WellCare Seeks New CEO as Chairman Takes Over for Cunningham

WellCare Health Plans Inc. (WCG), a provider of managed-care plans for about 2.8 million people, is seeking a new chief executive officer and said 2013 profit may be lower than anticipated.

Chairman David Gallitano will be the interim replacement for departing CEO Alec Cunningham, the Tampa, Florida-based health insurer said today in a statement. WellCare said earnings excluding certain items will be $4.70 to $4.80 a share this year, trimming a previous outlook of as much as $4.90.

WellCare lowered the profit forecast even as it said revenue may be $9.35 billion to $9.4 billion, more than previously expected. Fourth-quarter expenses are now anticipated to be higher, the company said. The combination of the lower profit expectation and an unexpected management change may hurt the stock, said Chris Rigg, an analyst with Susquehanna Financial Group.

“WellCare offered little information for the abrupt management change other than boiler plate language that is commonplace in these types of announcements,” Riggs wrote in a research note. “Shares could get hit hard today due to both the management change and the downward revision to 2013 EPS guidance.”

WellCare rose less than 1 percent to $66.68 at the close yesterday. The shares have gained 37 percent this year.

“As the company continues to expand and grow, the board felt that it was necessary to identify a new experienced leader to help write the next chapter for WellCare,” Gallitano said today in a statement. He has been a WellCare board member since 2009 and was named chairman in May.

WellCare provides managed-care services targeted to government-sponsored health-care programs and has about 2.8 million health-plan members in the U.S.

The company reported third-quarter net income rose 67 percent to $64 million, or $1.45 a share. Excluding one-time items, earnings were $1.56 a share, topping by 5 cents the average of 12 analysts’ estimates compiled by Bloomberg.

To contact the reporters on this story: Kristen Hallam in London at khallam@bloomberg.net; Meg Tirrell in New York at mtirrell@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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