Will ObamaCare Worries Hold Back WellPoint?
WellPoint (NYSE:WLP), the United States’ second-largest health insurance provider, reported profit for the fourth quarter that beat analysts’ expectations, drawing upon low medical costs and enrollment gains from its Amerigroup acquisition. However, the insurer warned investors that it was giving a “prudent” outlook for this upcoming year as the healthcare industry faces significant changes.
For the three-month period, the company said Wednesday that net profit increased to $464.2 million, or $1.51 per share. These results were boosted by an income tax settlement from the Internal Revenue Service and investment gains. Without these special items, earnings rose to to $1.03 per share from 99 cents a year earlier. Analysts polled by Thomson Reuters had predicted a profit of 95 cents per share. In addition, revenue increased to $15.27 billion from $15.18 billion in the year-ago quarter.
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This earnings statement was the first to include Amerigroup figures, which contributed to a rise in membership; as of December 31, the insurer had 36.1 million people enrolled, an increase of 5.5 percent from the previous year…
“We are encouraged by the performance of our associates and the business in the last six months, but we also want to retain an appropriately prudent stance in our outlook, in light of what we expect to be a fluid and dynamic market over the next 18 to 24 months,” said Wayne DeVeydt, the company’s executive vice president and chief financial officer. The company forecast a 2013 net profit of at least $7.60 per share.
Because it sells private health insurance to businesses and individuals and provides government insurance for the poor and elderly, WellPoint is preparing for the changes that will come as a result of the U.S. Affordable Care Act; later this year, states and the federal government will begin selling health insurance on exchanges for 2014.
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