Health insurer Wellpoint Health Networks Inc. (WLP) Friday trimmed its earnings forecast for the fourth quarter, citing merger costs and a larger-than-expected debt repurchase last month.

Wellpoint, which merged with Anthem Inc. (search) last year to create the No. 1 U.S. health insurance company, now expects to earn about 90 cents a share in the quarter, compared with a previous forecast of 95 cents to $1.

The company maintained its forecast for 2005, at $7.75 per share, a penny above average analyst forecasts, according to Reuters' Estimates.

Investors are looking to the company's financial preview later Friday morning to gauge industry health in 2005, and as earnings season begins this month. HMOs (search) have outperformed the market for the last five years, as the health insurance companies manage to make profits by keeping insurance premiums well ahead of soaring medical costs.

"I'm really looking for what they will say about 2005," Williams Capital Group analyst Adam Miller. "The keys will be enrollment, organization and where sales growth is going to come from."

Wellpoint attributed the weaker-than-expected fourth-quarter results to the repurchase of 9.125 percent and 9 percent notes. It said the offer attracted more investors than expected, resulting in a pre-tax loss of about $146 million, compared with an anticipated pre-tax loss of $125 million.

The refinancing will result in lower interest rates over the next 23 years, the company said.

Wellpoint, which forecast merger-related costs of 31 cents per diluted share for 2004, will review the updated financial outlook and provide 2005 quarterly earnings expectations in a conference call later this morning.