WellPoint Profit Down, Adj. Earnings Top Estimates; Lifts Full-year View

(RTTNews) - Health insurer WellPoint, Inc. (WLP) Wednesday reported a decline in the third-quarter profit, reflecting higher income tax expense. Earnings per share, however, rose from last year. Adjusted earnings topped analysts' estimates, helped by growth in membership across both of its segments.

The company lifted its adjusted earnings per share outlook for full year 2014, while lowered revenue view.

For the quarter, the company's net income declined to $630.9 million from $656.2 million in the previous year. Earnings per share were $2.22, up from $2.16 per share reported last year.

The company said its recent-quarter results included net losses of about $0.14 per share. Excluding items, adjusted net income was $2.36 per share, while the firm posted $2.10 per share in the year-ago quarter.

On average, 22 analysts polled by Thomson Reuters expected earnings per share of $2.27 for the quarter. Analysts' estimates typically exclude one-time items.

For the quarter, WellPoint recorded income tax expense of $456.3 million, up from $225.9 million a year earlier.

Total revenues increased 3.9 percent to $18.56 billion from $17.86 billion a year ago. Operating revenue grew 4.3 percent to $18.37 billion from $17.62 billion in the same quarter last year. Sixteen analysts estimated $18.72 billion in revenues for the period.

The company said the growth in revenue reflected premium increases to cover overall cost trends and new fees related to Health Care Reform, as well as higher enrollment in the Medicaid, Individual and Commercial self-funded businesses.

Operating revenues from Commercial & Specialty Business decreased 0.2 percent, while Government Business revenue increased 10.1 percent from last year.

Benefit expense ratio was 82.5 percent, down 240 basis points from 84.9 percent in the prior year.

As of September 30, 2014, Medical Membership totaled about 37.53 million members, an increase of about 2.0 million members, or 5.7 percent, from last year, and an increase of 259,000 members, or 0.7 percent, sequentially.

For full year 2014, the company now expects net income to be within the range of $8.83 to $8.93 per share, including $0.08 per share of net favorable items in the first nine months. Excluding these items, adjusted net income is projected to be in the range of $8.75 to $8.85 per share.

The firm now expects operating revenue to be in the range of $73.25 billion to $73.5 billion. Analysts now project annual earnings of $8.72 per share, on revenues of $73.50 billion for 2014.

Earlier, WellPoint forecast net income to exceed $8.81 per share, including $0.21 per share of net favorable items in the first half. Excluding items, adjusted net income was projected to be greater than $8.60 per share. Annual operating revenue was expected to be more than $73.5 billion.

For 2014, the company now expects medical membership to be in the range of 37.20 million to 37.30 million.

On October 28, the board declared a fourth-quarter dividend of $0.4375 per share, to shareholders of record on December 5, 2014, payable on December 22.

WLP closed Tuesday's trading at $120, down 0.28 percent.