WellPoint (NYSE:WLP), the nation’s largest health benefits company by membership, reported Wednesday better-than expected second-quarter earnings, due mostly to favorable reserve development that offset declines in enrollment.
Net income for the Indiana-based company was $722.4 million, or $1.71 a share, compared with $693.5 million, or 4 cents a share, in the same quarter last year. Excluding investment gains, the EPS was $1.67, beating average analyst estimates of $1.55, according to a Thomson Reuters poll.
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The Blue Cross Blue Shield licensee reported revenue of $14.2 billion, down 6.8% from $15.3 billion in the prior year quarter, and falling short of the Street’s view of $14.6 billion.
Medical enrollment dropped 729,000, or 2.1%, to 33.5 million last quarter, which the company attributed to high unemployment in a still downtrodden economy.
WellPoint CEO Angela F. Braly said the results “exceeded” expectations, attributing the success to higher-than anticipated favorable reserve development, continued strong performance in its capital management areas and positive results from strategic initiatives implemented over the last two years.
Based on the first-half results, the company raised its full-year guidance for EPS and operating cash flow, expecting at least $6.30 a share.
“We are optimistic about our future growth prospects,” Chief Financial Officer Wayne S. DeVeydt said.
Into the future the company is looking to “make health care reform work” for its "customers and the country," according to Braly, which, she said, will be possible through collaborations with industry partners, governmental agencies, and the health care delivery system.