INDIANAPOLIS (AP) — WellPoint's second-quarter profit fell 8.6 percent as expenses tied to changes in the nation's health care laws climbed.
It still beat Wall Street expectations and the nation's second-biggest health insurer raised its profit expectations for the year yet again.
Net income declined to $731.1 million, or $2.56 per share, from $800.1 million, or $2.64 per share, in the same quarter a year earlier.
Earnings, adjusted for investment gains, came to $2.44 per share. That easily topped the $2.28 that analysts were projecting, according to a poll by Zacks Investment Research.
Total expenses increased to $17.21 billion from $16.48 billion. The company's selling, general and administrative expense ratio was 15.8 percent, an increase of 190 basis points compared with the same period last year. The company cited changes in health care laws that went into effect at the beginning of the year.
Operating revenue, which excludes investment gains or losses, rose 4.2 percent to $18.23 billion from $17.49 billion. That is slightly above the $18.22 billion Wall Street forecast.
The company also cited the same changes to health care laws for driving revenue higher, largely through premium increases. Rising Medicaid enrollment also helped push revenue higher as well.
Medical enrollment grew to about 37.3 million members, up 4.5 percent from 35.7 million a year ago.
WellPoint made its name nationally as a provider of private Blue Cross Blue Shield coverage, but it is pegging more of its future growth on government business, which includes the Medicaid and Medicare programs and coverage for government employees. President and CEO Joseph Swedish said earlier this year that government business now represents nearly 45 percent of its revenue base.
On Wednesday, Swedish said he is optimistic about its future growth opportunities in its commercial and government segments.
WellPoint has made a sizeable bet on the success of the health care overhaul, the massive federal law that aims to spread coverage to millions of uninsured people. It is counting on its well-known Blue Cross-Blue Shield brand to help sell coverage on 14 state-based exchanges that started accepting applications for individual insurance coverage last fall. The overhaul's exchanges still represent a relatively small slice of WellPoint's customer base though.
WellPoint now anticipates its 2014 adjusted profit will be more than $8.60 per share. Its prior guidance was for an adjusted profit greater than $8.40 per share. Before that, it had predicted earnings of more than $8.20 per share. Analysts polled by FactSet expect $8.60 per share.
Shares of WellPoint Inc. are up almost 22 percent this year.