WellPoint’s profit drops, but whips expectations

WellPoint Inc.’s third-quarter profit fell 5 percent from a year ago, but came in far higher than Wall Street analysts were expecting.

As a result, the Indianapolis-based health insurer raised its full-year profit forecast to $8.40 per share, an increase of 40 cents.

WellPoint earned $656.2 million in the quarter ended Sept. 30, down from $691.2 million in the same quarter a year ago.

Because WellPoint has spent $1.2 billion buying back its own stock over the past year, the company’s profit per share actually increased to $2.16 in the latest  quarter, from $2.15 a year ago.

Excluding investment gains and one-time gains and charges, WellPoint would have earned $2.10 in the third quarter this year. On that basis, analysts were expecting profit of just $1.82 per share, according to a survey by Thomson Reuters.

The comany posted revenue of nearly $18 billion, well above the $17.62 billion expected by analysts.

“I am encouraged by the results in both our Commercial and Government segments in this dynamic marketplace,” WellPoint CEO Joe Swedish said in a prepared statement.

WellPoint reported a halt in the quarter to its loss of health plan members at its commercial customers. It did lose 158,000 Medicaid members during the quarter in California and Ohio. Overall, WellPoint had 35.5 million members in its health plans on Sept. 30.

But the amount of medical claims those members are filing dropped in the third quarter, cutting the percent of premiums WellPoint spends on benefits to 84.9 percent from 85.4 percent a year ago.

“Our third quarter results were driven primarily by lower than anticipated medical cost experience as well as favorable membership and revenue,” Wayne DeVeydt, WellPoint’s chief financial officer, said in a statement.

WellPoint's stock fell last week after its rival, Minnesota-based UnitedHealth Group, posted earnings that disappointed investors.