WellPoint's third-quarter profit beats analysts' expectations
(Reuters) - Health insurer WellPoint Inc (WLP.N) on Wednesday reported a third-quarter profit that beat analysts' expectations as it added new members and medical costs were lower than anticipated.
WellPoint, which operates 14 Blue Cross Blue Shield licenses, said earnings came to $2.10 per share, excluding favorable tax benefits and net investment gains, up from $2.09 a year earlier.
Analysts on average were expecting a profit of $1.82 per share, according to Thomson Reuters I/B/E/S.
The company raised its 2013 membership and profit forecasts to reflect the stronger-than-expected quarter and its "outlook for coming market changes under the Affordable Care Act," Chief Executive Officer Joseph Swedish said in a statement.
WellPoint said it now expected 2013 earnings of at least $8.40 per share. Analysts had forecast $8.27.
Swedish will attend a meeting of insurers at the White House later today, his spokeswoman confirmed. The meeting was first reported by website Politico on Tuesday, but the White House did not confirm it, and details on the exact topic are not known.
WellPoint and other insurers are selling policies for individuals on the new state-based exchanges created under U.S. the healthcare reform law known as Obamacare, which gives consumers access to government subsidies based on income.
Fourteen states are operating their own exchanges, and the federal government is operating them for the other 36 states. WellPoint is selling plans on both types of exchanges.
Since the October 1 launch, technology problems have prevented millions of people from logging onto the government site to buy plans, pushing them to the phones and paper applications. Enrollment for 2014 is open until the end of March.
WellPoint said it had 35.5 million members at the end of September, an increase of 2 million from a year earlier. Its Medicaid enrollment increased by 2.4 million members due to the acquisition of Amerigroup, while its commercial and Medicare businesses declined. It expects to end the year with 35.6 million people enrolled in medical plans.
The company said it had spent 84.9 percent of its premium income on providing healthcare, down from 85.4 percent a year earlier.
WellPoint said unit cost increases and use of medical services were lower than anticipated during the first nine months of this year. Use of medical services, including hospitalizations, doctor visits and elective surgery, has been down in recent years because of the weak economy and as health plans have shifted more of the cost to consumers.
Third-quarter net income fell to $656.2 million, or $2.16 per share, from $691.2 million, or $2.15 per share, a year earlier as costs rose due to investments for growth opportunities and increased compensation.
The report comes one week after results from UnitedHealth Group Inc (UNH.N), whose 2014 outlook for the private Medicare business was perceived negatively by investors and drove down shares of WellPoint, Cigna Corp (CI.N), Aetna Inc (AET.N), Humana Inc (HUM.N) and other health insurers.
(Reporting by Caroline Humer; Editing by Lisa Von Ahn)