INDIANAPOLIS (AP) — WellPoint Inc. will become the second big health insurer to tell investors how it wrapped up 2011 and whether health care use remains subdued when it reports on its fourth-quarter performance Wednesday.
WHAT TO WATCH FOR: The Indianapolis company said last fall that it expects growth in 2012. The company won't release its earnings forecast for the new year until next month, but investors and analysts will be looking for signs that this growth forecast still holds true.
The largest health insurer based on enrollment has said growth in its Medicare Advantage business plus a push to become more efficient will help it in 2012.
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Managed care companies also have been buoyed by health care use that has grown at lower-than-expected rates for the past few quarters. This trend, which may be driven by a lingering pullback on consumer spending from the recession, has helped companies consistently beat analyst expectations.
WellPoint's stock climbed 16 percent last year to close 2011 at $66.25 per share, and the shares of several of its competitors climbed briskly as well.
WellPoint competitor UnitedHealth Group Inc. said last week its fourth-quarter net income jumped 21 percent to $1.26 billion, or $1.17 per share, on $25.92 billion in revenue. UnitedHealth said commercial health insurance costs started climbing at a faster rate than they did in 2010. But growth rates still remained slower than what the industry saw before the recession.
UnitedHealth said price increases for inpatient hospital care were the biggest reason behind its growth in medical costs. It expects use to increase steadily throughout 2012. UnitedHealth is the first insurer to report earnings every quarter and is considered a bellwether for the sector.
WHY IT MATTERS: WellPoint runs Blue Cross Blue Shield plans in 14 states, including California, New York and Ohio. It had 34.4 million people enrolled in its coverage at the end of the third quarter. The company is the second-largest insurer based on revenue, trailing only UnitedHealth.
WHAT'S EXPECTED: Analysts polled by FactSet expect, on average, earnings of $1.12 per share on $15.46 billion in revenue in the fourth quarter.
LAST YEAR'S QUARTER: WellPoint earned $548.8 million, or $1.40 per share, in the final quarter of 2010. Operating revenue, which excludes investment gains or losses, fell 4 percent to $14.42 billion. The performance beat Wall Street expectations but represented a drop from 2009′s final quarter, when the insurer saw a big gain from the sale of its NextRx subsidiary to Express Scripts Inc.
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