WellPoint’s profit doubles

Wednesday, July 27, 2005 | 10:58 a.m.

SUN STAFF AND WIRE REPORTS

WellPoint Inc., the largest U.S. health insurance provider, said second-quarter profit more than doubled after the company added customers and cut costs through an acquisition in November.

Net income rose to $559.4 million, or 90 cents a share, from $237.9 million, or 83 cents, a year earlier, Indianapolis-based WellPoint said today in a statement. Revenue rose to $11.3 billion from $4.53 billion. The company was formed in November when Anthem Inc. bought WellPoint Health Networks Inc. and took its name.

The combined company may reduce costs by $150 million this year after lowering selling and general expenses $25 million in the first quarter and saving $35 million in the second, WellPoint officials said today on a call with investors. By next year, savings will total $250 million as WellPoint merges sales forces and eliminates administrative costs, the company said.

"The cost savings from the merger are where we may see upside come from, not as much in this quarter as in the second half of this year," said Edmund Kroll, an analyst at SG Cowen in New York, in a July 19 interview. "They're well-positioned in the marketplace with the Blue Cross/Blue Shield brand."

WellPoint is the largest operator of Blue Cross and Blue Shield health plans, covering one in every three U.S. customers of the programs through operations in 13 states. The company, which has non-Blue Cross plan in other states, said today that it provides medical insurance for 28.8 million Americans, 16.2 million more than a year earlier, before the merger.

In Nevada, the number of people WellPoint insures decreased by nearly 14 percent in the second quarter, which was primarily due to a significant drop in people insured through national accounts.

The company's managed-care membership increased to 10,880 Nevadans in the second quarter from 2,840 a year ago. Nevada numbers were added in July 2004.

The number of Nevadans insured through the company's federal employee programs increased slightly in the second quarter to 24,912 people, while the number of people insured on national accounts dropped 25 percent to 151,859 Nevadans.

Local group membership for Nevada increased 36 percent to 28,625 people in the second quarter from 21,086 in the year-ago period.

WellPoint raised its estimate for earnings this year to $3.91 a share from $3.87 a share. In 2004, WellPoint earned $960 million, or $3.05 a share.