WellPoint Reduces Profit Forecast

WellPoint Inc., the largest U.S. health insurer, said Friday that it expected to report fourth-quarter earnings of about 90 cents a share, less than its previous forecast, because of debt-buyback costs. Membership will rise 4% this year, the company predicted.

The Indianapolis-based company was formed in November when Anthem Inc. bought Thousand Oaks-based WellPoint Health Networks Inc. for about $20 billion. The company also said 2005 earnings would improve to about $7.75 a share from an estimated $6.07 this year, in line with its forecasts.

WellPoint will add about 1.1 million members in 2005 as it competes for customers with No. 2 health insurer UnitedHealth Group Inc., Aetna Inc. and Cigna Corp., Chief Financial Officer David Colby said Friday in a conference call. The combined company has said it will have the scale to bid on more accounts of national employers.

“A 4% increase in a market that’s very competitive is strong, and I think it’s achievable,” Colby told analysts and investors during the call.

Shares of WellPoint rose 40 cents to $115.80 on the New York Stock Exchange.

WellPoint previously forecast fourth-quarter earnings of 95 cents to $1 a share. A greater-than-expected response to an offer to repurchase notes in December reduced fourth-quarter results by 47 cents a share, WellPoint said. Expenses related to concessions the company had to make in California and Georgia to win approval for the acquisition totaled 31 cents.

Excluding those items, fourth-quarter profit was about $1.68 a share, the company estimated, matching the average estimate of analysts surveyed by Thomson First Call.

WellPoint provides health insurance and services to 28 million members through its Blue Cross or Blue Shield operations in 13 states and non-Blue Cross operations in other states.

The company has said it expects to save $150 million in 2005 by trimming overlapping operations. Beginning in 2006, increased efficiency may lead to annual savings of about $250 million, Chief Executive Larry Glasscock said in November.

First-quarter profit will be about $1.82 a share, WellPoint said Friday. It didn’t provide a year-earlier comparison.