INDIANAPOLIS (AP) — WellPoint Inc.'s first-quarter earnings rose about 3 percent, as the nation's second largest health insurer saw a revenue gain from an acquisition. It also raised its 2013 net income forecast.
The Indianapolis company closed its $4.46 billion acquisition of Medicaid coverage provider Amerigroup Corp. late last year, and the acquisition added more than 2 million members to its enrollment. That helped boost the insurer's total membership more than 6 percent in the first quarter to 35.8 million people, a total that trails only UnitedHealth Group Inc.
Medicaid is the state-federal program that provides health coverage for the needy and disabled people, and it represents a growth opportunity for health insurers. States are starting to move residents who qualify for both Medicaid and Medicare, which is a federally-funded program for people over age 65 and the disabled, into managed care programs that improve their care and cut wasteful spending.
WellPoint officials have said the opportunity these "dual eligible" patients offer was a driving force behind the deal.
Many of these patients have chronic or expensive medical conditions, so the additional membership comes with high costs that can balance the extra revenue. WellPoint's benefit expense, or the total it paid in claims, climbed nearly 17 percent to $13.75 billion in the quarter.
Overall, the insurer said Wednesday it earned $885.2 million, or $2.89 per share, in the three months that ended March 31. That's up from $856.5 million, or $2.53 per share, a year ago, when the company had more shares outstanding.
Adjusted earnings totaled $2.94 per share. Analysts forecast earnings of $2.38 per share, according to FactSet.
Operating revenue jumped nearly 16 percent to $17.55 billion. Analysts expected higher revenue of $17.86 billion.
WellPoint now expects 2013 earnings of at least $7.80 per share, up from the $7.60 per share it forecast in January.
Analysts expect, on average, earnings of $7.82 per share.
The insurer runs Blue Cross Blue Shield plans in 14 states, including California, New York and Ohio.
WellPoint shares closed at $69.33 on Tuesday. Its shares have traded in a 52-week range of $52.52 to $72.79.