WellPoint Inc. (NYSE:WLP) produced a big increase in net income for the fourth quarter of 2012 and is hoping to do well in 2013, but company executives spent much of today’s earnings call talking about 2014.
WellPoint is reporting $464 million in net income for the latest quarter on $16 billion in revenue, up from $335 million in net income on $15 billion in revenue for the fourth quarter of 2011.
The company ended the quarter providing or administering health coverage for 36 million people, 5.5 percent more than it was covering a year earlier.
Enrollment in self-insured plans that WellPoint is administering fell 1.6 percent, to 20 million, and commercial group enrollment fell 3.3 percent, to 27 million. But enrollment in insured plans rose 16 percent, to 16 million, and enrollment in individual and government health insurance arrangements rose 54 percent, to about 8 million.
Wayne DeVeydt, WellPoint’s chief financial officer, said the company believes it is entering 2013 on a strong note.
“Fourth quarter results were better than we expected and give us reason for optimism about business performance in 2013,” DeVeydt said.
But uncertainty around federal budget actions, overall medical utilization trends, the severity of the 2012-2013 flu season, and implementation of the Patient Protection and Affordable Care Act of 2010 (PPACA) are good reasons for WellPoint to be cautious when predicting what might happen to earnings this year, DeVeydt said.
Although WellPoint did well in the fourth quarter, the flu reduced net income by about 2 cents per share, or about 1.3 percent, DeVeydt said.
WellPoint is not sure how much flu will affect earnings for the quarter that is now under way, DeVeydt said.
The company is expecting the underlying local group medical cost trend, or rate of increase in the underlying cost of care, to be between 6.5 percent and 7.5 percent.
That compares with a cost trend estimate of 5 percent to 6 percent issued last week by a major WellPoint competitor, UnitedHealth Group Inc. (NYSE:UNH).
DeVeydt noted that WellPoint expects to see enrollment in the self-insured group plans it administers to continue to fall in 2013 because of price increases it pushed through in 2012.