Health insurer WellPoint Inc WLP.N on Wednesday said it was not ready to provide profit forecasts for 2014, citing problems launching new insurance plans under President Barack Obama's healthcare reform, sending shares lower.
WellPoint is one of the leading insurers offering health plans on the state-based exchanges created under Obamacare to provide coverage for millions of Americans.
The exchanges launched on October 1 and the enrollment effort has been stymied by technical problems on the federal government's Healthcare.gov website serving 36 states. That has raised concerns that consumers will not be able to sign up in time to get coverage starting on January 1.
WellPoint does not yet have an accurate picture of enrollment in these exchanges, Chief Executive Officer Joseph Swedish said during a conference call. WellPoint has signed up new members in these plans, but the company declined to give numbers.
The White House was due to convene a meeting with leading insurance company CEOs, including Swedish, later on Wednesday.
Shares in WellPoint, which operates 14 Blue Cross Blue Shield licenses, fell 3 percent. Rivals Aetna Inc (AET.N) and UnitedHealth (UNH.N) dropped 2.3 percent and 0.8 percent.
"We remain optimistic about the long-term membership growth opportunities on the exchanges, but given that we are just three weeks into the open enrollment period, it is really too early to draw any definitive conclusions," Swedish said during a call with investors.
Chief Financial Officer Wayne DeVeydt said that the company still must determine how many current customers will migrate to the exchanges and how much it will need to spend to support the plans there to gauge its 2014 performance.
One analyst said shares were off because the company was being so cautious about the outlook for next year.
Morningstar senior analyst Vishnu Lekraj said the Obamacare launch "has been rocky to say the least," leaving many questions about how the implementation of them will unroll and what the affect on insurance plan premiums will be in the longer run.
PROFIT BEATS EXPECTATIONS
Fourteen U.S. states are operating their own Obamacare 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 phone and paper applications. Enrollment for 2014 is open until the end of March.
WellPoint said its 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.
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.
For 2013, the company raised its 2013 membership and profit forecasts to reflect the stronger-than-expected third quarter performance. It now expects 2013 earnings of at least $8.40 per share. Analysts had forecast $8.27.
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.
The report comes one week after results from UnitedHealth, whose 2014 outlook for the private Medicare business was perceived negatively by investors and drove down shares of WellPoint, Cigna Corp (CI.N), Aetna, and Humana Inc (HUM.N).
(Reporting by Caroline Humer; Editing by Michele Gershberg, Lisa Von Ahn and Andrew Hay)