|
September
18, 2006
|
10.1
|
|
10.33
|
Medical
Services Contract between Florida Healthy Kids Corporation, HealthEase
and
WellCare HMO/Staywell Health Plan
|
10-Q
|
November
5, 2004
|
10.5
|
|
10.34
|
Amendment
to Medical Services Agreement between Florida Healthy Kids Corporation
and
HealthEase of Florida, Inc. and WellCare of Florida, Inc. (f/k/a
Well Care
HMO, Inc.) d/b/a Staywell Health Plan of Florida
|
8-K
|
October
4, 2005
|
10.1
|
|
10.35
|
Contract
for Furnishing Health Services between the State of Illinois Department
of
Public Aid and Harmony Health Plan of Illinois, Inc.
|
8-K
|
December
1, 2006
|
10.2
|
|
10.36
|
Medicaid
Managed Care and Family Health Plus Model Contract, between the New
York
State Department of Health and WellCare of New York, Inc.
|
8-K
|
November
21, 2005
|
10.1
|
|
10.37
|
Amendment
to Medicaid Managed Care and Family Health Plus Model Contract, between
the New York State Department of Health and WellCare of New York,
Inc.
|
8-K
|
November
21, 2005
|
10.2
|
|
10.38
|
Amendment
to Medicaid Managed Care and Family Health Plus Model Contract, between
the New York State Department of Health and WellCare of New York,
Inc.
|
8-K
|
September
11, 2006
|
10.3
|
|
10.39
|
Amendment
to Medicaid Managed Care and Family Health Plus
Model
Contract, between the New York State Department of Health and WellCare
of
New York, Inc.
|
8-K
|
September
11, 2006
|
10.4
|
|
10.40
|
Child
Health Plus Contract No. C-014386 between New York State Department
of
Health and WellCare of New York, Inc.
|
10-Q
|
November
5, 2004
|
10.9
|
10.41
|
Amendment
to Child Health Plus Contract No. C-014386 between the New York Department
of Health and WellCare of New York, Inc.
|
8-K
|
February
13, 2006
|
10.1
|
|
10.42
|
Amendment
to Child Health Plus Contract
No. C-014386 between New York State Department of Health and WellCare
of
New York, Inc.
|
8-K
|
October
6, 2006
|
10.1
|
|
10.43
|
Medicaid
Managed Care and Family Health Plus Model Contract between the City
of New
York Department of Health and Mental Hygiene and WellCare of New
York,
Inc.
|
8-K
|
April
5, 2006
|
10.1
|
|
10.44
|
Amendment
to Medicaid Managed Care and Family Health Plus Model Contract between
the
City of New York Department of Health and Mental Hygiene and WellCare
of
New York, Inc.
|
8-K
|
September
11, 2006
|
10.2
|
|
10.45
|
Medicaid
Advantage Model Contract No. C021236, between the New York State
Department of Health and WellCare of New York, Inc.
|
8-K
|
December
1, 2006
|
10.1
|
|
10.46
|
Medicaid
Advantage Model Contract between the City of New York Department
of Health
and Mental Hygiene and WellCare of New York, Inc.
|
8-K
|
September
11, 2006
|
10.1
|
|
10.47
|
Husky
A Purchase of Service Contract between the Connecticut Department
of
Social Services and FirstChoice Healthplans of Connecticut,
Inc.
|
10-Q
|
November
5, 2004
|
10.10
|
|
10.48
|
Contract
Amendment Number 9 to Contract Number 093-MED-FCHP-1 (Husky A) by
and
between the Department of Social Services and FirstChoice HealthPlans
of
Connecticut, Inc.
|
8-K
|
December
6, 2004
|
10.2
|
|
10.49
|
Contract
Amendment Number 10 to Contract Number 093-MED-FCHP-1 (Husky A) by
and
between the Department of Social Services and FirstChoice HealthPlans
of
Connecticut, Inc.
|
8-K
|
December
6, 2004
|
10.4
|
|
10.50
|
Purchase
of Service Contract number 093-HUS-WCC-2 (Husky B), between the State
of
Connecticut Department of Social Services and WellCare of Connecticut,
Inc.
|
8-K
|
June
8, 2006
|
10.1
|
|
10.51
|
Contract
No. 0654 between The Georgia Department of Community Health and WellCare
of Georgia, Inc. for Provision of Services to Georgia Healthy
Families
|
10-Q
|
August
4, 2005
|
10.19
|
|
10.52
|
Renewal
letter to Contract No. 0654 between The Georgia Department of Community
Health and WellCare of Georgia, Inc. for Provision of Services to
Georgia
Healthy Families
|
8-K
|
June
27, 2006
|
N/A
|
|
10.53
|
Contract
(H0712) between Centers for Medicare & Medicaid Services and WellCare
of Connecticut, Inc. (2006)
|
8-K
|
November
2, 2005
|
10.4
|
|
10.54
|
Renewal
letter to Contract (H0712) between Centers for Medicare & Medicaid
Services and WellCare of Connecticut, Inc. (2007)
|
8-K
|
November
1, 2006
|
N/A
|
|
10.55
|
Contract
(H1032) between Centers for Medicare & Medicaid Services and WellCare
of Florida, Inc. (2006)
|
8-K
|
November
2, 2005
|
10.5
|
|
10.56
|
Renewal
letter to Contract (H1032) between Centers for Medicare & Medicaid
Services and WellCare of Florida, Inc. (2007)
|
8-K
|
November
1, 2006
|
N/A
|
|
10.57
|
Contract
(H1112) between Centers for Medicare & Medicaid Services and WellCare
of Georgia, Inc. (2006)
|
8-K
|
November
2, 2005
|
10.6
|
|
10.58
|
Renewal
letter to Contract (H1112) between Centers for Medicare & Medicaid
Services and WellCare of Georgia, Inc. (2007)
|
8-K
|
November
1, 2006
|
N/A
|
|
10.59
|
Contract
(H1416) between Centers for Medicare & Medicaid Services and Harmony
Health Plan of Illinois, Inc. (2006)
|
8-K
|
November
2, 2005
|
10.7
|
|
10.60
|
Renewal
letter to Contract (H1416) between Centers for Medicare & Medicaid
Services and Harmony Health Plan of Illinois, Inc. (2007)
|
8-K
|
November
1, 2006
|
N/A
|
|
10.61
|
Contract
(H1903) between Centers for Medicare & Medicaid Services and WellCare
of Louisiana, Inc. (2006)
|
8-K
|
November
2, 2005
|
10.8
|
|
10.62
|
Renewal
letter to Contract (H1903) between Centers for Medicare & Medicaid
Services and WellCare of Louisiana, Inc. (2007)
|
8-K
|
November
1, 2006
|
N/A
|
10.63
|
Contract
(H3361) between Centers for Medicare & Medicaid Services and WellCare
of New York, Inc. (2006)
|
8-K
|
November
2, 2005
|
10.9
|
|
10.64
|
Renewal
letter to Contract (H3361) between Centers for Medicare & Medicaid
Services and WellCare of New York, Inc. (2007)
|
8-K
|
November
1, 2006
|
N/A
|
|
10.65
|
Contract
with Approved Entity Pursuant to Sections 1860D-1 through 1860D-42
of the
Social Security Act for the Operation of a Voluntary Medicare Prescription
Drug Plan between Centers for Medicare & Medicaid Services and
WellCare Prescription Insurance, Inc. (2006)
|
8-K
|
November
2, 2005
|
10.3
|
|
10.66
|
Amendment
to Contract with Approved Entity Pursuant to Sections 1860D-1 through
1860D-42 of the Social Security Act for the Operation of a Voluntary
Medicare Prescription Drug Plan between Centers for Medicare &
Medicaid Services and WellCare Prescription Insurance, Inc.
(2007)
|
10-Q
|
November
3, 2006
|
10.13
|
|
10.67
|
Medicaid
Managed Care - Eastern Region Contract between the State of Missouri
Office of Administration Division of Purchasing and Materials Management
and Harmony Health Plan of Illinois, Inc.
|
10-Q
|
May
9, 2006
|
10.4
|
|
10.68
|
Amendment
No. 1 to Medicaid
Managed Care - Eastern Region Contract between the State of Missouri
Office of Administration Division of Purchasing and Materials Management
and Harmony Health Plan of Illinois, Inc.
|
10-Q
|
November
3, 2006
|
10.19
|
|
10.69
|
Contract
(#H6499) between Centers for Medicare & Medicaid Services and Stone
Harbor Insurance Company
|
10-Q
|
November
3, 2006
|
10.14
|
|
10.70
|
Contract
(#1340) between Centers for Medicare & Medicaid Services and Advance /
WellCare PFFS Insurance, Inc.
|
10-Q
|
November
3, 2006
|
10.15
|
|
10.71
|
Contract
(#4577) between Centers for Medicare & Medicaid and Home Owners /
WellCare PFFS Insurance, Inc.
|
10-Q
|
November
3, 2006
|
10.16
|
|
10.72
|
Ohio
Medical Assistance Provider Agreement for Managed Care Plans (Covered
Families and Children) between the Ohio Department of Job and Family
Services and WellCare of Ohio, Inc. (2007)
|
10-Q
|
November
3, 2006
|
10.17
|
|
10.73
|
Ohio
Medical Assistance Provider Agreement for Managed Care Plan ABD Eligible
Population between the Ohio Department of Job and Family Services
and
WellCare of Ohio, Inc. (2007)
|
8-K
|
December
1, 2006
|
10.3
|
|
*
Denotes a management contract or compensatory plan, contract or
arrangement
†
Filed herewith
|