Health insurer WellPoint Inc. reported an 8% drop in second-quarter profit… (Michael Conroy/AP )
Health insurance giant WellPoint Inc. cut its full-year profit forecast as enrollment dipped and its medical costs kept climbing in the second quarter.
Shares of the nation's second-largest health insurer fell 12% in midday trading, and the disappointing results dragged down shares in other insurance companies.
Some analysts expressed frustration with the Indianapolis company's top executives.
"Time may be running out for WellPoint's management team," said Citi analyst Carl McDonald in a research note. "Several large [share]holders were already frustrated by WellPoint, and this earnings report won't do much to improve the relationship."
WellPoint, which runs Anthem Blue Cross in California and health plans in 13 other states, lowered its 2012 adjusted earnings forecast to a range $7.30 to $7.40 a share, down from $7.57 a share. The consensus estimate of analysts was for $7.76 a share, according to FactSet.
In contrast, rival UnitedHealth Group Inc. raised its full-year profit estimate when it reported second-quarter results last week.
WellPoint said second-quarter profit decreased by 8%, which also fell short of Wall Street expectations.
The company reported earnings of $643.6 million, or $1.94 a share, compared with $701.6 million, or $1.89 a share, in the same period a year ago. More shares were outstanding in last year's second quarter.
Enrollment during the quarter ending June 30 dropped 2% to 33.5 million members as WellPoint cited heightened competition in certain markets.
The company said it expects medical costs to rise by about 7.5% for 2012, a slight increase over its previous forecast. Overall, revenue in the quarter ended June 30 rose nearly 2% to $15.4 billion.
Angela Braly, WellPoint's chief executive, said, "We are disappointed with the need to lower our guidance but believe it is the right action to take given the challenging market we see."
In midday trading, WellPoint shares were off $7.51, or 12%, to $53.91.
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