WellPoint Posts 53% Jump in Earnings, Cites Cost Cuts

WellPoint Health Networks Inc., which is being acquired by Anthem Inc. to form the largest U.S. health insurer, said Wednesday that first-quarter profit rose 53% as the company added members and managed costs better.

Net income increased to $295.2 million, or $1.85 a share, from $193.1 million, or $1.29, a year earlier, Thousand Oaks-based WellPoint said. Revenue rose 17% to $5.65 billion from $4.84 billion a year earlier.

WellPoint, California’s biggest health insurer, added customers and cut costs by combining functions with Cobalt Corp., the Blue Cross insurer that WellPoint bought in September. That may reassure investors about Anthem and WellPoint’s prospects for merging their operations, said Brandon Carl, a fund manager at BB&T; Asset Management in Raleigh, N.C.

“Some companies like Cigna have done a lot of deals in the past and haven’t been as successful in integrating,” Carl said.

“The Anthem merger is a lot more to swallow, but the evidence is that they do a good job.”

WellPoint shares rose $1.67 to $114.50 in late trading after the report. They had climbed $1.58 to $112.83 on the New York Stock Exchange.

WellPoint said 2004 profit would rise to $7.50 a share from $6.16 last year. Fifteen analysts had expected $7.11 on average for 2004. For the quarter, the company was expected to earn $1.58 a share, the average estimate of 15 analysts surveyed by Thomson First Call.

Anthem’s purchase of WellPoint will close by midyear, the companies have said. The two Blue Cross insurers will have a total of about 26 million members, or almost 1 in 3 members of Blue Cross plans. Various Blue Cross plans cover about a third of all Americans.

Indianapolis-based Anthem owns Blue Cross and Blue Shield health plans in nine states and is competing with UnitedHealth Group Inc. to sign up big employers.