WELLCARE : Announces Securities Class Action Settlement
08/09/2010| 06:35am US/Eastern
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WellCare Health Plans, Inc. (NYSE: WCG) announced today that it has
reached an agreement on the material terms of a settlement which will
resolve the claims asserted against the Company in the previously
disclosed putative securities class action consolidated complaint filed
against the Company.
The securities class action settlement provides, among other things,
that WellCare will make cash payments to the class of $52.5 million
within thirty days following the Court's preliminary approval of the
settlement, and $35.0 million by July 31, 2011. The Company also will
issue to the class tradable unsecured bonds having an aggregate face
value of $112.5 million, with a fixed coupon of 6%. The principal
portion of the bonds have a maturity date of December 31, 2016. In
addition, if within three years of the agreement WellCare experiences a
change in control at a share price of $30 or more, the Company will make
an incremental $25.0 million payment to the class.
As a result of the agreement, the Company's current estimate for the
resolution of this matter is $200 million, which has been accrued in the
second quarter of 2010 at its estimated fair value of approximately $194
million. The material terms of the agreement are described in the
Company's second quarter Form 10-Q, which is expected to be filed later
today with the United States Securities and Exchange Commission (SEC).
The terms of the settlement will be documented in an agreement which
will require approval by the United States District Court for the Middle
District of Florida following notice to all class members. There can be
no assurance that the settlement will be finalized and approved, and the
actual outcome of this matter may differ materially from the terms of
the settlement.
?We believe we will be able to meet our known near-term monetary
obligations, including the terms of this settlement agreement, and
maintain sufficient liquidity to operate our business,? said Tom Tran,
WellCare's chief financial officer.
In addition to the securities class action settlement, on June 24, 2010,
WellCare announced it had reached a preliminary settlement with the
Civil Division of the United States Department of Justice and the Civil
Divisions of the United States Attorneys' Offices for the Middle
District of Florida and Connecticut to settle their pending inquiries.
In May 2009, the Company resolved investigations by the United States
Attorney's Office for the Middle District of Florida, the Florida
Attorney General's Office and the SEC.
?Upon final approval of these two matters, WellCare will have addressed
the financial aspects of the legal proceedings that began in late 2007,?
said Chuck Berg, WellCare's executive chairman. ?These resolutions will
enable us to focus on our mission of serving some of the country's most
vulnerable populations and to invest in our priority areas: health care
quality and access, compliance, infrastructure and growth.?
About WellCare Health Plans, Inc.
WellCare Health Plans, Inc. provides managed care services exclusively
for government-sponsored health care programs, focusing on Medicaid and
Medicare. Headquartered in Tampa, Florida, WellCare offers a variety of
health plans for families, children, and the aged, blind and disabled,
as well as prescription drug plans. The Company served approximately 2.2
million members nationwide as of June 30, 2010. For more information
about WellCare, please visit the Company's website at www.wellcare.com.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains ?forward-looking? statements that are made
pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995, regarding the prospective resolution of a
civil investigation. Such forward-looking statements are based on
current expectations, are predictive in nature, and involve known and
unknown risks and uncertainties that may cause WellCare's actual
outcomes and results to differ materially from those projected or
contemplated in the forward-looking statements. These risks and
uncertainties include, but are not limited to, the risk that the
settlement will not be finalized or approved. If the settlement is not
finalized, the ultimate resolution and its impact on WellCare cannot be
assessed. Forward-looking statements in this news release should be
evaluated and read in conjunction with the other risks and uncertainties
that affect WellCare's business, including those found under the
captions ?Cautionary Statement Regarding Forward-Looking Statements? and
?Risk Factors? in the Company's Annual Report on Form 10-K for the year
ended December 31, 2009, ?Forward Looking Statements? and ?Risk Factors?
in the Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 2010, and in other filings by the Company with the U.S.
Securities and Exchange Commission, which contain discussions of
WellCare's business and the various factors that may affect it. Given
these risks and uncertainties, we can give no assurances that any
results or events projected or contemplated by our forward-looking
statements will in fact occur and we caution you not to place undue
reliance on these statements. WellCare undertakes no duty to update
these forward-looking statements to reflect any future events,
developments, or otherwise.
WellCare Health Plans, Inc.
Investor Relations:
Gregg Haddad,
813-865-1284
gregg.haddad@wellcare.com
or
Media
Relations:
Amy Knapp, 813-290-6208
amy.knapp@wellcare.com
© Business Wire 2010
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