WellCare Health Plans, Inc. provides managed care services for government-sponsored health care programs. It operates through three segments: Medicaid Health Plans, Medicare Health Plans, and Medicare PDPs. The Medicaid Health Plans segment offers plans for beneficiaries of temporary assistance for needy families, supplemental security income, and aged blind and disabled residents; and other state-based programs, such as children's health insurance programs for qualifying families who are not eligible for Medicaid, as well as managed long-term care programs for people with chronic illnesses or who have disabilities and need health and long-term care services. The Medicare Health Plans segment provides Medicare, a federal program that provides eligible persons aged 65 and over, as well as some disabled persons with a range of hospital, medical, and prescription drug benefits; Medicare Advantage, a Medicare's managed care alternative to the original Medicare program, which offers individuals standard Medicare benefits directly through Centers for Medicare & Medicaid Services; and coordinated care plans that are administered through health maintenance organizations and require members to seek health care services and select a primary care physician from a network of health care providers. The Medicare PDPs segment provides Medicare part D PDP plans to Medicare-eligible beneficiaries. Its PDP plans offer national in-network prescription drug coverage with 69,000 pharmacies, including a preferred pharmacy network. As of December 31, 2015, the company served approximately 3.8 million members in 50 states and the District of Columbia. WellCare Health Plans, Inc. was founded in 1985 and is headquartered in Tampa, Florida.
Business Analysis of WellCare
The Healthcare Services Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how WellCare compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by WellCare to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of WellCare with an interactive chart.
- Revenue Growth: WellCare reported a revenue growth of 2.5% year-on-year during 2016. Healthcare Payers Industry grew at 13.5% in the same period
- COGS share of Revenues: As a percentage of revenue, WellCare spent 84.9% of its total revenues on COGS. Healthcare Payers industry average (COGS share of revenue) in the same period was 78.2%
- R&D share of Revenues: WellCare R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, WellCare spent 8.0% of its total revenues on Sales, Marketing, and General Administration (SG&A). Healthcare Payers industry average SG&A spending in the same period was 15.1%
- Inventory share of Revenues: WellCare Inventory share of Revenues details are not available because either company does not share the data or we do not have it
- Accounts Payable share of Revenues: As a percentage of revenue, WellCare invested 18.7% of its total revenues on Accounts Payable (A/P) Healthcare Payers industry average Accounts Payable investment in the same period was 13.9%
- Accounts Receivable share of Revenues: As a percentage of revenue, WellCare invested 5.7% of its total revenues on Accounts Receivable (A/R). Healthcare Payers industry average Accounts Receivable investment in the same period was 9.0%
- PP&E share of Revenues: As a percentage of revenue, WellCare invested 1.9% of its total revenues on Property, Plants, and Equipments (PP&E). Healthcare Payers industry average PPE investment in the same period was 2.6%
- Intangibles share of Revenues: As a percentage of revenue, WellCare invested 3.3% of its total revenues on Intangibles. Healthcare Payers industry average Intangibles investment in the same period was 21.9%
- Net Margins: WellCare Net Margins in the year 2016 were 1.7%. Healthcare Payers industry average Net Margins in the same period were 3.0%
Sector and Industry Association of WellCare
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
WellCare is associated with Healthcare Sector Group, Healthcare Services Sector, and Healthcare Payers Industry.
Healthcare Services sector is comprised of the following industries: Drug Stores, PBM and Distributors; Healthcare Payers; Healthcare Providers; Medical Software; Healthcare Research Services. The definitions for each of the industries is as follows:
- Drug Stores, PBM and Distributors industry includes nationwide drugstore chains, pharmacy benefit management (PBM) companies, and drug distributors. Drug stores also offer walk-in clinics and related pharmacy services. Distributors distribute branded and generic pharmaceutical and other healthcare products to hospitals, pharmacies and other healthcare providers. PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims.
- Healthcare Payers industry includes healthcare insurance companies that finance or reimburse the cost of health services. These companies also offer collaborative care, population health management, healthcare technology, Pharmacy Benefit Management, analytics, consulting and administrative services.
- Healthcare Providers industry consist primarily of hospitals but recent changes in the health services industry have contributed to both increasing numbers of other types of facility providers. Companies in this industry include traditional healthcare providers and emerging healthcare facility providers like ambulatory surgery centers, behavioral healthcare facilities, dialysis clinics, home health care companies and others.
- Medical Software industry includes companies that offer any software item or system used within a healthcare context. These companies offer standalone software used for diagnostic, therapeutic purposes, clinical financial and operational purposes.
- Healthcare Research Services industry includes companies that offer biopharmaceutical development services, commercial outsourcing services; commercial pharmaceutical sales and service organizations, consulting, health information analytics and technology consulting.
Industry Ranking of WellCare
With $14.2 billion revenues, WellCare ranked number 8 of all the companies in the US Healthcare Payers industry. There were a total of 14 public companies in the US Healthcare Payers industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Healthcare Payers industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.