July 24 WellPoint Inc reported a much
higher-than-expected quarterly profit on Wednesday, helped by
lower-than-forecast medical costs in its employer-based
insurance business and improvements in Medicaid operations after
the purchase of Amerigroup in December.
The second-largest U.S. insurer also raised its full-year
earnings forecast to at least $8 per share, up from the $7.75 it
had affirmed in June.
WellPoint said its improved 2013 outlook was based on the
better first-half results and that it remained "prudent" about
the second half of the year.
The company and its rivals are bracing for a transformation
of the U.S. healthcare system under President Barack Obama's
reform law, which aims to expand insurance coverage to more than
30 million more Americans through larger Medicaid programs for
the poor and subsidized health insurance exchanges that goes on
sale Oct. 1.
WellPoint, which plans to sell exchange-based insurance in
the 14 states where it operates the Blue Cross Blue Shield
license, said second-quarter net income rose to $800.1 million,
or $2.64 per share, from $643.6 million, or $1.94 per share, a
Excluding investment gains and acquisition-related costs,
WellPoint said earnings were $2.60 per share. That compares with
analysts' expectations of $2.11, according to Thomson Reuters
The report comes on the back of stronger-than-expected
results from UnitedHealth Group Inc last week.
This was WellPoint's first full quarter under new Chief
Executive Officer Joseph Swedish. He took over the top spot at
the company from Angela Braly, who left after coming under
investor pressure one year ago over disappointing financial
WellPoint said it expected medical costs to rise in 2013,
but low utilization of medical services by consumers continued
during the first six months and was beyond expectations. That
trend has helped all insurers during the past few years as their
claim costs fell.
The company said it had 35.7 million members at the end of
June, a slight drop from the end of March as declines in the
employer-based and Medicare businesses outpaced increases in
Medicaid from the Amerigroup acquisition.