WellPoint, Inc. (NYSE:WLP) reported that its net income declined by 68% due to the increase of use in medical services in the fourth quarter prior to the cancellation of medical plans by the end of 2013.
Financial results
During the fourth quarter, the insurance provider generated $148 million net income of $0.49 earnings per share compared with its $464.2 million net income or $1.51 earnings per share in the same period a year ago. Its revenue increased 16% to $17.9 billion from $15.44 billion in the year-ago quarter.
The financial performance of the company was also negatively impacted by the $164.5 million after tax charge it recorded from the sales of its subsidiary, 1-800-Contacts.
WellPoint generated $261 million net income or $0.87 earnings per share excluding investment results and other one-time charges, which is in line with the expectations of Wall Street analysts polled by Thomson Reuters.
For the full year 2013, the insurance provider delivered $2.49 billion profit or $8.20 earnings per share compared with its $2.7 billion net income or $8.18 earnings per share in the same quarter last year. Its revenue was $71.02 billion, an increase of 15.5% from $61.49 billion a year earlier.
In a statement, Joe Swedish, CEO of WellPoint said, “We are pleased with our performance in 2013, which came in stronger than we expected even as we prepared for the implementation of the Affordable Care Act.”
The insurance provided ended the fourth quarter with $271.8 million operating cash flow and $3.1 billion operating cash flow by the end of fiscal 2013.
WellPoint had 51 million shares worth $449.8 million in the fourth quarter. For the entire year, it bought back 20.7 million shares worth approximately $1.6 billion. The insurance provider also distributed $110.5 million in dividends to shareholders during the fourth quarter and $448 million in dividends for the full year.
Its board of directors recently approved the increase of dividend by 16.7% to $0.4375, which will be paid in the first quarter of 2014.
WellPoint projected to deliver around $8 earnings per share in 2014, lower than its earnings in 2013 before special items. Wayne DeVeydt, CFO of the company explained that its 2014 outlook represents approximately $100 million negative impact from the changes in government policy related the implementation of the Obamacare.
