Health insurer WellPoint Inc. (WLP) reported Wednesday a slight increase in the first-quarter profit, while adjusted earnings topped Street estimates, as memberships increased mainly on Amerigroup acquisition. Further, the company lifted its fiscal 2013 earnings forecast.
Wayne DeVeydt, executive vice president and chief financial officer, said, "Our quarterly results were ahead of our plan both at the operating gain level and below the line, and were supported by strong quality metrics. We have modestly raised our full year EPS outlook as a reflection of our performance, but are still being prudent as many of the uncertainties inherent in our original guidance still exist."
In its recently concluded first quarter, WellPoint's net income increased 3.4 percent to $885.2 million from last year's $856.5 million. Earnings per share climbed 14.2 percent to $2.89 from $2.53 a year ago, reflecting a 9.8 percent drop in share count.
The latest-quarter results included net investment losses of $0.05 per share, while prior year's results had $0.19 per share of net income related to certain items.
Excluding items, earnings were $2.94 per share, an increase of 25.6 percent from last year. On average, 20 analysts polled by Thomson Reuters expected earnings of $2.38 per share for the quarter. Analysts' estimates typically exclude one-time items.
Total operating revenues grew 15.8 percent to $17.55 billion from prior year's $15.15 billion, while analysts estimated revenues of $18.02 billion for the quarter.
The company attributed the growth in revenues to the inclusion of Amerigroup business, partially offset by the reduction in fully insured Local Group and Senior membership.
A slight decline in commercial business was more than offset by 51.5 percent surge in consumer business revenues reflecting the inclusion of Amerigroup business, the company said.
Total operating margin, meanwhile, dropped 20 basis points from last year to 7.8 percent.
The company's medical enrollment exceeded 35.8 million members as of March 31, an increase of 6.3 percent from last year.
The benefit expense ratio, an operating metric used in the health insurance industry, was 83.7 percent, an increase of 40 basis points from last year.
Looking ahead, for fiscal 2013, WellPoint now expects net income to be at least $7.75 per share, including net investment losses of $0.05 per share. Adjusted net income is currently estimated to be at least $7.80 per share. Nineteen analysts project annual earnings of $7.78 per share. The forecast includes integration costs regarding the Amerigroup acquisition
The company's previous forecast for net income was at least $7.60 per share, including integration costs related to the Amerigroup acquisition.
Operating revenue is now expected to be in the range of $71 billion to $73 billion, compared to previous forecast between $71.5 billion and $73 billion. In the year 2012, the company's net income was $8.18 per share and adjusted net income was $7.56 per share, on revenues of $60.73 billion.
Street analysts estimate earnings of $7.78 per share on revenues of $71.90 billion.
WellPoint shares closed Tuesday's trading at $69.33, up $1.08 or 1.58 percent.
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