Shares of WellPoint (NYSE:WLP) tumbled nearly 11% to multi-year lows on Wednesday after the health-benefits manager reported a weaker-than-expected second-quarter profit and cut its fiscal 2012 forecast.
Hurt by a 1.9% decline in commercial membership, revenue in WellPoint’s commercial business slumped 3% to $8.4 billion. Its smaller consumer business partially offset some of those declines by growing 10.9% to $4.8 billion, led by climbing senior membership.
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The Indianapolis-based health insurer reported net income of $643.6 million, or $1.94 a share, compared with a year-earlier $701.6 million, or $1.89 a share.
Excluding one-time items, WellPoint earned $1.94 a share, below average analyst estimates of $2.08 in a Thomson Reuters poll.
Revenue for the three months ended June 30 climbed 2% to $15.17 billion from $14.88 billion a year ago, topping the Street’s view of $15.27 billion.
The second-largest health insurer by market value lowered its fiscal 2012 earnings guidance to a range of $7.30 to $7.40 a share from an earlier view of at least $7.57. The consensus is calling for earnings of $2.08.
“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,” WellPoint CEO Angela Braly said in a statement.
WellPoint said the altered outlook reflects anticipated financing for the pending $4.46 billion Amerigroup acquisition and lower commercial insured enrollment and higher medical costs.