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Jan. 23--Health insurance giant WellPoint Inc. announced higher-than-expected fourth quarter profits today, but lowered its guidance for 2013 earnings amid concerns about the flu, federal budget uncertainties, and national healthcare reform.
Earnings jumped 38 percent to $464.2 million in the final quarter of the year, up from $335.3 million during the same time last year, the Indianapolis-based company said.
"We are very pleased with second half 2012 performance," said Interim CEO John Cannon, who took over for Angela Braly in August after she resigned amid complaints from investors unhappy with the company's performance.
Earnings excluding a tax settlement and investment gains were $1.03 a share, nine cents higher than analysts expected. Medical-plan membership increased to 36.1 million with last year's $4.9 billionAmerigroup purchase, WellPoint said.
Despite the strong fourth-quarter performance, the company lowered its 2013 profit guidance to $7.60 per share. On average, analysts had anticipated $7.93.
"While fourth quarter results were better than we expected and gives us reason for optimism about business performance in 2013, we believe our guidance reflects an appropriate level of conservatism for uncertainties such as the flu, sequestration, medical utilization and the continued implementation of healthcare reform," WellPoint spokeswoman Kristin Binns said.
That frustrated some analysts, who noted that WellPoint, the nation's second-largest health insurer, had indicated 2013 earnings would be flat as recently as Jan. 8.
"As has often been the case over the last year, though, what WellPoint says often seems to bear little resemblance to what actually happens," said Carl McDonald, an analyst with Citigroup, in a note to investors.
Shares of WellPoint were trading at $63.87, down less than a percent, as of 10:38 a.m.
The company is continuing its search for a new CEO, Cannon said, but he declined to provide any additional details. A decision is expected sometime this quarter, he said.
Chris Rigg, an analyst with Susquehanna Financial Group in New York, said the CEO search may be a factor in the company's conservative 2013 earning projections.
"It's rational to offer a conservative outlook," he said. "You wouldn't want to back the new CEO, whoever she or he may be, into the corner with a high bar."
Analysts have speculated that WellPoint is likely considering James Carlson, who headed Amerigroup before it was acquired last year by WellPoint, and retired Aetna CEO Ronald Williams.
Cannon, who was the company's general counsel before stepping in for Braly, has said he's not interested in the permanent CEO job.
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