(Adds analyst comment on medical cost)
July 30 U.S. health insurer WellPoint Inc
on Wednesday reported a decline in second-quarter
profit, but its closely watched medical costs as a percentage of
premiums ratio improved and it beat Wall Street estimates.
WellPoint, which runs Anthem and Empire Blue Cross Blue
Shield Plans, is the third large health insurer to beat
analysts' earnings estimates for the quarter but shares have
sold off as investors worried that a run in low medical costs
might be ending.
WellPoint beat Wall Street expectations because this ratio
was less than foreseen, Leerink Partners analyst Ana Gupte said
in a research note.
"The quarter should offer relief to nervous investors,"
WellPoint said it spent 82.7 percent of the premiums that it
brought in on medical claims in what is known as the medical
benefit expense ratio. That is down from 83.9 percent a year
WellPoint said net income fell to $731 million, or $2.56 per
share, from $800 million, or $2.64 per share, a year earlier.
Excluding gains, it reported earnings of $2.44 per share.
Analysts had been expecting $2.26.
The decline in net income is partly due to a rise in sales,
general and administrative expenses to 15.8 percent of operating
revenue from 13.9 percent a year earlier because of new fees and
continued spending due to healthcare reform.
It raised its expectations for 2014 earnings by 20 cents to
at least $8.60 per share.
(Reporting by Caroline Humer; Editing by W Simon, Lisa Von Ahn
and Nick Zieminski)