Health insurance giant WellPoint, based in Indianapolis, runs Blue Cross… (Michael Conroy / Associated…)
Health insurance giant WellPoint Inc. issued a lower-than-expected profit outlook for 2013 as it prepares for the federal healthcare overhaul and continues to search for a new chief executive.
WellPoint, which runs Anthem Blue Cross in California and health plans in 13 other states, reported a bigger-than-expected 38% jump in fourth-quarter net income Wednesday, boosted by one-time gains related to income taxes and investments.
But investors focused much of their attention on the company's estimate of full-year earnings of at least $7.60 a share. Analysts had expected 2013 earnings of $7.94 a share, according to FactSet.
WellPoint officials said they wanted to be conservative in their outlook amid uncertainties with the federal budget and upheaval in the health insurance markets from the federal Affordable Care Act.
Wayne DeVeydt, WellPoint's chief financial officer, said the company wants to retain "an appropriately prudent stance in our outlook in light of what we expect to be a fluid and dynamic market over the next 18 to 24 months."
The Indianapolis company said it continues to search for a new CEO to replace Angela Braly, who stepped down in August amid dissatisfaction among major shareholders over her leadership and the company's performance.
John Cannon, WellPoint's interim CEO, said the company still expects to name a new leader some time in the first quarter.
WellPoint shares were up 94 cents, or 1.5%, to $64.74 in mid-session trading Wednesday.
The health insurer said its fourth-quarter net income was $464.2 million, or $1.51 a share, up from $335.3 million, or 96 cents a share, a year earlier.
Excluding certain one-time items, the company said adjusted fourth-quarter profit was $1.03 a share, up 4% from 99 cents a share in the year-earlier quarter.
WellPoint is the nation's second-largest health insurer, behind UnitedHealth Group Inc., and it has 36 million customers nationwide. The company said revenue in the fourth quarter inched up 1% to $15.3 billion compared with a year ago.
The company said the financial impact of the flu season thus far was moderate and it continues to prepare for state insurance exchanges set to open across the country next year under the federal healthcare law.
In recent years, the company has sought to diversify through a series of deals and to expand its business in government healthcare programs. Last month, WellPoint completed its $4.5-billion acquisition of Medicaid insurer Amerigroup Corp.
In California, WellPoint is participating in a new program aimed at improving care and lowering costs for patients enrolled in Medicare and Medi-Cal, the state's Medicaid program. The company said enrollment in that state initiative has been delayed until September.