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WellPoint's 3Q profit falls 5 pct, forecast climbs

October 23. 2013 7:36AM
Associated Press

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(AP) WellPoint Inc.'s third-quarter earnings fell 5 percent, but the nation's second-largest health insurer's results topped Wall Street expectations. The company hiked its 2013 forecast, citing in part gains it expects from the health care overhaul.

Shares of the Indianapolis company jumped in premarket trading Wednesday about three hours before the market opening.

The Blue Cross Blue Shield insurer said its performance so far and coming market changes under the overhaul prompted it to raise its forecast for 2013 adjusted earnings to at least $8.40 per share. That's up from its previous forecast for at least $8 per share and well beyond the $8.26 per share average that analysts surveyed by FactSet expect.

The company didn't elaborate in a Wednesday morning statement on how the overhaul will affect its business.

The law aims to provide health insurance coverage to millions of uninsured people, and it took a major step toward that goal on Oct. 1, when enrollment started for plans that begin coverage Jan. 1. The overhaul calls for an expansion of the state-federal Medicaid program and also provides income-based tax credits to help people buy coverage on health insurance exchanges.

Analysts and investors expect the overhaul's coverage expansion to affect WellPoint more than other insurers because the company derives a large portion of its business from the individual market and through smaller employers who cover their workers.

Investors haven't been sure how much business insurers like WellPoint will lose or gain because of these exchanges, and analysts say that has made them wary of buying the stock.

The business impact so far has likely been light. Computer glitches tied to the largely online exchanges have frustrated consumers in many states as they have tried to shop around for coverage.

Overall, WellPoint said it earned $656.2 million, or $2.16 per share, in the quarter that ended Sept. 30. That compares to $691.2 million, or $2.15 per share, last year, when the company had more shares outstanding. Earnings excluding one-time items totaled $2.10 per share.

Analysts expected, on average, earnings of $1.81 per share, according to FactSet.

Operating revenue, which excludes investment gains or losses, soared 17 percent to $17.73 billion and topped analyst expectations for $17.66 billion.

WellPoint shares climbed 2.3 percent, or $2.05, to $90.48 in premarket trading.

Associated Press

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