Profit at WellPoint Inc., the largest U.S. health insurer, more than doubled in the second quarter as the company cut costs, added members and raised premiums, the Indianapolis-based firm said Wednesday.
The company was created in November when Anthem Inc. bought Thousand Oaks-based WellPoint Health Networks Inc., which operates Blue Cross of California, and took its name. The combined company runs health plans across the country, including Blue Cross and Blue Shield coverage in 13 states.
Wednesday's results were "meaningfully better than consensus [of analysts] and at least as good as we expected," wrote Patrick Hojlo, a healthcare analyst at Credit Suisse First Boston, who praised WellPoint's membership gain in the quarter.
WellPoint said membership rose to 28.8 million in the second quarter, an increase of 16.2 million from a year earlier, mostly because of the acquisition.
The company said net income rose to $559.4 million, or 90 cents a share, from $237.9 million, or 83 cents, a year earlier. Revenue jumped to $11.3 billion from $4.53 billion.
"Our efforts are reflected in the membership growth we continue to see and the gains we have realized in all of our business segments," said Larry C. Glasscock, president and chief executive of WellPoint.
But consumer advocates said the increased profit showed that WellPoint made patients rather than shareholders pay for combining the companies, violating promises to states. That is the subject of an investigation by California regulators.
"WellPoint and Blue Cross of California ... divert huge amounts of money to overhead and profits, leaving patients to foot the bill," said Jerry Flanagan, a spokesman for the Santa Monica-based Foundation for Taxpayer and Consumer Rights, on Wednesday.
The second-quarter results will be considered by state regulators, said Lynne Randolph, a spokeswoman for the Department of Managed Health Care, which is investigating the acquisition.
The state has hired an actuary to look into allegations by consumer activists and will submit a report in the next month, she said.
"We will look at these new earnings as part of our ongoing study of the Blue Cross premium increases," Randolph said. "We will look at how these premium increases have been applied and how they relate to the cost of the merger."
Shares of WellPoint fell $1.19 to $67.10. The company raised its full-year profit projection to $3.91 a share from $3.87 a share.