WellPoint Posts ‘Better-Than-Expected’ Fourth-Quarter Earnings
Thousand Oaks-based WellPoint Health Networks Inc., one of California's largest health insurers, reported yesterday that fourth-quarter earnings increased 23% and "outpaced" Wall Street estimates, the Wall Street Journal reports (Wall Street Journal, 2/12). WellPoint said that fourth-quarter net income increased to $109.9 million, or $1.65 a share, from $89.5 million, or $1.37 a share, a year earlier. In addition, the insurer reported that fourth-quarter revenue increased 40% to $3.42 billion, up from $2.44 billion a year earlier. Analysts had predicted that WellPoint would post fourth-quarter earnings of $1.59 a share (Bloomberg News/Los Angeles Times, 2/12). WellPoint separately said that fourth-quarter net income for RightChoice Managed Care Inc., which the health insurer acquired on Jan. 31, increased 61% to $17.1 million, or 85 cents a share, from $10.6 million, or 64 cents a share, a year earlier (Wall Street Journal, 2/12).
Analysts attributed the "better-than-expected" fourth-quarter results to strong membership and revenue growth, as well as to WellPoint's "aggressive cost control measures" (Crowe, Ventura County Star, 2/12). WellPoint, the parent company of Blue Cross of California, offers members a range of copayments and a greater choice of physicians than some competitors, which has led to increased membership, analysts said. The health insurer also has acquired Blue Cross and Blue Shield companies in Georgia and Missouri, "giving it a presence on the East Coast and in the Midwest." WellPoint added 1.9 million new members last March when the health insurer purchased Cerulean Cos., the parent company of BlueCross and BlueShield of Georgia. As of Dec. 31, WellPoint had 10.1 million members, an increase of 28% from 7.9 million a year earlier. WellPoint CEO Leonard Schaffer said that the health insurer also hopes to establish a presence in the Midwest, Southeast and mid-Atlantic regions of the United States to compete with rivals such as Cigna Corp., UnitedHealth Group Inc. and Aetna Inc. (Bloomberg News/Los Angeles Times, 2/12). In California, WellPoint reported a "strong performance" in the large medical group sector, which added more than 348,000 new members in 2001, a 9.2% increase (Ventura County Star, 2/12).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.