Giant health plan WellPoint had what most financial types would consider a tough second quarter, with earnings falling 10 percent and its overall profit predictions for 2008 falling. Still, given that these numbers were better than investors expected, the company's stock did OK nonetheless. Perhaps the fact that it raised premiums--as executives vowed to do last quarter--gave investors more confidence that things weren't going south completely.
WellPoint's second-quarter net income fell to $750.5 million or $1.44 a share, from $835.2 million or $1.35 a share, a year earlier. Meanwhile, WellPoint has cut back its 2008 earnings projections, with the company now forecasting profits of $5.42 to $5.57 a share rather than $5.42 to $5.67. (While that's a small difference on the top end, every trim-back hurts, particularly on the Street.)
WellPoint CEO Angela Braly said that the lower forecast comes from bigger drops in enrollment in its commercial plans than it had expected. In fact, the company expects health-plan enrollment to fall by 150,000 in the second half of this year. She also noted that recent settlements with California regulators over its rescission policies for individual policy-holders have had an impact.
That being said, executives were able to point to some successes. For example, WellPoint cut its backlog of medical claims by 23 percent from the end of 2007, sped up its claims-paying system and revised its premiums to make sure it won't be taking big medical losses in the future, they said.
To learn more about WellPoint's financial performance:
- read this Wall Street Journal piece (sub. req.)
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