July 30 (Bloomberg) — WellPoint Inc., the second-biggest U.S. health insurer, boosted its annual profit forecast as the industry starts to see gains from customers buying its products through the Obamacare overhaul.
WellPoint raised its full-year adjusted earnings forecast by 20 cents, to $8.60 or more per share. Profit excluding one- time items was $2.44 per share, 18 cents more than expected by 22 analysts surveyed by Bloomberg, the Indianapolis, Indiana- based company said in a statement.
WellPoint made the biggest commitment of any publicly traded insurer to the Obamacare markets, accounting for 769,000 of 8 million enrollees under the Patient Protection and Affordable Care Act. Now investors are watching to see if the bet pays off, which largely depends on how healthy the new customers are and whether their costs are covered by premiums.
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"WellPoint's second quarter results look solid across the board," said Chris Rigg, an analyst with Susquehanna Financial Group, in a note to clients today. "The company's revised 2014 guidance reflects stronger enrollment and continued cost controls."
Humana Inc. also reported a spike in customers from Obamacare, which contributed to a 122 percent increase in the number of individual plans sold. The Louisville, Kentucky-based insurer reported earnings per share today that matched analyst estimates and reaffirmed its 2014 profit.
WellPoint fell 1.6 percent to $110.75 at 9:49 a.m. in New York trading and Humana fell 5 percent to $121.09.
Both insurers are each selling insurance plans on Obamacare marketplaces in 14 states.
Medicaid Expansion
Along with the new markets, insurers have benefited from Obamacare's expansion of who can qualify for the Medicaid insurance program for the poor. WellPoint said it added 373,000 members through Medicaid and Humana gained 163,000.
Nationwide, more than 6 million people have gotten coverage through Medicaid since the law's expansion went into effect this year.
WellPoint said those buying Obamacare plans in the second quarter were younger than those who purchased coverage earlier in the year, an indication a late surge of enrollees could help profits. So far, the Obamacare customers don't seem to be sicker and more costly than the company had anticipated.
WellPoint said net income for the second quarter was $731 million, or $2.56 a share, compared to $800 million, or $2.64 a share, a year earlier. Revenue rose 4.4 percent to $18.5 billion as it added 1.6 million new members this quarter compared to a year before.
Humana reported net income that fell 18 percent to $344 million, or $2.19 per share.
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