hope you hung on Big M Update on investigation and the stock is up $4+ today.....
Ahead of the Bell: WellCare
Thursday January 3, 9:03 am ET <TABLE height=4 cellSpacing=0 cellPadding=0 border=0><TBODY><TR><TD height=4></TD></TR></TBODY></TABLE>Analyst Says Subpoenas Show Investigation Into WellCare Health Plans Is Limited
NEW YORK (AP) -- A CIBC World Markets analyst said Thursday the U.S. government's investigation of WellCare Health Plans Inc. is focused on the company's Florida Medicaid unit, and not on larger allegations of fraud that could put the health insurer out of business.
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</NOSCRIPT></TD></TR></TBODY></TABLE>The FBI, Department of Health and Human Services and the Medicare fraud division of the Florida Attorney General's office raided WellCare's Tampa, Fla., headquarters on Oct. 24, taking documents in what analysts say is an investigation related to a "whistleblower" lawsuit.
The news knocked the stock price down from the $120s to a low of $20.81. Shares finished at $41.99 Wednesday.
Analyst Carl McDonald, who has said in the past that the investigation is limited, reiterated that view Thursday after looking at five subpoenas issued to WellCare by the U.S. Attorney's Office.
"With each new piece of data, it seems clear that this investigation is focused on the Florida Medicaid business, the company's Florida Medicaid behavioral arrangement, and WellCare's reinsurance subsidiary," he said. "WellCare's Medicare and its non-Florida Medicaid contracts received barely a mention."
The behavioral unit provides mental health services.
McDonald said the investigation will last for some time, but he thinks WellCare will ultimately settle with the government, pay a fine, and stay in business.
He kept an "Overweight" rating on WellCare shares, with a price target of $60.
Separately, WellCare said Tuesday that effective March 1, it is ending its Medicaid contracts with the state of Connecticut. The company said it received $57 million in revenue from those two contracts in the first three quarters of 2007.
Jefferies & Co. analyst Brian Wright said the move was not a surprise, and will not affect WellCare's 2008 profit. He rates the stock "Buy," with a price target of $66 per share.
ope:
