WellPoint Profit Increases 64% From Year Earlier
WellPoint Health Networks Inc. said Monday that its fourth-quarter profit surged 64% from a year earlier, which California’s biggest health insurer attributed to strong membership growth, acquisitions and higher investment income.
WellPoint, the Thousand Oaks-based parent of Blue Cross of California and one of the nation’s largest for-profit managed-care companies, has continued to offset rising health- care costs with higher premiums. That’s also helped the insurer enjoy a string of sizable profit gains in recent quarters.
“They continue to price with discipline, so that’s very encouraging,” said William McKeever, an analyst at investment firm UBS Warburg in New York.
“It’s another solid performance.”
WellPoint has been among the best performers in the managed-care industry, which overall has enjoyed strong earnings growth. But some analysts recently have lowered the industry’s outlook based on expectations that insurers will find it harder to push through double-digit rate increases.
Last year, though, WellPoint had its way.
The company said net income in the three months ended Dec. 31 jumped to $180 million, or $1.18 a share, from $109.9 million, or 83 cents, a year earlier. The earnings exceeded Wall Street’s average forecast of $1.15 a share, based on analysts polled by Thomson First Call.
WellPoint’s fourth-quarter revenue rose 34% to $4.58 billion from $3.42 billion a year earlier.
The company spent 82 cents of each $1 in premium revenue for health-care services, unchanged from a year earlier. At the same time, WellPoint reported that its general and administrative expenses, as a share of revenue, fell during the fourth quarter.
The company’s nationwide medical-plan enrollment stood at 13.2 million, up 26% from 10.5 million a year ago. Contributing to the gain were higher enrollment in California and Illinois -- especially large-group memberships -- and acquisitions, such as Blue Cross and Blue Shield of Missouri, the company said.
California membership climbed 11% to 6.6 million people from 5.9 million, WellPoint said.
“Our results reflect the company’s broad product portfolio and networks and enhanced service levels in key regional markets,” WellPoint Chairman Leonard Schaeffer said in a statement.
However, membership enrollment was up only 1% from the third quarter, when it was 13.05 million.
WellPoint’s fourth-quarter revenue also was boosted by a 10% gain in investment income, to $70.2 million from $64 million in the year-earlier quarter.
For the full year, WellPoint’s profit soared 70% to $703.1 million, or $4.67 a share, from $414.7 million, or $3.15, in 2001. WellPoint’s annual revenue climbed 40% to $17.3 billion from $12.4 billion.
The results were announced after financial markets closed. During trading, WellPoint’s shares rose 59 cents to $68.59 on the New York Stock Exchange.
The stock has fallen from a 52-week high of $89.20 in October.
