Investors Reward WellPoint, Tenet After Companies Report Good Financial News
Shares of WellPoint Health Networks Inc. rose sharply yesterday after the company announced on Monday that it is raising its 2002 earnings guidance from $4 to $4.30 a share because of "stronger-than-expected growth" in membership, the Los Angeles Times reports. The Thousand Oaks-based health insurer said earnings in each of the last three quarters were "10 cents a share higher" than anticipated. The company also said that its health plan membership will likely increase in "the high single-digit range" for the year, compared to a previously projected 5% to 7% growth. WellPoint has added subscribers in California and Georgia by offering health plans that give patients greater choices of providers and a range of copayments and through its purchase of Blue Cross and Blue Shield insurers in the Midwest and Southeast. "I think [WellPoint has] got a sustainable period here of very solid earnings growth, and that will continue," William McKeever, a UBS Warburg analyst, said. WellPoint shares rose 7.4%, or $5.80, to reach an all-time high of $83.75 (Los Angeles Times, 6/12).
In other financial news, shares of Tenet Healthcare Corp. also hit an all-time high yesterday after the company announced on Monday that its profits in the three months ending May 31 beat analysts' earnings estimates (Reuters, 6/11). Earnings for the Santa Barbara-based hospital chain from operations in its fiscal fourth quarter will "comfortably exceed" the 90-cent average forecast of analysts, the company said. The results mark the 10th consecutive period in which the company's earnings grew 20% or more and the fifth consecutive quarter of 30% growth or more, according to Tenet CEO Jeffrey Barbakow. Tenet, the nation's second-largest hospital chain, boosted its earnings by raising prices for managed-care insurers and by "investing in profitable medical services," including cardiology and orthopedics (Snider, Bloomberg News/Orange County Register, 6/11). The company's shares rose 1.6% to close at $77.68 yesterday (Reuters, 6/11).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.