UPDATE 3-Wellpoint says 2013 will be relatively stable vs 2012

Tue Jan 8, 2013 7:46pm EST

* Says 2012 adjusted profit may beat previous forecast

* Sees share buybacks boosting 2013 earnings

* Says CEO decision expected this quarter

* Wellpoint, Aetna both see growth in government program revenue

Jan 8 (Reuters) - Health insurer Wellpoint Inc said its 2013 adjusted profit would be "relatively stable" compared with 2012 earnings as it positions itself for reforms to the U.S. health care system.

The company also said it would buy back more shares this year, leading to moderate growth in per-share earnings compared with 2012, which it said may top its previous expectations.

Wellpoint said during the JP Morgan healthcare conference on Tuesday that it anticipates a shift toward more government-sponsored business to boost its patient volumes.

"Rather than fearing this new market, we are embracing it," Wellpoint Interim Chief Executive John Cannon told investors in remarks that were webcast.

For 2012, the second-largest U.S. health insurer said it expects earnings, excluding one-time items, near the high end or slightly above its prior guidance of $7.30 to $7.40 per share.

It said that due primarily to a tax gain, 2012 net earnings would surpass the $7.37 to $7.47 per share it had previously forecast.

Analysts had expected adjusted earnings of $7.46 per share for 2012 and $8.01 per share for 2013, according to Thomson Reuters I/B/E/S.

Wellpoint is well positioned to capitalize on health reform, Cannon said, and benefit from state health exchanges due to a strong presence in local markets. A large presence in California, New York, Texas and Florida will allow the company to take advantage of a developing market for people who are part of both the Medicare program for the elderly and Medicaid for poor people.

Cannon said 2013 will be a year of investing for growth. The company is targeting a compound annual growth rate of 10 to 14 percent over the next five years, he said. Organic growth will contribute 4 to 6 percent, acquisitions will add 2 to 3 percent, and share repurchases will add 4 to 5 percent, Cannon said.

"Frankly, organic growth has been our challenge in recent years, but we are confident that this target can be achieved," he said.

Cannon, who became interim CEO at Wellpoint after the abrupt departure of Angela Braly in August following investor dissatisfaction with the health insurer's financial performance, also reiterated that a decision on a permanent chief is expected this quarter.

Aetna Inc, whose CEO also spoke at the conference on Tuesday, said after the market closed on Monday that its guidance for 2012 and 2013 profit and revenue growth remain on track with its earlier forecast. Analysts, however, had been projecting stronger profit in 2013, and the company's shares fell more than 3 percent on Tuesday.

Aetna looks to substantially increase government program revenue and profit over the next several years, Chief Executive Mark Bertolini told investors.

Over the longer term, Aetna is targeting low double-digit operating EPS growth on average, he said.

Aetna and Wellpoint are in the forefront of healthcare reform. The market for insurance will change with the start of healthcare exchanges later this year and the expansion of Medicaid insurance for the poor in 2014. The changes are expected to add 30 million people to the ranks of the insured over the next decade.

Shares of Wellpoint closed up 33 cents, or less than 1 percent, at $60.07 Tuesday on the New York Stock Exchange. Shares of Aetna fell $1.58, or 3.44 percent, to close at $44.38.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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