Moody’s gives Ba2 to WellCare debt

Moody's Investors Service said it assigned a Ba2 senior unsecured debt rating to WellCare Health Plans, Inc.'s planned issuance of roughly $1.2 billion of senior unsecured debt due 2025.

Net proceeds are expected to be used to refinance WellCare's senior unsecured debt ($900 million), repay outstanding amounts under its revolver (about $100 million) and for general working capital purposes.

The outlook is stable.

Moody's said the Ba2 senior debt rating of WellCare and Baa2 insurance financial strength (IFS) rating for WellCare of Florida, Inc. are supported by the company's good financial profile, characterized by adequate operating earnings and strong cash flow, including a stream of unregulated cash flows from management fees.

However, the rating also reflects a somewhat weaker business profile, largely the result of the exclusive focus on the Medicare and Medicaid segments with almost 66% of the company's premium revenue from Medicaid contracts, the agency added.

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