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Wellcare Health's (WCG) Inorganic Growth Boosts Revenues

WellCare Health Plans, Inc.’s WCG growth strategies continue to help it retain its leading position in the industry. It has been strengthening its revenue base consistently over the last 10 years. The Affordable Care Act (ACA) implemented by the former U.S. President Barrack Obama also contributed significantly to the company’s top-line growth. Nevertheless, a lot many hassles around “Repealing and Replacing” the ACA under the Trump administration might lead to volatility in Medicaid programs enrolment.

However, despite the regulatory uncertainty, WellCare Health remains an attractive pick for investors. Let’s delve deeper to find out why.

WellCare Health has been witnessing consistent revenue growth supported by strategic acquisitions, partnerships and alliances since 2011. These initiatives not only bolstered the company’s presence in existing markets but also expanded its operations geographically. In the first half of 2017, revenues of $8.2 billion increased 15.6% year over year due to strong organic growth across all its three lines of business and the company's acquisition of Care1st Arizona.

The company’s substantial cash inflow has helped it increase shareholders’ value through several capital deployment initiatives. In the first half of 2017, net cash from operating activities was $335 million versus net cash used for operating activities of $60 million in the prior-year quarter. The improvement was primarily driven by the advanced timing of Medicare-related receipts.  This high level of financial liquidity is expected to support the company's inorganic growth initiatives and further drive top-line growth.

The company delivered positive earnings surprises in the last four quarters with an average beat of 47.37%. In the second quarter, its earnings surpassed the Zacks Consensus Estimate and grew year over year on higher revenues. Pursuant to the earnings beat, the company also raised its earnings and revenue guidance for 2017 that boosted shareholder optimism in the stock. Over past seven days, the Zacks Consensus Estimate for 2017 and 2018 has also been revised upward significantly.

Stocks to Consider

Investors interested in the same space can consider stocks like Humana Inc HUM, Aetna Inc AET and Anthem Inc ANTM.

Humana, a leading managed care company, topped estimates in all of the last four quarters with an average beat of 6.63%.

Aetna surpassed expectations in each of the last four quarters with an average positive surprise of 18.97%

Anthem delivered positive surprises in three of the last four quarters with an average beat of 8.58%.

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