earnings

WellPoint loses money for Q2, but still pleases investors

Anne Zieger — Fri, 25 Jul 2008 11:47:49 -0400

Giant health plan WellPoint had what most financial types would consider a tough second quarter, with earnings falling 10 percent and its overall profit predictions for 2008 falling. Still, given that these numbers were better than investors were expecting, the company's stock did OK, nonetheless.

WellPoint's second-quarter net income fell to $750.5 million or $1.44 a share, from $835.2 million or $1.35 a share, a year earlier. Meanwhile, WellPoint has cut back its 2008 earnings projections, with the company now forecasting profits of $5.42 to $5.57 a share rather than $5.42 to $5.67. (While that's a small difference on the top end, every trim-back hurts, particularly on the Street.)

WellPoint CEO Angela Braly said that the lower forecast comes from bigger drops in enrollment in its commercial plans than it had expected. In fact, the company expects health-plan enrollment to fall by 150,000 in the second half of this year. She also noted that recent settlements with California regulators over its rescission policies for individual policy-holders have had an impact.

That being said, executives were able to point to some successes. For example, WellPoint cut its backlog of medical claims by 23 percent from the end of 2007, sped up its claims-paying system and revised its premiums to make sure it won't be taking big medical losses in the future, they said.

To learn more about WellPoint's financial performance:
- read this Wall Street Journal piece (sub. req.)

Related Articles:
WellPoint pays hospitals $11.8M to settle bills from rescissions
WellPoint profits fall 25 percent during first quarter

Cigna first-quarter profits drop 80 percent

Fri, 02 May 2008 06:59:58 -0400

Uh oh--this can't be good. A multitude of insurers have have posted rather disappointing financial results, including UnitedHealth Group, Humana, Health Net and WellPoint--and now another big insurer joins the party. Cigna has announced that it saw an 80 percent drop in first-quarter profits over the same quarter last year, with earnings of $58 million this time versus $289 million one year ago. Cigna has been hit by a multitude of factors, including a tough flu season, litigation and the cost of integrating newly-acquired Great-West Healthcare. All that being said, Cigna executives did cite some bright spots in their picture, including a predicted rise of 2 to 2.5 percent in enrollment (excluding Great-West enrollees). But this is still shaping up to be a tough year for U.S. health plans generally. Brace yourself for next year: premiums are likely to shoot up, employees to carry more costs, and providers to get hit with more bad debt. It's a pretty ugly picture all around.

To learn more about Cigna's problems:
- read this Modern Healthcare article (reg. req.)

Related Articles:
UnitedHealth suffers financial setback
WellPoint profits fall 25 percent during first quarter

Universal Health has profitable first quarter

Fri, 25 Apr 2008 06:59:58 -0400

It's been a good first quarter for hospital company Universal Health Services, which saw a substantial jump in net earnings over the same quarter last year. UHS's net income climbed 24.6 percent for the first quarter, to $61.7 million, up from $49.5 million in the same period last year. Not only that, the company has raised its earnings forecast for the year from $3.70 per share to $3.80 per share, up from $3.37 to $3.42 per share.

All of this happened despite the company having lost four hospitals to Hurricane Katrina in 2005. The hospitals got some financial help from a patient influx driven by a harsh flu season, as well as expanded capacity in its behavioral hospitals and improved insurance reimbursement.

To learn more about Universal's performance:
- read this Philadelphia Inquirer piece

Related Articles:
Universal Health faces wider federal investigation.
Universal Health must turn over $1.1M in back pay.

LifePoint hospitals sees 30% profit drop for '07

Mon, 11 Feb 2008 06:59:57 -0500

It seems that LifePoint Hospitals took a beating in fiscal 2007. The Brentwood, Tenn.-based chain said that despite raised revenues, profits fell 20 percent, undermined by volume losses of 15 percent in six of its markets and a rise in bad debt to 16 percent. For the fourth quarter of fiscal '07, the company reported profits of $30.6 million on revenues of $658.4 million, compared with $38.4 million in the fourth quarter of fiscal '06. For the year, things looked worse. Despite a revenue increase of 9.7 percent, to $2.63 billion, profits fell 30.2 percent to $102 million in 2007, compared with profits of $146.2 for fiscal '06.

In addition to bad debt, other factors that helped sink profits included a late starting flu season, the loss of physicians from hospital medical staffs, and the closing of unprofitable service lines. Also, some of LifePoint's Southern states reported fewer seasonal residents.

To learn more about LifePoint's financials:
- read this Modern Healthcare piece (reg. req.)

Related Articles:
LifePoint shareholder calls for changes. Report
LifePoint, Triad offer earnings guidance. Report
HCA sees bad debt rising until patients get insured. Report

Dialysis provider faces anemia drug pressures

Mon, 17 Sep 2007 06:59:56 -0400

National dialysis chain DaVita is doing very well, thank you very much, with 2006 sales of $4.9 billion and earnings of $290 million. That's up dramatically from 1999, when it had revenue of $1.4 billion. Stock prices have also climbed above $60 per share, up from below $2 in early 2000.

The question for DaVita, however, is whether it can maintain this status if Medicare takes proposed measures to cut back on reimbursement for anemia drug Epogen. Like its competitors, DaVita is using large volumes of the Amgen drug; however, it seems to be the most aggressive Epogen user, according to government dialysis registry United States Renal Data System. And USRDA figures suggest that more than half of DaVita patients have raised red blood cell levels that are considered dangerous by the FDA.

DaVita CEO Kent Thiry faces big pressure from Medicare, which wants to pay for dialysis on a bundled basis that won't reward higher Epogen use. Not only that, it's getting hammered by Amgen, which is demanding that it use more Epogen each year to keep favorable pricing. All told, this is a tough moment to be a dialysis provider, particularly a high-profile one, it seems.

To learn more about the Epogen question:
- read this article from The New York Times

Related Articles:
Study: Dialysis chains profit from higher Epogen use. Report
Amgen stock slips as anemia drug concerns rise. Report
Dialysis chains defend anemia use along ethnic lines. Report

SPOTLIGHT: A financial diagnosis for the healthcare sector

Sun, 06 May 2007 20:01:32 -0400

Managed care companies should enjoy a whopping 15 to 20 percent growth in earnings next year, but hospitals aren't so fortunate, says John Boettiger, healthcare valuation leader at Deloitte & Touche USA. In an interview, Boettiger offers some predictions as to how providers will cope with continuing budget squeezes--and suggestions as to what they can do about it. Article

Medicare releases physician P4P measures

Wed, 04 Apr 2007 20:01:38 -0400

CMS has released the 74 performance measures it plans to begin using in its Medicare pay-for-performance program this July. Under the Physician Quality Reporting Initiative, physicians who choose to report on quality measures can get bonuses of up to 1.5 percent of their earnings. The bonuses will apply to services provided between July 1st and December 31st of this year. The measures are drawn from discussions with varied physician trade groups and professional organizations such as the American Medical Association and National Quality Forum. Medicare is moving ahead with the program after testing the P4P concept with hospitals for three years. By the second year of its pilot, Medicare found that participating hospitals had improved quality 11.8 percent. In response, the agency paid out $8.7 million to the 115 best-performing hospitals.

To find out more about the measures:
- read this United Press International item

Related Articles:
Medicare P4P results show care improvements. Report
Positive results for Medicare P4P pilot. Report
Exclusive: How to make P4P work. Interview

HealthSouth may sell units, pay off debt

Sun, 13 Aug 2006 20:01:33 -0400

HealthSouth, which is still in the process of recovering form a 2.7 billion accounting scandal, announced that it many sell its surgery centers and outpatient rehabilitation unit. The company would to center its efforts on its more lucrative inpatient rehab hospitals, which account for over half of company's revenue and 86 percent of operating earnings. HealthSouth hopes that the sale of the unit will help the company pay off $1 billion of debt in five years. In 2003 the company was the subject of a federal investigation. Just recently former CEO Richard Scrushy was found guilty of bribing the governor of Alabama, though last year he was acquitted of charges related to the accounting scandal. He still faces a civil suit over the matter.

- see this article from The Washington Post

WSJ.com: UnitedHealth faces SEC probe

Wed, 10 May 2006 20:01:39 -0400

In the latest twist in the stock-option backdating story, UnitedHealth Group said that it may have to restate earnings for the past three years. That could cost the company as much as $286 million. Meanwhile, the health services giant admits in a regulatory filing that it is the object of an "informal" SEC probe into its stock option granting processes. UnitedHealth shares fell $1.70 to $44.47 in morning trading.

- read this The Wall Street Journal article (sub. req.)

Have insurers hit the top?

Wed, 12 Apr 2006 20:01:38 -0400

The New York Times wonders if 2006 might turn out to be a long overdue bad year for insurers in the wake of the recent problems at UnitedHealth Group. Shares of health insurers are down 8.6 percent since January first according to Standard & Poors. On the other hand, that's led some on Wall Street to wonder if companies like United and WellPoint are actually bargains at the moment. Some observers are wondering if the investor uncertainty may have a lot to do with the chaotic Medicare Part D rollout. There are some signs that investors are avoiding insurers with high Part D exposure, including Humana and Aetna. We'll know more next week when UnitedHealth Group reports earnings.

- read the report in The New York Times