WellPoint Health Networks and Aetna became the latest health insurers to raise their earnings outlooks after posting better-than-expected first-quarter profits. WellPoint, Thousand Oaks, Calif., reported a 36% increase in net income to $193.1 million, or $1.29 per share, as the company added members and controlled costs. Analysts had expected earnings of $1.20 per share, according to Thomson Financial/First Call. Revenue climbed 22.7% to $4.8 billion. WellPoint's enrollment rose 4.6% year-over-year to 13.5 million members, making it the nation's second-largest health insurer in terms of enrollment after UnitedHealth Group, Minneapolis. The company raised its 2003 earnings forecast to $5.50 per share, from its previous estimate of $5.10 per share.
Aetna, Hartford, Conn., earned $330 million, or $2.12 per share, in the first quarter, thanks partly to abating medical-cost increases. That compares with a restructuring-driven loss of $2.83 billion, or $19 per share, in the year-ago period. Analysts had expected earnings of 86 cents per share in the 2003 first quarter, Thomson Financial/First Call said. Revenue fell 15% to $4.46 billion, as Aetna continued to jettison unprofitable accounts and reduced enrollment by 2 million in less than a year. At 13 million members, Aetna is the nation's fourth-largest health insurer in terms of membership; it was the largest just two years ago. Medical costs rose between 8% and 9% in the first quarter, slower than in quarters past, as members used fewer services or paid more of their medical costs out of pocket, Aetna said. As a result, the company spent 77% of premium revenue on medical care, down from 85.7% in the year-ago quarter. Aetna raised its 2003 earnings outlook significantly -- to between $4.75 and $4.90 per share, from a previous estimate of $3.30 to $3.40 per share. Anthem, PacifiCare Health Systems and UnitedHealth also have boosted earnings forecasts for the year after reporting that medical-cost increases appeared to be easing. -- by Laura B. Benko