Wellpoint Earnings Cheat Sheet: Positive Profits to Start 2011

S&P 500 (NYSE:SPY) component Wellpoint, Inc. (NYSE:WLP) reported net income above Wall Street’s expectations for the first quarter. WellPoint, Inc. is a health benefits company which offers a spectrum of network-based managed care plans to employers individuals and senior markets.

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Wellpoint Earnings Cheat Sheet for the First Quarter

Results: Net income for the health care plans company rose to $926.6 million ($2.44/share) vs. $876.8 million ($1.96/share) in the same quarter a year earlier. A rise of 5.7% from the year earlier quarter. The results included investment gains of $35.6 million ($0/09/share) vs $18.6 million ($0.04/share) last year.

Revenue: Fell 2.9% to $14.65 billion YoY.

Actual vs. Wall St. Expectations: WLP beat the mean analyst estimate of $1.87/share. Estimates ranged from $1.57 per share to $1.95 per share.

Quoting Management: “We are pleased with our positive start to 2011. Our membership and earnings results are higher than we originally anticipated and we are continuing to become a more efficient and effective company, as evidenced by our 4.5 percent reduction in SG&A expenses while serving 363,000 more medical members than we did in the first quarter of 2010,” said Angela F. Braly, chair, president and chief executive officer.

“Our first quarter results are a testament to the strong value proposition we create in our efforts to hold down the rate of rising health care costs while improving quality, and our commitment to continuously improve by building a better WellPoint. Based on these results, we are raising our year-end 2011 membership expectation to 33.9 million and increasing our full year earnings guidance,” said Wayne S. DeVeydt, executive vice president and chief financial officer. “We are also managing our capital to enhance value for our customers and shareholders. During the first quarter, we paid the first cash dividend in WellPoint’s history and also utilized $742 million to repurchase 11.4 million shares on the open market.”

Key Stats: Net income has dropped 3.6% year over year on average across the last five quarters. Performance was hurt by a 80% decline in the fourth quarter of the last fiscal year from the year earlier quarter.

Competitors to Watch: CIGNA Corporation (NYSE:CI), Humana Inc. (NYSE:HUM), UnitedHealth Group Inc. (NYSE:UNH), Aetna Inc. (NYSE:AET), Universal American Corp. (NYSE:UAM), Health Net, Inc. (NYSE:HNT), HealthSpring, Inc (NYSE:HS), Molina Healthcare, Inc. (NYSE:MOH), Coventry Health Care, Inc. (NYSE:CVH), and Triple-S Management Corp. (NYSE:GTS).

Today’s Performance: Shares of WLP are trading at $74.20 as of April 27, 2011 at 8:35 AM ET, up over 1% from the previous close of $72.97.


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