WellPoint Inc., the country’s second-largest insurer, beat Wall Street expectations with a second-quarter profit jump of 24% as lower medical costs partly helped the Indianapolis company post strong results.
“We are pleased with our second-quarter results and encouraged by the positive momentum we have across the organization,” said Joseph Swedish, WellPoint’s chief executive since March.
This was the second earnings report that has beat analyst expectations under Swedish. He took the helm after the company’s previous chief executive, Angela Braly, was ousted last year.
WellPoint, which runs Anthem Blue Cross in California and health plans in 13 other states, reported Wednesday that net income rose to $800.1 million, or $2.64 a share. That compares with $643.6 million, or $1.94 a share, during the same quarter in 2012.
Excluding some items, the company said earnings were $2.60 a share.
The results buoyed the company’s expectations. It adjusted its full-year earnings outlook to $8 a share, up 20 cents from its earlier projections.
Operating revenue grew 16% to $17.6 billion, excluding investment gains or losses.
WellPoint’s results were partly lifted by its acquisition of Amerigroup Corp., a Medicaid insurer.
“Our commercial businesses continue to perform well, and we have achieved improvements in our Medicaid operations, largely reflecting benefits from the Amerigroup transaction,” Swedish said in a statement.
Carl McDonald, a healthcare analyst at Citigroup, said WellPoint’s acquisition bolstered the company’s financial results as it has enrolled more members. Medical enrollment is now 35.7 million.
“Earnings from WellPoint’s government business more than doubled sequentially in the second quarter, aided by the California Medicaid business, favorable Medicare prescription drug plan seasonality, and what was likely another strong quarter of Medicare Advantage results,” McDonald said.
WellPoint’s shares closed Tuesday at $87.51, the highest price since January 2008 and a 44% gain from a year earlier. But shares fell 7 cents, or 0.1%, to $87.44 on Wednesday.