Insurer WellPoint hikes 2014 forecast a third time
INDIANAPOLIS (AP) — WellPoint raised its 2014 earnings forecast again after trumping analyst expectations for the third quarter, as health insurers continue to ease earlier concerns that the nation's health care overhaul would hamstring the industry.
The Blue Cross-Blue Shield insurer now expects 2014 adjusted earnings to range between $8.75 and $8.85 per share. That's up from a forecast it made in July for earnings of more than $8.60 per share.
The new forecast, announced Wednesday, marks the third time this year that WellPoint has raised its outlook.
Analysts had been looking for annual per-share earnings of $8.74 per share, according to FactSet.
WellPoint Inc. also posted adjusted earnings of $2.36 per share in the third quarter, which was much better than the $2.28 that analysts had projected, according to a poll by Zacks Investment Research.
The Indianapolis-based insurer's big quarter comes after competitors Aetna Inc. and UnitedHealth Group Inc. also topped quarterly expectations and raised their annual forecasts.
Insurers began the year cautious about a major coverage expansion initiated by the overhaul, the federal law that aims to cover millions of uninsured people. Late last year, the U.S. introduced state-based public health insurance exchanges that promised to give insurers millions of new customers by making it easier for people to buy coverage, sometimes with help from income-based tax credits.
But the overhaul also heaped additional costs on insurer balance sheets, including an industry-wide tax that is non-deductible. It trimmed funding for Medicare Advantage plans and altered the manner in which insurers operate by preventing them from excluding high-risk patients.
Insurers were plunged into new territory, unsure of what their exchange customer base would look like, and a glitch-plagued debut of the exchanges created even more ambiguity.
A year later, these challenges appear manageable, and investors see much less uncertainty ahead for health insurers.
UnitedHealth has already said that It expects its overall performance to grow stronger next year and beyond. Stephen Hemsley, CEO of the nation's largest insurer, told analysts earlier this month that he thinks all of UnitedHealth's businesses are better positioned than they were entering 2014.
Shares of UnitedHealth, WellPoint and Aetna — the country's three largest health insurers — have repeatedly hit all-time highs this year and have easily outpaced broader trading indexes.