WellPoint Stock Drops on Medical Costs Estimates

WellPoint Health Networks shares have been falling on concern that the managed-care company, one of California’s biggest, underestimated its medical costs for the third quarter.

WellPoint, which sells health insurance under the Blue Cross of California and Unicare brands, closed at $54.19 Monday, down 31 cents on the NYSE. Last week, it was trading in the $56 range.

Shares of the Woodland Hills-based company have been tumbling since company executives told investors last week that WellPoint might not meet its goal of reducing its third-quarter medical-loss ratio, or the percentage of premiums consumed by medical costs. WellPoint’s medical-loss ratio was 80.6% in the second quarter, up from 80.2% in the first.

WellPoint Chief Financial Officer David Colby said he can’t predict whether the medical-loss ratio will rise or fall this quarter, though he expects the company will meet earnings forecasts for the rest of 1998 and next year.

Managed-care stocks have been volatile in recent months as WellPoint and competitors such as United HealthCare Corp. and Foundation Health Systems Inc. have disappointed investors with lower-than-expected earnings.