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WellPoint Profit Up 19% for Quarter

July 26, 2001|From Bloomberg News

Managed-care company WellPoint Health Networks Inc. said Wednesday that second-quarter profit rose 19% as it added customers and raised premiums to stay ahead of increasing medical costs.

Net income rose to $99.9 million, or $1.53 a share, from $83.7 million, or $1.30, a year earlier, beating estimates, the company announced after U.S. markets closed. Revenue rose 37% to $3.15 billion.

Thousand Oaks-based WellPoint has attracted profitable customers by offering health plans that give patients a choice of doctors and flexible co-payments for medical care. The company, the parent of Blue Cross of California, also has sought new customers among fired workers at California technology companies and through acquisitions.

WellPoint earnings were expected at $1.49 a share, the average estimate of analysts surveyed by First Call/Thomson Financial.

Shares fell 26 cents to $102.75 on the New York Stock Exchange.

WellPoint had 9.8 million customers as of June 30, an increase of 2.2 million from a year earlier. Most of the increase, 1.9 million, came from its March acquisition of Cerulean Cos., the parent of Blue Cross and Blue Shield of Georgia. The company also added 343,000 customers in its California large employer health plans, a 9.5% gain.

The company said its medical-loss ratio, the portion of every premium dollar that pays for medical care, fell to 80.6%, from 80.8% in last year's second quarter. Analysts had expected the ratio to rise.

WellPoint's report kicks off what analysts expect will be a profitable earnings season for managed-care insurers.

WellPoint has avoided offering coverage via Medicare, the government health insurance program for the elderly and disabled. Insurers who offer Medicare plans have been hurt as costs rise faster than funding.

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