Shares of WellCare Health Plans plunged as much as 61 percent Thursday, a day after federal and state government agents searched its headquarters in Tampa, Florida.
The share drop wiped out nearly $3 billion in market value in WellCare, which offers health coverage to Medicare and Medicaid recipients.
WellCare serves more than 2.3 million members through its Medicaid health plans for low-income Americans and Medicare plans for the elderly.
On Wednesday, more than 200 federal and state agents searched the company's headquarters. They included agents from the Federal Bureau of Investigation, the U.S. Department of Heath and Human Services Office of Inspector General, and the Florida attorney general's Medicaid Fraud Control unit.
Company and government officials have declined to comment on the details of the investigation.
"We would stay on the sidelines until more details come to light," Wachovia analyst Matthew Perry said in a research note, echoing bearish tones sounded by many analysts covering the company.
After being halted for most of Wednesday, WellCare shares opened mid-morning on Thursday. They were off $66.15, or 57 percent, to $49.25 on the New York Stock Exchange, where they tumbled as low as $44.46.
In a message recorded on WellCare's Web site, Chief Executive Todd Farha said on Thursday the company was cooperating with officials in the probe, but that it was not in a position to share more details about the investigation.
"This investigation is having no impact on the delivery of any health care services," Farha said.
Farha said some of its staff went home on Wednesday to ease the agents' access to our premises, although most remained on site.
A spokesman for the U.S. attorney's office in Tampa said the search warrant in the case was sealed and did not provide further details about the probe.