WellPoint Inc., parent of Anthem Blue Cross of Connecticut in Hamden, cut its 2012 earnings forecast on Wednesday after net income fell more than 8 percent, the health insurer’s enrollment slipped and medical costs climbed during the second quarter, The Associated Press reports.
The company’s shares sank 12 percent in early morning trading Wednesday, off $7.42 at $54.
Chairwoman and CEO Angela Braly said in a statement the Indianapolis company was disappointed that it had to lower its forecast but believes it is the right move as it deals with the rising cost of medical care and other challenges.
The insurer now expects 2012 adjusted earnings, which exclude one-time items, to range between $7.30 and $7.40 per share, down from a previous forecast for $7.57 per share.
Analysts surveyed by FactSet expected, on average, earnings of $7.76 per share.
In the second quarter, WellPoint reported net income of $643.6 million, or $1.94 per share. That’s down from $701.6 million, or $1.89 per share, a year ago when the company had more shares outstanding.
Adjusted earnings were $2.04 per share.
Operating revenue, which excludes investment income and gains, climbed 2 percent to $15.17 billion.
The performance missed Wall Street expectations. Analysts had forecast, on average, earnings of $2.08 per share on $15.31 billion in revenue.
Citi analyst Carl McDonald said in a research note WellPoint competitor UnitedHealth Group Inc. also is seeing medical costs rise, but it incorporated that into its guidance and raised its 2012 forecast earlier this month.
“Time may be running out for WellPoint’s management team,” McDonald wrote. “Several large (share) holders were already frustrated by WellPoint, and this earnings report won’t do much to improve the relationship.
