WellPoint, the second-largest U.S. health insurer, on Wednesday reported a lower quarterly profit as it took a charge for the sale of its contact lens business and consumers increased their use of medical services as they faced the loss of health plans at the end of 2013.
WellPoint, which sells Empire and Anthem Blue Cross Blue Shield plans, said its costs went up as it prepared for the rollout of Obamacare and an expected increase in new members this year.
The company is one of the biggest players on the new insurance exchanges created under President Barack Obama's national healthcare law. Competitor Aetna Inc (AET.N) is in about 16 states while UnitedHealth Group Inc (UNH.N), the largest insurer, has only offered plans in a few states.
WellPoint said net profit for the fourth quarter fell to $148.2 million, or 49 cents per share, from $464 million, or $1.51 per share a year earlier. Excluding costs for the sale of 1-800 Contacts and investment gains, earnings fell to 87 cents per share from $1.03 per share, which also included investment gains and acquisition costs.
The company forecast earnings of at least $8 per share in 2014, representing a likely drop from the $8.52 it earned in 2013 before special items. Analysts on average were expecting 2014 earnings to fall to $8.39 per share, according to Thomson Reuters I/B/E/S.
The company spent 87.8 percent of its premiums brought in on medical claims, up from 87.3 percent a year ago. It said that as old individual plans were being canceled ahead of the introduction of the new 2014 insurance with more benefits, customers used more medical services.
(Reporting by Caroline Humer; Editing by Lisa Von Ahn and Rosalind Russell)