WellPoint profit drops even as revenue grows
Health insurance giant WellPoint Inc.’s profit dropped 7.6% in the third quarter compared with the same period last year even though enrollments and revenues rose.
The nation’s largest insurer by membership and parent of Anthem Blue Cross in California earned $683.2 million in the three months that ended Sept. 30, down from $739.1 million in the year-earlier period.
Executives at the Indianapolis company said profit was down partly because of lower investment income and higher expenses from the purchase of CareMore Health Group, a Cerritos healthcare provider that serves seniors. The company also said last year’s performance was aided by the release then of $110 million in reserves for operating expenses.
Despite smaller profit, earnings per share rose 3% in the third quarter to $1.90, up from $1.84 during the same period last year, primarily because the company bought back 13.4 million shares.
“Our ability to add new customers while controlling costs demonstrates our execution and emphasis on creating a more affordable operating model for our customers,” Chief Executive Angela F. Braly said in a statement.
WellPoint, which operates Blue Cross Blue Shield plans in 14 states, said enrollment in the third quarter grew 2.6% to 34.4 million, up from 33.5 million during the same period last year. The company has added more than 1 million new members since the beginning of the year.
Enrollment in its senior business grew faster, up 14.8% to 1.44 million policyholders from 1.26 million last year, aided by the company’s acquisition of CareMore.
Third quarter revenue rose 5.7% to $15.4 billion, up from $14.6 billion at the same time last year.
WellPoint raised its 2011 earnings forecast, saying it will be $6.90 to $7 per share, not counting investment gains. Previous guidance was $6.75 to $6.95 per share.
WellPoint shares were up $2.58, or 3.9%, to $69.58 on Wednesday.
-- Duke Helfand
Photo: WellPoint headquarters in Indianapolis. Credit: Darron Cummings / Associated Press