I suppose you can blame pretty much anything on the economy. But WellPoint Inc. really does seem to be susceptible to downturns — in part because of its exposure to the small group and individual markets.
Shares in the company had fallen 7% by early afternoon today, with investors spooked by a cloudy outlook in the face of high unemployment. Here are some bullet points, as reported by the company in its second-quarter earnings call this morning.
- WellPoint lowered its 2009 profit forecast, blaming the impact of the economy on the company’s commercial business. Overall, profits fell nearly 8% in the second quarter, which still topped Wall Street expectations.
- Medical membership fell by 1.1 million or 3% to 34.2 million as of June 30, compared to a year earlier. Small group membership alone fell by 734,000. Compared to the first quarter, total medical membership was down 338,000, almost entirely from commercial; about 75% of the loss came from job attrition among existing clients.
- Commercial medical cost ratio rose nearly 200 basis points in the second quarter, compared to a year earlier. The company said that markets hit hard by the recession, such as California and Ohio, fared worst. It also said layoffs have been mostly among lower utilizers of healthcare services. Exactly why isn’t clear.
- COBRA membership — with its high medical cost ratio — has increased to 2.2% of WellPoint’s fully funded membership, compared to 1.6% as of year-end 2008.
So basically what started as a good day (Hey, they beat 2Q09 consensus!), turned into a downer really fast.
Subscribe in RSS Reader