Health insurer WellPoint Inc., parent of Anthem Blue Cross Blue Shield of Connecticut in North Haven, said today its fourth-quarter profit dropped 61 percent because of a large investment loss and growing unemployment that reduced the number of workers on its membership rolls.
The nation’s largest insurer by enrollment said it earned $331.4 million, or 65 cents per share, down from $859.1 million, or $1.51 per share, a year ago. WellPoint’s investments lost $350.5 million, or 69 cents per share. Revenue fell 3.2 percent to $15.07 billion from $15.57 billion.
Excluding the investment loss, WellPoint earned about $1.34 per share.
Some analysts following the company also excluded a charge of $24 million, or 5 cents per share, that WellPoint took in the quarter due to recently announced job cuts. In that case, WellPoint’s adjusted profit would be $1.39 per share.
Analysts polled by Thomson Reuters expected, on average, a profit of $1.36 per share and $15.56 billion in revenue.
WellPoint said earlier this month that it would eliminate about 1,500 jobs, or more than 3 percent of its staff.
The Indianapolis-based company, which operates Blue Cross and Blue Shield plans, said its membership fell by 288,000 from the third to fourth quarters as employers cut jobs.
Chief Executive Angela Braly said today the company expects unemployment to continue to rise in 2009. She said they believe it will peak above 10 percent in some of WellPoint’s states.
“The challenging climate in the United States is causing many customers to reduce workforce size and to seek more cost effective solutions and services from their health plans,” she said.
On the flip side, Braly said WellPoint expects to see more opportunities in its state-sponsored Medicaid business because of the downturn.
WellPoint finished the year with 35 million members, up from about 34.8 million a year ago. Membership in state-sponsored plans fell by 206,000 for the year. Enrollment grew in its national and senior businesses. But fully insured medical membership fell by 3 percent to 16.5 million people, while enrollment in the less profitable self-funded business grew 4 percent to 18.5 million.
WellPoint spent 83.4 percent of premium revenue on medical care, up from 82.9 percent last year, due in part to higher medical costs. While premium revenue grew in all businesses, it lost a key drug contract and had lower fully insured membership.
Total premiums grew 0.2 percent to $14.3 billion in the quarter. However, WellPoint lost a prescription drug contract with the state of New York.
The company earned $2.5 billion, or $4.76 per share, in 2008, including an after-tax loss of $1.45 per share in investment and security investments, a write-down of 17 cents per share in its state sponsored business, and income tax benefits of 90 cents per share. That represented a drop of 25.5 percent from 2007, when it earned $3.35 billion, or $5.56 per share.
Total revenue, which includes revenue from investments, rose slightly to $61.25 billion from $60.17 billion.
WellPoint said it will offer an outlook for the year 2009 during an investor conference in February. Analysts currently expect a profit of $5.78 per share on $63.52 billion in revenue.
At 11 a.m. WellPoint shares traded at $44.40, up $1.78, or 4.2 percent. (AP)
