WellPoint (WLP) revealed a 68% decline in fourth-quarter profit on an across-the-board decline in membership on Wednesday, but its shares climbed as the health benefits manager expressed optimism about enrollment in the new year.
The Indianapolis-based health insurer reported net income of $148.2 million, or 49 cents a share, compared with a year-earlier profit of $464.2 million, or $1.51.
Excluding a 38-cent impairment charge related to the pending 1-800 Contacts acquisition and other one-time costs, earnings were 87 cents a share, matching average analyst estimates in a Thomson Reuters poll.
Revenue for the three months ended Dec. 31 increased 16.3% to $17.6 billion from $15.2 billion a year ago, narrowly below the Street’s view of $17.8 billion.
“We are pleased with our performance in 2013, which came in stronger than we expected even as we prepared for the implementation of the Affordable Care Act,” WellPoint CEO Joseph Swedish said in a statement.
Shares of WellPoint were up close to 4% to $87.51 in recent trade despite a broader market sell-off.
While medical enrollment fell by 477,000 members, or 1.3%, to 35.7 million, commercial enrollment fell by 234,000, and Medicaid and Medicare membership declined by 142,000 and 108,000, respectively, Swedish said he is “encouraged by the trajectory” of its membership.
Enrollment was up from the third quarter and WellPoint says it expects to add more than one million new customers in 2014. The company says it has priced its new exchange products properly based on enrollment thus far in ObamaCare.
WellPoint sees full-year earnings above $8.00 a share and operating revenue of roughly $73 billion. The consensus view is calling for fiscal 2014 EPS of $8.39 on revenue of $73.67 billion.
Earlier this week, the health insurer's board increased the company’s quarterly dividend by 16.7% to 43.75 cents, payable on March 25 to shareholders of record on March 10.