NEW YORK (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. Its shares fell in morning trading after initially rising.
For the three months ended June 30, WellPoint's 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.
While the country's health care overhaul gave insurers more customers through a coverage expansion that started this year, it also heaped additional costs on their balance sheets, including an industry-wide tax that is non-deductible. It also trims funding for Medicare Advantage plans, changes how insurers can write their coverage and adds an industry-wide tax, which is not deductible.
WellPoint said that its second-quarter 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 health insurer cited the same changes to health care laws for driving revenue higher, largely through premium increases. Rising Medicaid enrollment helped push revenue higher as well.
Medical enrollment grew to about 37.3 million members in the quarter, 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.