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WellPoint sees profit grow eightfold in fourth quarter

The parent company of California's largest health insurer, Anthem Blue Cross, is projecting higher earnings this year despite softening enrollments and revenue from premiums.

January 28, 2010|By Duke Helfand

The parent company of Anthem Blue Cross, California's largest health insurer, posted an eightfold increase in profit for the fourth quarter and projected solid earnings for this year despite a recent softening in enrollments and revenue from premiums.

WellPoint Inc., the nation's largest health insurer by membership, earned $2.7 billion, or $5.95 a share, for the final three months of last year, compared with profit of $331.4 million, or 65 cents a share, for the same period the previous year.

Quarterly sales rose 26% to $19 billion from $15.1 billion.

The huge increase in profit came largely from the gain on the $4.7-billion sale of WellPoint's NextRx pharmacy benefit management subsidiaries in December.

Excluding the sale of NextRx and other one-time charges, the company made $1.16 a share in the fourth quarter, well above analysts' estimates.

The Indianapolis company saw enrollments and premium revenue decline in the fourth quarter, largely the result of the recession as employers slashed jobs and health benefits.

WellPoint, which also operates Blue Cross/Blue Shield plans in 14 states, said that price increases largely offset the membership losses.

"We do not expect the employment situation to improve until late this year," WellPoint Chief Executive Angela F. Braly said Wednesday. "We believe companies that can effectively manage healthcare costs . . . will succeed in the long run."

Fourth-quarter enrollment fell by 185,000 to 33.7 million members nationwide.

That was 3.9% lower than the previous year when the company had about 35 million enrollees.

The insurer's local group business, composed mostly of small companies, showed the most significant enrollment decline, largely because of rising unemployment.

Its revenue from premiums fell 2% to $14 billion from $14.3 billion.

For the year, WellPoint earned $4.7 billion, or $9.88 a share, nearly double the previous year's profit of $2.5 billion, or $4.76 a share.

Factoring out the one-time gain from the sale of NextRx, there was only a modest increase in annual profit.

The company said net earnings for the year were $3 billion, or $6.09 a share, compared with $2.9 billion, or $5.48, the year before.

The company projected its net income this year would be "at least" $6 a share.

WellPoint shares gained 74 cents Wednesday, closing at $64.62.

duke.helfand@latimes.com

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