Moody's may upgrade WellCare

Moody's Investors Service said it placed the Ba2 senior debt rating of WellCare Health Plans, Inc. on review for upgrade.

The upgrade review follows news that WellCare will be acquired by Centene Corp. for $17.3 billion, Moody's said.

Following the acquisition, Moody's also said it affirmed Centene's Ba1 senior debt rating and the Baa1 insurance financial strength ratings of its operating subsidiaries.

The agency said it expects WellCare's outstanding debt will either be repaid when Centene funds the transaction, or incorporated into and explicitly guaranteed by Centene when the deal closes.

If the deal does not close, Moody's said it will likely confirm WellCare's ratings, unless other changes to its credit profile occur during the review period.

WellCare's ratings reflect its relatively low leverage, solid operating earnings and strong unregulated cash flows, the agency said.

These strengths are somewhat mitigated by its concentration in the government sector and its 100% exposure to full-risk underwriting, Moody's said.

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