Wednesday, commercial health benefits provider WellPoint Inc. (WLP) reported a 10.1% decline in its second-quarter profit, hurt by net realized investment losses and higher expenses. Yet, earnings per share rose from last year on lower share count and topped analysts' estimate. Going forward, the Indianapolis, Indiana-based company lowered the high end of its fiscal 2008 earnings outlook and cut its operating revenue forecast.
Second-quarter net income was $750.5 million, down from $835.2 million last year. However, earnings per share rose 6.7% to $1.44 from $1.35 a year ago, helped by a 15.4% decrease in total share count.
WellPoint said that current-year quarter results included net realized investment losses of $0.03 per share.
On average, 16 analysts polled by First Call/Thomson Financial expected the company to post earnings of $1.36 per share.
Quarterly operating revenues were $15.48 billion, up 3.1% from $15.01 billion a year ago. Total revenues rose 2.6% to $15.67 billion from $15.27 billion in the prior-year quarter. Analysts projected revenues of $15.61 billion.
The company attributed the revenue growth to premium rate increases in all medical lines of business and growth in its Medicare Advantage products. These increases in revenue were partially offset by the loss of the New York State prescription drug contract and lower Commercial and State Sponsored fully insured membership, the company noted. Commercial Business posted revenues of $9.52 billion, a 0.2% decline from $9.53 billion in the previous year. Operating gain for the segment was $820.7 million, down 11.6% from $928.8 million in the second quarter of 2007.
Meanwhile, Consumer Business revenues rose 8.8% to $4.14 billion from $3.81 billion in the same quarter last year. Operating gain was $223.7 million, up 5.5% from $212.0 million in the previous year.
Medical enrollment totaled about 35.3 million members as of June 30, up 1.5% from last year, driven by the National business, which added 626,000 members over the past 12 months. Enrollment in the company's Senior products increased by 66,000 members in the quarter.
For the six-month period, the company earned $1.34 billion, or $2.50 per share, compared to $1.62 billion, or $2.61 per share, last year. Total revenues rose 2.8% to $31.22 billion from $30.36 billion in the same quarter a year ago.
Looking ahead, the company now expects fiscal 2008 earnings in the range of $5.42 - $5.57 per share, including net realized investment losses of $0.06 per share. Operating revenue is now expected to be about $61.9 billion for the year. The company had earlier projected full-year earnings in the range of $5.42 - $5.67 per share on operating revenue of approximately $62.3 billion. Analysts currently expect full-year earnings of $5.48 per share on revenues of $62.36 billion.
The company also expects medical enrollment to decline by approximately 150,000 members during the second half of 2008.
WLP closed Tuesday's trading at $48.75, up $3.09, on a volume of 6.61 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.