WellPoint Raises Profit Forecast Ahead of ExchangesAlex Nussbaum
WellPoint Inc., the second-biggest U.S. insurer, increased its full-year forecast as the company gears up for business from the U.S. health-care law’s new online insurance markets.
Profit is expected to be at least $8.40 a share in 2013, Indianapolis-based WellPoint said in raising its projection for the third time this year. Analysts had estimated $8.27 in profit this year and $8.39 in 2014, according to data compiled by Bloomberg. Third-quarter earnings topped estimates.
WellPoint has made the biggest commitment of any publicly traded insurer to the health exchanges that debuted this month. Medical-plan enrollment jumped 6 percent to 35.5 million in the quarter as WellPoint also benefited from the slowdown in medical claims that has boosted all insurers since the economic recession that ended in 2009.
The raised forecast reflects “our strong performance, our continued preparation and the outlook for coming market changes under the Affordable Care Act,” Chief Executive Officer Joseph Swedish said in a statement today.
Health insurers stand to gain millions of customers in an expansion of private insurance options under the Patient Protection and Affordable Care Act of 2010.
Swedish, on a conference call with analysts, declined to say how many new members WellPoint might gain from the health law and suggested early expectations for next year’s earnings may be below this year’s results.
Health insurer shares fell, with WellPoint slipping 3 percent to $85.48 at the close in New York.
“Our view into the quarter for was for flat-to-down stocks for the rest of the year,” said Thomas Carroll, a Stifel Nicolaus & Co. analyst in Baltimore, in an e-mail. “It’s based on the irrelevance of this year, and the lack of guidance or super-conservative guidance hints for next year.”
The shares of UnitedHealth Group Inc., the biggest insurer, fell the most in two years on Oct. 17 after the Minnetonka, Minnesota-based company declined to raise its profit forecast for 2013. The carrier said cuts in Medicare reimbursements would weigh on results next year as well.
WellPoint’s third-quarter earnings excluding one-time items of $2.10 a share topped the $1.82 average of 17 analyst estimates compiled by Bloomberg. Net income fell 5.1 percent to $656.2 million, or $2.16 a share, from $691.2 million, or $2.15, a year earlier, the company said in a statement today. Revenue rose 17 percent to $17.7 billion.
The insurer runs 14 Blue Cross plans. The increase in medical-plan enrollments was fueled by last year’s $4.9 billion acquisition of Amerigroup Corp., which specializes in coverage for low-income Medicaid patients. The program is also set to expand under the health-care overhaul.