Profit at WellPoint Inc. fell sharply in the fourth quarter but met analysts’ projections, the company announced Wednesday morning.
The Indianapolis-based health insurer earned $148.2 million, or 49 cents per share, during the last three months of the year, a decrease of 68 percent from the same quarter the year before.
A big part of that decline was the $164.5 million after-tax charge WellPoint recorded from the sale of its 1-800-Contacts subsidiary to a private equity firm.
Excluding investment results and other one-time charges, WellPoint would have seen its profit drop 17 percent from a year ago, to $261 million, or 87 cents per share.
On that basis, Wall Street analysts were expecting 87 cents per share, according to a survey by Thomson Reuters.
For all of 2013, WellPoint’s profit fell 6 percent from the previous year, to $2.49 billion. Because of stock repurchases, earnings per share increased by two pennies, to $8.20.
Excluding special charges, WellPoint’s earnings per share rose 13 percent last year, to $8.52. Analysts were expecting full-year profit on that basis of $8.51 per share.
“We are pleased with our performance in 2013, which came in stronger than we expected even as we prepared for the implementation of the Affordable Care Act,” WellPoint CEO Joe Swedish said in a prepared statement.
In the fourth quarter, WellPoint’s revenue grew 16 percent, to $17.9 billion, slightly beating analysts’ expectations. WellPoint saw its membership in its health plans rise by 145,000 people during the quarter.
WellPoint’s 2013 revenue grew nearly 16 percent, to $70.2 billion, as the company enjoyed a full-year of contributions from Amerigroup Corp., the Medicaid managed care subsidiary it acquired near the end of 2012.
Analysts had been expecting revenue of $70.7 billion.
The company said its medical expenses spiked 18 percent in the quarter, to $14.58 billion, due in part to higher use of individual policies in advance of the overhaul's coverage expansions, which unfolded this year.
Insurers typically see a rise in use at the end of each year as patients pay up their deductible, or the out-of-pocket cost before most coverage starts, and then use their coverage before that deductible renews in the new year. But WellPoint said it also saw a jump in use from patients who wanted to take advantage of their policies while they still had them.
At least 4.7 million customers nationwide received notices from their insurers last fall that their plans were being canceled because they didn't meet coverage requirements established under the overhaul, the federal law that aims to cover millions of uninsured people. The actual number is likely much higher because officials in nearly 20 states said they were unable to provide information on cancellation notices or were not tracking it.
The overhaul also provided help to many with canceled coverage by offering income-based tax credits that customers can use to buy a new plan on state-based insurance exchanges that started last fall.
But complaints over the cancellation notices eventually led President Obama to announce that people could keep their individual policies if state regulators approved.
WellPoint spokeswoman Kristin Binns said health care use started climbing after customers received their notices and before the president's November announcement. The insurer runs Blue Cross Blue Shield plans in 14 states, and its biggest market, California, did not allow for plans to be continued.
WellPoint provides individual insurance coverage for about 1.8 million people, or 5 percent of its total medical enrollment of 35.7 million. It did not say how many of its customers received cancellation notices.
In 2014, analysts expect WellPoint’s revenue to surge $3 billion, but they expect profit to decline to $8.39 per share. WellPoint predicted profit of “more than $8.00 per share.”
The insurer also said Wednesday that its board voted to raise WellPoint's quarterly dividend to 43.75 cents per share, up from 37.5 cents.
WellPoint shares closed Tuesday at $84.30 apiece, down 0.7 percent. They have fallen $8.09 per share, or 8.8 percent, since the start of the year.