IBJNews

WellPoint shares rise after better-than-expected quarter

Back to TopCommentsE-mailPrintBookmark and Share

WellPoint Inc. shares rose more than 5 percent Wednesday morning after the Indianapolis-based health insurer announced better-than-expected quarterly results boosted by Obamacare enrollments.

The results prompted WellPoint to increase its profit forecast.

First-quarter medical enrollment rose by 1.3 million from the prior three-month period as WellPoint benefited from new customers through the exchanges created by Patient Protection and Affordable Care Act.

WellPoint has the highest share of enrollments of insurers through Obamacare, saying Wednesday that it has signed up 400,000 on government exchanges through Feb. 14.

“Obamacare is a very important piece of WellPoint’s growth story,” said Ana Gupte, an analyst with Leerink Partners in a phone interview from New York. “They’ve grown a lot, and they continue to grow further on public exchanges and Medicaid expansion.”

Those customers also are younger than earlier anticipated, making the company’s earlier prediction of “double-digit” rate increases next year less likely.

“Obamacare is a very important piece of WellPoint’s growth story,” said Ana Gupte, an analyst with Leerink Partners in New York. “They’ve grown a lot, and they continue to grow further on public exchanges and Medicaid expansion.”

WellPoint shares 5.6 percent, to $100.75, in late-morning trading. The stock was up 31 percent in the past 12 months through Tuesday.

WellPoint said it now expects 600,000 enrollments through the public exchanges this year.

The average age of enrollment has come down “each day in a meaningful fashion,” CEO Joseph Swedish said on a conference call. That means double-digit rate growth is less likely and will vary market to market.

Younger customers tend to less expensive for health insurers, seeking fewer medical services.

Full-year profit is now expected to be more than $8.40 a share, an increase of 20 cents, WellPoint said.

WellPoint's profit swooned in the first quarter, but less than analysts were expecting. It earned $701 million in the first three months of the year, down 21 percent from the same quarter a year ago.

Excluding investment gains and one-time charges, those profits translated into earnings per share of $2.30, down from $2.94 in the same quarter a year ago.

But Wall Street analysts were expecting WellPoint’s profit to dip as low as $2.13 per share, acoording to a survey by Thomson Reuters.

“We are off to a strong start, supporting an increase in our earnings guidance for the full year,” WellPoint CEO Joseph Swedish said in a prepared statement.

For all of 2014, WellPoint now expects to earn more than $8.40 per share, up from a forecast of more than $8.20 per share it issued in March, and a forecast of $8 per share it issued in January.

Wall Street analysts already had been expecting profit of $8.40 per share for the year, according to the Thomson Reuters survey.

WellPoint also raised its expectations for enrollment growth in its health plans. It now expects to add 1.3 million or 1.4 million members, up from its March forecast of 1 million to 1.3 million.

WellPoint’s enrollment in its commercial health plans grew between 3.2 percent and 5.5 percent in the first quarter, including the addition of 95,000 net new customers in its individual business, where WellPoint is fighting for enrollment in the Obamacare exchanges.

But WellPoint suffered declines in its Medicare enrollment and in its fully insured commercial business, which brings in more profit than contracts where WellPoint merely acts as an adminsitrator of claims.

During the first quarter, WellPoint’s revenue rose 1.6 percent, to nearly $17.86 billion. Analysts were expecting a bit more in revenue, with an estimate of $17.96 billion.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
thisissue1-092914.jpg 092914

Subscribe to IBJ
  1. On my rental property, before tax caps, I was paying $2,000/yr in property taxes. After the tax caps I'm paying $4,000/yr. How exactly am I "benefiting the most"?

  2. Nick, I too tried that new Walmart NM on Michigan a couple of weeks ago. I had the same feeling, it had good prices, but something was just off about it. I can't put my finger on what it is, but it just didn't feel right. On the plus side, it was easy to get in and out of and much less busy than a typical Walmart.

  3. @Young Hoosier - you might want to check out the Paris skyline again....it's decidedly taller than 7-8 stories http://all-that-is-interesting.com/paris-skyline-photo

  4. Are you in need of Loan or financial help?, you need a loan for your business or to solve other monetary issues. James Lewis Loan Company started offering loans with a very low interest rate of 3% for a minimum of 15 years, Interested applicants should submit their request via email (jameslewisloan@gmail.com) for immediate processing with the information listed below: Names in full:................ Address:...................... Gender:.................... Email:........................ Phone Number:....... Amount Required:... Loan Duration:....... Country:................. Occupation:.................. ================================== In acknowledgment to these details, I will send you a well calculated Terms and Conditions for the amount you require. Warm Regards, Mr James Lewis

  5. So the GOP legislature passed a bill that gave big breaks to business at the expense of Indiana families. Color us not surprised.

ADVERTISEMENT