INDIANAPOLIS (AP) — WellPoint Inc.'s third-quarter earnings fell 5 percent but still topped expectations, and the nation's second-largest health insurer said it raised its 2013 forecast despite added expenses from the health care overhaul.
The Blue Cross Blue Shield insurer said Wednesday its performance so far this year helped prompt it to raise its forecast for 2013 adjusted earnings to at least $8.40 per share. That's up from its previous forecast for at least $8 per share and well beyond the $8.26 per share average that analysts surveyed by FactSet expect.
Company executives told analysts they are doing this despite making sizeable investments to get ready for upcoming coverage expansions under the overhaul.
The law aims to provide health insurance coverage to millions of uninsured people, and it took a major step toward that goal on Oct. 1, when enrollment started for coverage that begins Jan. 1. The overhaul calls for an expansion of the state-federal Medicaid program and also provides income-based tax credits to help people buy coverage on health insurance exchanges that are set up in each state.
WellPoint is selling coverage on several of these exchanges. Chief Financial Officer Wayne DeVeydt said WellPoint has spent about $300 million to prepare for the exchanges, and they expect to spend $70 million to $100 million on marketing for coverage the insurer sells on them.
Analysts and investors expect the overhaul's coverage expansion to affect WellPoint more than other insurers because the company derives a large portion of its business from the individual market and through smaller employers who cover their workers. Investors haven't been sure how much business insurers like WellPoint will lose or gain because of these exchanges.
They'll have to wait a little longer to get clarity on that. Computer glitches tied to the largely online exchanges have frustrated consumers in many states as they have tried to shop around for coverage.
DeVeydt said the insurer has enrolled people through the exchanges, but they don't have a clear picture yet on how many because they haven't received all the paperwork for those customers.
Overall, WellPoint said it earned $656.2 million, or $2.16 per share, in the quarter that ended Sept. 30. That compares to $691.2 million, or $2.15 per share, last year, when the company had more shares outstanding. Earnings excluding one-time items totaled $2.10 per share.
Analysts expected, on average, earnings of $1.81 per share, according to FactSet.
Operating revenue, which excludes investment gains or losses, soared 17 percent to $17.73 billion and topped analyst expectations for $17.66 billion.
WellPoint shares fell 3.5 percent, or $3.13, to $85.32 in midday trading Wednesday, while the Standard & Poor's 500 index dropped less than 1 percent.