WellPoint's profit falls 11% but beats forecasts
October 29, 2009
WellPoint Inc., the largest U.S. health insurer by membership, beat analysts' estimates for third-quarter earnings Wednesday while saying operating profit was likely to decline next year.
Excluding a 28-cent charge from the sale of its drug-benefits division, earnings were $1.78 a share, the Indianapolis company said. That compares with an average estimate of $1.39 in a Bloomberg analyst survey.
Chief Executive Angela Braly cited "outstanding sales" among large employers, the only customer group in which enrollment increased. Braly also announced the cutting of more than 1,500 jobs this year in addition to higher charges for coverage. UnitedHealth Group Inc., the biggest insurer by sales, last week reported earnings that also beat estimates.
"United and WellPoint did a very good job with setting stronger pricing for this year, and that's really been benefiting them," said Steven Shubitz, an analyst with Edward Jones & Co. in St. Louis.
WellPoint beat third-quarter estimates by raising premiums and budgeting more than needed to treat patients. Earnings from the company's health plans will probably decline next year as U.S. job losses persist through the end of 2010, Chief Financial Officer Wayne DeVeydt said.
WellPoint shares fell 41 cents to $46.29.
Net income dropped 11% in the third quarter to $730.2 million, or $1.53 a share, from a year earlier. Revenue increased 3.1% to $15.4 billion.
Total enrollment fell 4.2% to 33.9 million, with most of the losses resulting from layoffs, WellPoint said.
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