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WellPoint Earnings Close to Estimates as Profit Jumps

By Reuters
Published | Updated

NEW YORK – WellPoint Inc. (WLP), the largest U.S. health insurer, Wednesday said profit rose sharply, helped by an increase in membership, and boosted its 2006 profit outlook, though it was below Wall Street estimates.

Net income jumped to $652 million, or $1.04 cents per share, from $184.5 million, or 46 cents per share, in the year-ago period, when the Indianapolis-based company took 39 cents in charges related to its merger with Anthem and repurchased debt.

The company said fourth-quarter earnings per share included 1 cent related to net realized investment losses.

Analysts, on average, expected WellPoint to earn $1.04 for the quarter, according to Reuters Estimates.

"WellPoint's fourth quarter was about what the market expected," CIBC analyst Carl McDonald said in a research note.

WellPoint forecast net income of $4.54 per share for 2006, 3 cents higher than its prior view. The new forecast assumes the company completes $2 billion in share repurchases this year and includes costs of 20 cents per share from the impact of expensing stock options, WellPoint said.

The average estimate of 22 analysts was $4.61 per share for 2006, according to Reuters Estimates. Excluding estimates from two analysts who did not account for expensing stock options, the average estimate was $4.59 per share.

The company said it continues to expect first-quarter net income of $1.07 per share.

WellPoint last month closed its $6.5 billion acquisition of WellChoice Inc., increasing its medical enrollment to about 34 million members. Rival UnitedHealth Group Inc. (UNH) kept apace, completing its $9.2 billion purchase of PacifiCare Health Systems Inc. in December.

WellPoint increased its enrollment by nearly 1.2 million members during 2005, excluding acquisitions.

Total revenue rose 67.5 percent to $11.43 billion. Including the results of both Anthem and WellPoint — whose merger closed at the end of November 2004 — total operating revenue rose 5.8 percent.

WellPoint shares, which closed at $73.19 on Tuesday on the New York Stock Exchange, rose 5.2 percent in the fourth quarter, trailing a 7 percent climb for the Morgan Stanley Healthcare Payor Index during the period.