Reuters: Global Markets: WellPoint profit tops estimates on lower costs

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WellPoint profit tops estimates on lower costs Nov 7th 2012, 14:01 Wed Nov 7, 2012 9:01am EST (Reuters) - Health insurer WellPoint Inc (WLP.N) joined rivals UnitedHealth Group (UNH.N) and Aetna Inc (AET.N) in reporting a better-than-expected quarterly profit as it cut costs and benefited from a lower tax rate. WellPoint said on Wednesday net income rose to $691.2 million, or $2.15 per share, in the third quarter, from $683.2 million, or $1.90 per share, a year earlier. Excluding one-time items, the company earned $2.09 a share, topping analysts' average forecast of $1.84, according to Thomson Reuters I/B/E/S. Jason Gurda, an analyst at Leerink Swann, said the results were not as strong as those of most WellPoint peers. "Earnings were ahead of expectations but it was largely due to a lower-than-expected tax rate and share count," he said. "On the operating side, they were largely in line with expectations, however most of their peers came in well ahead this quarter." WellPoint's effective income tax rate was 32.6 percent in the quarter, down from 34.6 percent a year ago. Operating revenue topped $15.1 billion, little changed from a year ago. Premium revenue declined 1 percent, and the health benefit to expense ratio was 85.4 percent, up from 85.1 percent a year earlier. The second-largest U.S. health insurer by market value said enrollment totaled 33.5 million members at the end of September, down 2.5 percent from a year earlier. WellPoint, which warned last summer of intensifying competition and rising medical costs, said it still expects year-end enrollment of about 33.4 million members. It also reiterated its full-year profit forecast. "The third quarter reflected a combination of improved core operating performance, administrative expense management, and favorability in the capital management of the company," Chief Financial Officer Wayne DeVeydt said in a statement. The re-election of President Barack Obama puts his healthcare reform act on course to be fully implemented; key provisions kick in 2014. The reforms, which will add millions of new customers to the rolls of health insurers, also impose conditions under which patients may not be denied coverage due to pre-existing conditions. The federal governments is also trying to put a clamp on reimbursement for Medicare and Medicaid, as part of its wider effort to bridge a growing budget deficit. This has prompted a string of deals in the health insurance sector as companies rush to gain scale and market share. WellPoint in July announced a deal to buy rival Amerigroup Corp (AGP.N) for $4.46 billion to focus on its Medicaid business. This was closely followed by Aetna announcing the $5.6 billion buy of Coventry Health Care Inc (CVH.N). Shares of WellPoint, which has a market value of about $19.9 billion, fell 3.6 percent to $59 in premarket trading. (Reporting by Esha Dey in Bangalore, Toni Clarke in Boston and Caroline Humer in New York; Editing by Supriya Kurane and John Wallaceis) Link this Share this Digg this Email Reprints

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