WellPoint second-quarter profit falls but beats estimates

[July 30, 2014]  (Reuters) - U.S. health insurer WellPoint Inc said on Wednesday that profit fell in the second quarter, partly because of some higher administrative costs stemming from the healthcare reform law and new fees, but it still came in ahead of Wall Street estimates.

WellPoint, which runs Anthem and Empire Blue Cross Blue Shield Plans, said net income fell to $731 million, or $2.56 per share, from $800 million, or $2.64 per share, a year earlier.

Excluding gains, it reported earnings of $2.44 per share. Analysts had been expecting $2.26.

WellPoint is the third large health insurer to beat analysts' earnings estimates for the quarter, although investors have watched reports closely for signs that costs may be rising.

WellPoint said it spent 82.7 percent of the premiums that it brought in on medical claims in what is known as the medical benefit expense ratio. That is down from 83.9 percent a year earlier.

The company also said sales, general and administrative expenses rose to 15.8 percent of operating revenue from 13.9 percent a year earlier because of new fees and continued spending due to health care reform.

WellPoint said it expected medical costs to rise 6.5 percent in 2014, plus or minus 50 basis points.

(Reporting by Caroline Humer; Editing by W Simon and Lisa Von Ahn)

[© 2014 Thomson Reuters. All rights reserved.]

Copyright 2014 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.