Despite rising medical costs and a decline in membership, managed care firm, Wellpoint, second only to United Healthcare in membership size, posted third-quarter profits of $691.2 million, up from $683.2 million a year earlier, with the correlating share values of $2.15 up from $1.90, as reported by Businesswire.
Although total revenue for the quarter declined 0.3 percent to $15.35 billion, it still surpassed the predictions of Thomson Reuter analysts who expected earnings of $1.84 a share on revenue of $15.31 billion, according to the site.
Commercial business revenues were down by 3.4 percent to $8.36 billion for the quarter; consumer business was up 6.6 percent to $4.88 billion, and medical enrollment was down 2.5 percent, at 33.5 million members in its affiliated health plans.
In addition to those 33.5 million members, Wellpoint also serves approximately 65 million through its subsidiaries, according to the company’s website.
The company has been diversifying its revenue streams: it recently purchased the online contact lens retailer 1-800-Contacts and in a $4.46 billion deal that is expected to close at the end of the year, will acquire the health insurer Amerigroup. Wellpoint bought the Medicaid managed care provider for a premium of more than 50 percent over its market value, according to Forbes.
The Amerigroup purchase will make Wellpoint the country’s biggest Medicaid insurer, and allow it to compete for Medicaid patients who also receive Medicare, Businesswire reported.
“Our third quarter results compared favorably to our expectations and reflected more consistent execution across our businesses. We are preparing for a successful Amerigroup integration and have recently taken steps to better align business level leadership to execute on the growth opportunities before us,” said John Cannon, interim president and chief executive officer, in a press release posted on the company’s site.
Shares closed at $61.20, and prior to these results had dropped 7.6 percent for the year. The company projects total revenue for the year at $60.7 billion, down from $61 billion.
Angela Braly, Wellpoint's former CEO, resigned abruptly in August responding to pressure from shareholders. She was replaced by John Cannon.