DOW JONES NEWSWIRES
WellPoint Inc.'s (WLP) third-quarter earnings fell 11% on
declining enrollments and asset write-downs, though the results
were better than expected.
Chairman and Chief Executive Angela Braly said the nation's
largest health insurer by members remains confident about the
outlook for the current quarter and expects net growth of more than
400,000 national members in January.
For the year, the company lowered its 2009 earnings forecast to
$5.06 to $5.23 a share from $5.60 to $5.66 a share to reflect the
asset write-downs and increased usage of health benefits after an
employee loses his or her job. But revenue estimates were raised
$300 million to $60.9 billion. WellPoint also expects year-end
medical enrollment of 33.6 million members, which would be down
300,000 from Sept. 30 levels.
The managed-care industry faces concerns about Washington's
health-care debate and an expected wave of H1N1 flu this fall and
winter, in addition to challenges from the recession. WellPoint in
recent quarters has shown signs of getting a better handle on
rising medical costs. The company has introduced more-affordable
products and expanded retention programs amid the recession.
The government recently lifted marketing and enrollment
sanctions on WellPoint's Medicare products in time for the company
to sign up beneficiaries for next year.
WellPoint reported a profit of $730.2 million, or $1.53 a share,
down from $820.7 million, or $1.60 a share, a year earlier. The
latest period included a net 25 cents in write-downs.
Revenue rose 3.1% to $15.43 billion, though premium revenue
declined just 1.1%.
Analysts polled by Thomson Reuters most recently forecast
earnings of $1.37 on revenue of $15.15 billion.
Medical membership fell 4.2% to 33.9 million as of Sept. 30 from
a year earlier and dropped 300,000 during the quarter.
Its medical-loss ratio, or the amount of premiums used to pay
patient medical costs, fell to 81.1% from 82.5% a year earlier and
82.9% in the second quarter.
Express Scripts Inc. (ESRX) in April agreed to buy WellPoint's
in-house pharmacy-management business for $4.68 billion. The deal,
expected to close before year-end, is a shift from prior a strategy
among health insurers to own and control their own PBMs, could
pressure rivals to do the same.
WellPoint shares closed Tuesday at $46.70 and didn't trade
premarket.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com;