WellPoint sees profit, membership increase

October 24, 2007
WellPoint Inc. posted solid profit growth and modest customer growth in the third quarter, the Indianapolis-based health insurer announced this morning. Net income was $868 million, or $1.45 per share, a 7-percent increase over the same quarter last year. WellPoint also reversed a decline in membership from its second quarter, posting a gain of 38,000 for the quarter ended Sept. 30.

However, WellPoint reduced its outlook for full-year customer growth. It now expects to add 800,000 customers this year, down from earlier projections of 1 million.

WellPoint raised its full-year profit forecast by a penny. It now expects to earn $5.56 per share.

"We are pleased with our financial results for the third quarter and they reinforce the confidence we have in our future outlook," CEO Angela F. Braly said in a written statement.

Revenue in the quarter rose 5.5 percent to $13.9 billion from the same quarter last year.

WellPoint spent slightly more of its revenue on benefit payouts. Its benefit expense ratio crept up to 81.8 percent in the third quarter from 81.3 percent in the same quarter last year. Most of the rise stemmed from a higher-than-expected payment to the government for risk sharing in the Medicare Part D prescription drug program.

WellPoint reduced its total overhead, dropping its selling, general and administrative expenses to 14.6 percent of its revenue. That figure was 15.5 percent of revenue a year ago.

During the third quarter, WellPoint repurchased 30.1 million shares of its common stock for $2.4 billion. WellPoint's shares closed Tuesday at $79.48, up 79 cents apiece.
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