WellPoint shares rise after better-than-expected quarter

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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.


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