By J.K. Wall, The IBJ
jwall@ibj.com
WellPoint Inc. lost 148,000 commercial customers in its fourth quarter as large employers laid off workers, the company reported today.
The decline in commercial membership - WellPoint's most profitable segment - contributed to the company missing Wall Street analysts' earnings expectations by two cents per share.
The Indianapolis-based health insurer pulled down a profit of $1.34 per share, excluding investment losses of 69 cents per share. Analysts surveyed by Thomson Financial expected WellPoint to earn $1.36 per share.
"While our enrollment levels are being impacted by rising unemployment, our customer retention rates remain very strong," said CEO Angela Braly in a statement. "As employers continue to reduce their workforces, we have alternatives for the impacted employees through individually purchased products or government-sponsored plans."
WellPoint recorded more than $350 million in fourth-quarter investment losses, which caused its overall profit to swoon 62 percent from its profit in the same quarter of 2007. Excluding the investment losses, WellPoint's profit would have dropped 21 percent, to $682 million.
Revenue for the quarter fell 3 percent to $15.1 billion.
It was a difficult year for WellPoint, marred by computer problems early, investment losses in the middle and job cuts at the end. WellPoint itself cut 1,500 positions this month in response to the economic downturn.
For the year, WellPoint pulled in profit of $2.5 billion. Excluding investment losses and one-time items, the company would have earned nearly $2.9 billion in profit, down 14 percent from its 2007 profit. Revenue for 2008 totaled $61.3 billion, up 2.2 percent over the previous year.
The company's stock lost 52 percent of its value in 2008 and has been flat so far this year. Its share price closed yesterday at $42.62. The company said it would provide a financial forecast for 2009 at its investors meeting in February.
WellPoint is the nation's second-largest health insurer by revenue, behind Minnesota-based UnitedHealth Group, but insures the most people. Its customers totaled 35 million at the end of 2008.
WellPoint also lost 140,000 non-commercial customers in its fourth quarter. For the year, however, it gained 240,000 customers.