Wellpoint reports lower profit in first earnings since merger

Charles Wilson

Monday, Feb. 7, 2005 | 11:08 a.m.

INDIANAPOLIS -- WellPoint Inc. said today its fourth-quarter profit dropped nearly 12 percent primarily due to expenses related to debt retirement and the merger that created the nation's largest health insurance company.

But the company said its results still beat its own profit projections for the quarter in its first earnings report since the $16.5 billion merger between Anthem Inc. and WellPoint Health Networks Inc. But its shares sank 3 percent in early trading.

Profit fell to $184.5 million, or 92 cents a share, for the three months ending Dec. 31 compared with $208.8 million, or $1.47 a share, a year ago. Revenue rose to $6.7 billion from $4.2 billion a year ago.

The company said its earnings beat its own projections by 2 cents a share.

Its shares fell $3.74 to $121.15 in early trading on the New York Stock Exchange.

The quarter included just one month of joint earnings since the Nov. 30 merger. Year-ago figures were based on Anthem's 2003 results.

For all of 2004, the company reported net income of $960 million, or $6.10 per share, on revenue of $20.8 billion, compared with profit of $774 million, or $5.45 a share, on revenue of $16.8 billion for 2003.

Wellpoint said it anticipated profit for the coming year of $7.75 per share for 2005, at the high end of its previous estimate of $7.65 to $7.75 per share.

Anthem, the nation's second-largest Blue Cross provider, bought Thousand Oaks, Calif.-based WellPoint, the largest, in November, after promising hundreds of millions of dollars to improve health care in California and Georgia to overcome state regulators' misgivings.

Anthem paid the old company's stockholders $23.80 in cash and one share of Anthem common stock for each WellPoint share, and renamed itself WellPoint Inc.

The new company insures some 28 million people in 13 states, about a quarter of whom live in California. It has Blue Cross operations in California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, Ohio, Virginia and Wisconsin. It also provides insurance through HealthLink and UniCare.

The Las Vegas Valley is one of the nation's fastest-growing markets and WellPoint plans to focus a lot of energy on products for valley residents, said Joe Hoffman, vice president and general manager of Anthem Blue Cross and Blue Shield in Colorado and Nevada.

The company recently launched health savings accounts and high-deductible plans in Las Vegas for individuals and group members.

In the coming months, Anthem Blue Cross and Blue Shield of Colorado and Nevada will offer new individual plans for people in their 20s who tend to be healthy and would typically forgo insurance, Hoffman said.

"We continue to look for ways to grow our members in Las Vegas," Hoffman said, adding that the company will update and simplify existing products in midsummer.

Anthem represents about 14 percent of Nevada's insured population, which equates to about 220,000 people insured on its individual and group health plans, Hoffman said. The plans are a combination of HMO, PPO and indemnity policies.

The company also offers Medicare supplement, dental, vision, employee assistance, life, disability and accidental death and dismemberment policies in Nevada.