WellPoint profit beats, but 2013 outlook "prudent"

Wed Jan 23, 2013 12:41pm EST
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By Caroline Humer

(Reuters) - WellPoint Inc WLP.N reported a higher-than-expected fourth-quarter profit on Wednesday as it kept medical costs down, but the second-largest U.S. health insurer said it was taking a "prudent" view of 2013 in the face of industry reform.

WellPoint, which sells private health insurance to businesses and individuals and also provides government insurance for the elderly and the poor, is preparing for a round of changes resulting from the U.S. Affordable Care Act.

Later this year, states and the federal government will begin selling health insurance on exchanges for 2014, and new insurance taxes are on the way. Pressure on prices for medical services is also a concern for insurers.

WellPoint Chief Financial Officer Wayne DeVeydt said the company intends to sell insurance on the exchanges in the 14 states where it sells Blue Cross Blue Shield insurance plans, whether the exchanges are run by the state or the Federal government.

"We expect this to be a growth opportunity," DeVeydt said during an interview. "If you look at who is eligible for a full or partial subsidy on the exchanges, that represents almost 66 percent of the U.S. population."

Amerigroup, which WellPoint bought in December because of its marketshare in Medicaid insurance, is ready to tap into the growing Medicaid market. That is expected to expand as a result of the Affordable Care Act.

WellPoint said that given the "fluid and dynamic" market over the next 18 to 24 months, it expected a 2013 net profit of at least $7.60 per share, including the costs of integrating its recent acquisition of smaller competitor Amerigroup.

Analysts on average have been expecting $7.98 a share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the two numbers are comparable.   Continued...