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Earnings Preview: WellPoint reports on 3Q Wed

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October 21, 2013 07:08 AM EST | AP


INDIANAPOLIS — INDIANAPOLIS (AP) — WellPoint Inc. will become the second major health insurer to detail its third-quarter performance and discuss the health care overhaul's enrollment period when it reports results Wednesday.

WHAT TO WATCH FOR: Investors appear to have set a higher bar for health insurer earnings, and WellPoint competitor UnitedHealth Group Inc. fell short of it Thursday when it said third-quarter earnings inched up 1 percent and it narrowed its 2013 forecast instead of raising it. Shares of UnitedHealth, WellPoint and other insurers then slid.

The sector may have become a victim of its own success. Insurers have turned in strong performances for several quarters now, and the shares of UnitedHealth and WellPoint both reached all-time high prices earlier this year.

Citi analyst Carl McDonald has said investors have come to expect big earnings gains.

Enrollment started earlier this month in new public insurance exchanges that are part of the health care overhaul, which is designed to cover millions of uninsured people. WellPoint has invested heavily in preparing for the exchanges. It won't have results to share next week, but it may provide some insight into how enrollment has gone.

WellPoint shares closed 2012 at $60.92 and have largely climbed throughout 2013. The stock tied its all-time high price of $90 on July 24, according to FactSet.

WHY IT MATTERS: WellPoint is the second-largest health insurer after UnitedHealth. It runs Blue Cross Blue Shield plans in 14 states, including California, New York and Ohio. It covers more than 35 million people. It is based in Indianapolis.

WHAT'S EXPECTED: Analysts expect, on average, earnings of $1.81 per share on $17.66 billion in revenue.

LAST YEAR'S QUARTER: WellPoint's net income climbed 1 percent to $691.2 million, or $2.15 per share, while earnings excluding investment gains came in at $2.09 per share. That topped analyst expectations. Revenue, also excluding investments, came in relatively flat at $15.13 billion.