WCG

[David Randolph]

WCG touched the previous resistance, now support level of $76.73, I think it is getting ready for another bull run.

No news out and nothing else to do but to keep on holding WCG.

[David Randolph]

Nothing new on WCG, just keep holding.

[David Randolph]

Perhaps WCG will need to make another correction towards the 50 days moving average (which closed yesterday at $70.4), I don't know, but I'll continue holding WCG for the long term.

I want to be exposed to the health care industry in the US and WCG is the best pick in the sector that I know of, growing rapidly and very profitable, as you can read on the rest of this thread.

[David Randolph]

You can see on the all history chart below that WCG's trend is bllish since it became a publicly traded company in 2004. The stock rose every year, but not every month.

I'll keep holding WCG with long term eyes and hands. Because the fundamental trends tell me the stock will keep rising, and rising, and rising, year after year.

I need to hold something related to health care and WCG is the best pick that I know of in that sector.

[David Randolph]

WCG is the largest company in the Main Portfolio, and it feels good to own just a few medium size caps, I think it adds stability to the portfolio.

One could think such a large cap doesn't have all that much potential, and that's true, if one is looking for short term results, but if we consider long term fundamental trends instead, WCG is the fastest growing company in the Main Portfolio, with a 60% plus historical average annual revenue growth

I'll keep holding WCG.

[elliemae]

WCG just keeps hitting the ball out of the park with earnings and membership enrollment.  WCG won't double overnight, but look back in 14 months and it will!!  Patience will be rewarded

[David Randolph]

WCG just keeps hitting the ball out of the park with earnings and membership enrollment.  WCG won't double overnight, but look back in 14 months and it will!!  Patience will be rewarded

Thanks for the post elliemae, I was feeling a bit lonely on this thread

• WellCare Announces Fourth Quarter and Full-Year 2006 Results
Business Wire (Tue 4:00pm)

For 2006 analysts expected EPS of $3.37 on $3.67 B revenue. Actual figures came in higher, EPS was $3.43 and revenue was $3.8 B.

The company also raised guidance for 2007:

• Wellcare Increases 2007 Outlook
AP (Tue 4:44pm)

Now the company is talking about EPS between $4.10 and $4.20 and revenues of $4.95 B for fiscal 2007.

I actually think this guidance is still quite conservative, it looks like an extrapolation of just the 4th quarter numbers. I believe the company will raise guidance even more going forward, because membership growth is strong, and the more, the more, as the word spreads.

WCG closed up 1.9% in after hours.

I'll make a more detailed analysis in subsequent updates, I'm short on time now. I'll continue holding WCG.

[JKN]

This is one of my favorites David...no need to feel lonely.

Much thanks to you and elliemae...

Kent

[guitarman]

Ditto!
You rock David!
I went on margin to get this one!
No Options!  - Sorry I didn't respond earlier.
I was on vacation.
Best
GMan

[David Randolph]

Nice to have some company

WCG started yesterday with the "sell on the good news because we're making some money and we don't want more" type of mentality. That gave an opportunity to long term investors to load the truck on the dip that almost touched the ascending 50 days SMA.

I think WCG's results were great and the best is yet to come. Watch as WCG pushes up to a new all time high above $80.

[David Randolph]

WCG's subscriber numbers increased 164% in 2006, as you can read on the table below that was taken out of the latest 10-K filed with the SEC:



The big jump of 1,403,000 subscribers came primarily from PDP (Prescription Drug Plans) and TANF (Temporary Assistance to Needy Families).

In January 2007 WCG began operations as a PFFS (private fee-for-service) plan and one month later they already had 18,000 members enrolled in this plan. So this is a new and important source of growth for 2007.

We'll keep studying this company's operations throughout these updates. The only risk I see is that the contracts with the government are short in duration and they can be terminated, but I rely on elliemae's judgment that says the government saves money using these companies. By the way elliemae, when you have some time, being a professional health care service provider yourself, could you elaborate on how the government saves money by making these contracts with companies like WCG? Thanks 

Since WCG helps the government saving taxpayers money I think the company is here to stay and prosper.

There's strong revenue and EPS growth expected for 2007 and beyond:



I'll continue holding WCG.

[elliemae]

David,
   
The way I see it as a provider, WCG is like the audit police for the government.  They receive a premium per membership, and the provider's must request authorized visits/treatments for the patient.  Basically, as a provider, you have to jump through hoops to get authorization/paid.  However, the waste in health care has been rampant and this service protects/polices all parties involved in the care of the patient (provider/patient/government payee, tax payers).  I know this sounds cynical, but the truth is the truth.  Anyways, WCG and companies of this type will be utilized to save the government money in all areas, because fees are already stripped down for medicaid/medicare reimbursement and providers won't take anymore cuts.  For a 1 hour P.T. visit, Medicaid pays $85.00, and now that you have to go through a CMO like WCG, you still get $85.00 for a 1hr. visit (unless you are not an authorized provider, then you get 10% less for authorized services $76.50)
The real savings for the government comes in when a treatment/procedure is deemed not medically necessary and is not authorized.  I also forgot the paperwork trail that encompasses the process to get authorized visits, or extended visits (makes a provider think twice about visits/treatments needed)
I remember about 10 years ago there was a Psychiatrist in Atlanta, Ga. that would round Medicad children up on buses with parental consent for CAMP and would charge Medicaid for psychiatric eval./treatment and made over $2 million in 1 year.  When this was brought to the news media, Medicaid's response was it was unethical but not illegal!!  Well, this isn't going to happen with CMO's

[David Randolph]

Great post elliemae, thanks a lot

So, the government pays $85 an hour for a P.T. visit (whatever P.T. is - I don't know what it is, but given the context, I figure it is something like "personal trainer", or "personal therapist" or "private therapist"). And that is less than what it used to be, if I correctly recall one of your previous posts.

And people in Europe say the US doesn't have social security and social programs ... of course, Europeans don't have a clue.

Nevermind that, I now understand how the government saves money making contracts with companies like WCG. WCG is here to stay and prosper.

Today I don't have all that much time to study, but let's just make four questions for tomorrow. That PDP (Prescription Drug Plans) were the biggest source of growth for WCG? They're provided on a nationwide basis, right? How much do they cost? How much is the net profit margin on each of these plans?

In the meantime, WCG shares are doing what they were supposed to do, given the fundamentals. I already see $100 on my chart. I'll keep holding.

[David Randolph]

I read the entire 10-K and there's no information to answer the questions made above. Anyway, WCG closed at a new all time high yesterday and fundamentals in a general sense are attractive, I'll continue holding WCG. As I see it, in the future, the company can be as large as any one of its competitors, say, $60 B market cap? 

[David Randolph]

There was an analysis out from Zack's yesterday, saying the following:

«WellCare Health Plans topped estimates by five cents with fourth-quarter earnings of $1.38 per share. Revenues and membership more than doubled thank to the addition of Medicare Part D products and the launch of a Georgia Medicaid health plan. The medical expense ratio improved to 78.4% from 80.2%. Following the strong fourth-quarter performance, WCG raised its 2007 profit guidance to between $4.10 to $4.20 per share, from $3.95 to $4.05 per share. Nearly all of the covering brokerage analysts revised their forecasts in response, causing the consensus estimate to rise by 13 cents to $4.11 per share. WCG is a Zacks #1 Rank ("strong buy") stock.»

And WCG closed at a new all time high of $82.37. Slowly I now have a 10% profit on the stock. The beauty of this is that I think the stock won't give back this gain all that easily.

See you at $100