WellPoint Inc. ( WLP ) reported
first-quarter 2013 adjusted income of $2.94 per share, beating the
Zacks Consensus Estimate of $2.37. Adjusted income also surpassed
the year-ago earnings of $2.34 per share by 25.6%.
Including net investment losses of 5 cents per share, WellPoint
posted net income of $885.2 million or $2.89 per share in the
reported quarter, compared with $856.5 million or $2.53 per share
in the first quarter of 2012. The year-ago quarter included some
non-recurring items of 19 cents per share.
Operating revenues of WellPoint for the reported quarter were
$17.5 billion, up 15.8% from the year-ago quarter level. Revenues,
however, lagged the Zacks Consensus Estimate of $18.0 billion. The
increase in revenues resulted from the acquisition of Amerigroup,
partly offset by the decline in fully insured Local Group and
WellPoint's premium revenues increased 16.2% year over year and
other revenues surged 658.5%, offset by a 0.6% decline in
administrative fees. Meanwhile, total expenses increased 16.3% to
Medical enrollment of WellPoint improved 6.3% to 35.8 million as
of Mar 31, 2013 from 33.7 million as of Mar 31, 2012. The increase
resulted from membership hike in the State Sponsored businesses
attributable to the Amerigroup acquisition. The improvement was
partially offset by the membership fall of 0.43 million in the
WellPoint posted a benefit expense ratio (benefit expenses as a
percentage of premium revenue) of 83.7% in the reported quarter,
surpassing 83.3% in the first quarter of 2012. The increase was due
to the high benefit expense ratio of Amerigroup, which offset the
lower benefit expense ratio in the Local Group business,
Commercial Business: Operating
revenues slipped 1.3% year over year to $8.40 billion in the
reported quarter. Operating gains in the segment, however,
increased 11.7% year over year to $1.11 billion in the quarter,
primarily due to lower-than-expected medical costs in the Local
Consumer Business: Operating revenues
climbed 51.5% year over year to $7.20 billion in the quarter under
review. Operating gains in the segment increased 13.7% to $247.5
million in the reported quarter from $217.7 million in the year-ago
quarter. The increase was due to the Amerigroup acquisition, partly
offset by operating margin decline in the Individual business and
the spreading out of the CareMore Medicare Advantage model.
Other: Operating revenues in the
quarter under review came in at $1.95 billion, up 3.1% year over
year. Operating gains in this segment amounted to $12.6 million,
compared with $3.1 million in the year-ago quarter. The increase
resulted from the decline in the corporate and other general and
administrative expenses in the quarter under review.
WellPoint exited the quarter with cash and cash equivalents of
$1.67 billion, compared with $2.48 billion as of Dec 31, 2012.
Operating cash flow in the first quarter of 2013 amounted to $956.9
Long-term debt declined to $14.0 billion as of Mar 31, 2013,
from $14.2 billion as of Dec 31, 2012. Shareholder equity inched up
to $24.3 billion from $23.8 billion, while total assets increased
to $59.41 billion from $58.96 billion at the end of 2012.
WellPoint repurchased 5.5 million shares for $340.2 million in
the reported quarter. As of Mar 31, 2013, the company had
approximately $1.5 billion worth of authorization remaining under
its share repurchase program.
During the reported quarter, WellPoint paid a quarterly cash
dividend of 37.5 cents per share. This resulted in cash
distribution of $113.4 million.
Outlook for 2013
WellPoint expects adjusted net income of $7.75 per share in
2013. Moreover, including net investment losses of 5 cents per
share, net income is expected to come above $7.80 per share. Both
these figures include integration costs related to the Amerigroup
Furthermore, operating revenues are expected to range between
$71.0 billion and $73.0 billion. Year-end medical enrollment is
expected between 35.3-35.5 million.
Meanwhile, operating cash flow is projected to be above $2.7
billion. In addition, WellPoint expects SG&A expense ratio to
be approximately 13%-14%, while the guidance for the benefit
expense ratio stands at 86.0%, plus or minus 0.5%.
Results at Other Healthcare Providers
UnitedHealth Group Inc. ( UNH ) reported
first-quarter 2013 earnings of $1.16 per share, in line with the
Zacks Consensus Estimate. Earnings, however, declined 11.4% on a
Other peers such as CIGNA Corp. ( CI ) and Humana
Inc. ( HUM
) are expected to release their first-quarter earnings shortly.
Currently, WellPoint carries a Zacks Rank #3 (Hold).CIGNA CORP (CI): Free Stock Analysis ReportHUMANA INC NEW (HUM): Free Stock Analysis
ReportUNITEDHEALTH GP (UNH): Free Stock Analysis
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