S&P lifts credit rating on WellCare Health Plans

NEW YORK

Standard & Poor's Ratings Services raised its opinion on WellCare Health Plans Inc. on Wednesday, saying the health insurer's performance has been good and its operations are steady.

The agency raised its counterparty credit rating for WellCare to 'B' from 'B-'. Counterparty credit ratings are S&P's opinion of a company's overall creditworthiness. The new rating is still non-investment grade, or "junk," status.

WellCare is beginning to recover from government investigations into its business. Last year, the company agreed to pay about $125 million to settle charges it defrauded the states of Florida and Illinois and overstated its profits from 2004 and 2007. With the investigations settled, WellCare was allowed to start marketing Medicare programs again.

The company's CEO Todd Farha and CFO Paul Behrens resigned in early 2008, shortly after the government raided WellCare's headquarters and the investigation became public.

"Under its new senior management team, WellCare has produced good operating performance, sustained its market presence, and expanded its operating scale through some challenges in 2008 and 2009," said Standard & Poor's analyst Hema Singh.

Singh said WellCare's pretax profit grew significantly in 2009, and because the company has no outstanding debt, it has good access to cash and financial flexibility. Singh maintained a positive outlook on WellCare, meaning further upgrades are possible.

The Tampa, Fla., company's current rating is five notches into "junk" status.

WellCare's stock rose 11 cents to $62.05 after-hours. The shares fell 3 cents to close regular trading at $61.94.