WellPoint Inc., the second-largest U.S. health insurer, raised its 2014 earnings forecast as the company adds customers through Obamacare.
Net income this year will be greater than $8.20 a share, the Indianapolis-based company said today in a statement. WellPoint previously predicted earnings of more than $8. Analysts had expected $8.39 a share, the average of estimates compiled by Bloomberg.
WellPoint expects 1 million to 1.3 million net new customers this year, an increase helped by the public exchanges set up under the health law. The company said Jan. 29 it had added 500,000 members since enrollment under the Patient Protection and Affordable Care Act started in October.
“We’re very optimistic as to where we are” on the exchanges, said Ken Goulet, executive vice president of commercial and specialty business, at an investor meeting today in New York. The average age of those enrolled “came in right where we expected it to be,” he said.
Goulet also said he expected “double-digit” rate increases in premiums for 2015 plans on the exchanges to compensate for a reduction in government payments to insurers that were supposed to ease their entry onto the public marketplaces.
WellPoint also will continue to seek membership growth in the goverment’s Medicare and Medicaid programs, Chief Executive Officer Joseph Swedish told the investors.
“There’s an explosion in the government business,” he said.
Swedish, who took over at WellPoint in March 2013, had announced the sale of 1-800 Contacts and Glasses.com on Jan. 7, just 18 months after his predecessor bought the eyewear business. At the time, he said he wanted to focus on “core growth opportunities” including the new insurance exchanges.
“We’re simpler, focused, and value-driven,” Swedish said today.
WellPoint gained less than 1 percent to $99.77 at the close in New York.
The company’s forecast “might not be enough to satisfy expectations,” Carl McDonald, a New York-based analyst a Citigroup Global Markets, said today in a note to clients. “There doesn’t appear to be any industry implications from the guidance raise, since it seems mostly attributable to the impact of the 1-800 Contacts sale and the ensuing share repurchase.”