--Company reiterates earnings per share growth guidance for 2009 while outlining strategies to enhance long-term value for customers and shareholders
INDIANAPOLIS, Feb 24, 2009 /PRNewswire via COMTEX/ -- WellPoint, Inc. (NYSE: WLP) today
hosted its 2009 investor conference in Indianapolis, IN. During the meeting,
WellPoint's executive leadership team reviewed the company's performance over
the past year, assessed the business environment and offered detailed company
guidance for 2009.
"While the current economy will present challenges in 2009, we expect
growth of 1 percent to 3 percent over $5.48 of adjusted earnings per share in
2008," said Angela F. Braly, president and chief executive officer of
WellPoint, as she began her remarks to investors. "This forecast assumes a
further increase in unemployment rates across our Blue states. We are
comfortable with these employment assumptions and we will continue to take the
steps necessary to position WellPoint to address the challenges as well as
capitalize on the opportunities presented by today's economy."
During the conference, Braly and her leadership team highlighted a number
of specific actions WellPoint took during 2008 to position the company for
improved long-term growth, including:
-- Introduced and expanded new products in the market, including
SmartSense, Employee Elect and PRISM, which have already generated enrollment
growth. WellPoint also saw significant growth in its Lumenos Consumer-Driven
Health Plan portfolio of products.
-- Significantly reduced claims inventory levels and increased claims
processing speeds, leading to better customer service.
-- Created an Operations Council, composed of key executives throughout
the company, to ensure day-to-day execution of WellPoint's business plan as
well as attainment of operating targets and maximization of profitable growth.
The Operations Council has improved collaboration across the organization for
enhanced visibility into future developments.
-- Invested in medical management programs and information technology for
competitive differentiation and greater efficiency.
-- Conducted a market-by-market review to gain better visibility into
competitive dynamics across WellPoint's service areas.
"We are already seeing positive results for our customers from many of the
actions we've taken," added Braly. "We will remain focused on improving health
care quality and affordability, and delivering the best overall value to the
marketplace. WellPoint continues to be a financially strong company with
distinct competitive advantages to benefit us over the long-term."
Wayne S. DeVeydt, executive vice president and chief financial officer of
WellPoint, echoed Braly's comments and said, "We are projecting earnings
growth in 2009 despite economy-related enrollment losses because we have
executed on a series of initiatives to improve operational performance. Our
reserves for medical claims have increased by $400 million, or 7 percent, from
year-end 2007 and we continue to maintain a strong and diverse investment
portfolio. We have good liquidity at our parent company and we expect to
generate $3 billion of operating cash flow during 2009. We are very focused
on providing excellent service to our customers and successfully executing our
business plans."
DeVeydt provided the following specific guidance for 2009:
-- Net income is expected to be in the range of $5.51 to $5.66 per share,
representing growth of 1 percent to 3 percent over $5.48 of adjusted net
income per share in 2008. The 2009 guidance assumes no future net realized
investment gains or losses, and a reconciliation of 2008 adjusted net income
per share to 2008 GAAP net income per share is included in this press release.
-- Operating revenue is expected to grow by approximately $400 million, or
1 percent, in 2009.
-- Medical enrollment is expected to decline by 1 million members,
reflecting the company's assumption of a continued increase in unemployment
rates.
-- The benefit expense ratio is expected to decline to between 82.7
percent and 82.9 percent in 2009.
-- The SG&A expense ratio is expected to be 15.3 percent in 2009.
-- Cash flow from operations is expected to total approximately $3
billion.
A webcast replay of the investor conference will be available at
www.wellpoint.com for two weeks.
About WellPoint, Inc.
WellPoint is committed to improving the lives and health of the people and
communities we serve by simplifying the connection between health, care and
value. Our goal is to help shape the impact each health care decision has on
individuals, the health care system at-large, and our communities. WellPoint's
more than 42,000 associates work every day to help create the best health care
value for our customers. Through collaborations with providers and with
innovative programs, WellPoint's affiliated health plans reward healthy
lifestyles and quality, safe and effective care. As the nation's largest
health benefits company, with approximately 35 million members in its
affiliated health plans, WellPoint is at the center of the health care system.
This position provides us with the relationships and insights needed to help
create affordable and actionable solutions that improve health care.
As an independent licensee of the Blue Cross and Blue Shield Association,
WellPoint serves members as the Blue Cross licensee for California; the Blue
Cross and Blue Shield licensee for Colorado, Connecticut, Georgia, Indiana,
Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area),
Nevada, New Hampshire, New York (as the Blue Cross Blue Shield licensee in 10
New York City metropolitan and surrounding counties and as the Blue Cross or
Blue Cross Blue Shield licensee in selected upstate counties only), Ohio,
Virginia (excluding the Northern Virginia suburbs of Washington, D.C.),
Wisconsin; and through UniCare. Additional information about WellPoint is
available at www.wellpoint.com.
WellPoint, Inc.
GAAP RECONCILIATION
This press release includes references to a non-GAAP financial measure.
This non-GAAP financial measure is not intended to be an alternative to any
measure calculated in accordance with GAAP. Rather, this non-GAAP financial
measure is presented in order to aid investors when comparing the WellPoint,
Inc.'s financial results among periods. A reconciliation of this non-GAAP
financial measure to the most directly comparable measure calculated in
accordance with GAAP is presented below.
Net Income Per Diluted Share - Year Ended December 31, 2008
For the year ended December 31, 2008, net income was $4.76 per diluted
share. These results included: net realized investment losses of $1.45 per
diluted share; an impairment charge of $0.17 per diluted share related to
certain intangible assets in the Company's State Sponsored business; and
income tax benefits totaling $0.90 per diluted share, resulting from the
favorable resolution of certain federal and state tax matters. Excluding
these items, net income for the year ended December 31, 2008, was $5.48 per
diluted share.
Year Ended
(unaudited) December 31, 2008
Net income per diluted share $4.76
Add back:
Net realized investment losses (1) 1.45
Impairment charge for certain State Sponsored
intangible assets (2) 0.17
Subtract:
Income tax benefits from the favorable resolution of
certain federal and state tax matters (3) (0.90)
Adjusted net income per diluted share $5.48
(In millions, except per share data)
(1) After-tax impact of net realized investment losses $759.6
Approximate diluted per share effect $1.45
(2) After-tax impact of impairment charge for certain
State Sponsored intangible assets $90.8
Approximate diluted per share effect $0.17
(3) Income tax benefits from the favorable resolution
of certain federal and state tax matters $473.0
Approximate diluted per share effect $0.90
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
The Company and its representatives may from time to time make written and
oral forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (PSLRA), including statements in this press
release, in presentations, filings with the Securities and Exchange
Commission, or SEC, and reports to shareholders and in meetings with analysts
and investors. The projections referenced in this press release are forward-
looking and they are intended to be covered by the safe harbor for "forward-
looking statements" provided by PSLRA. Words such as "expect(s)", "feel(s)",
"believe(s)", "will", "may", "anticipate(s)", "intend", "estimate", "project"
and similar expressions are intended to identify forward-looking statements,
which generally are not historical in nature. These statements include, but
are not limited to, financial projections and estimates and their underlying
assumptions; statements regarding plans, objectives and expectations with
respect to future operations, products and services; and statements regarding
future performance. Such statements are subject to certain risks and
uncertainties, many of which are difficult to predict and generally beyond our
control, that could cause actual results to differ materially from those
expressed in, or implied or projected by, the forward-looking information and
statements. These risks and uncertainties include: those discussed and
identified in our public filings with the SEC; increased government regulation
of health benefits, managed care and pharmacy benefit management operations;
trends in health care costs and utilization rates; our ability to secure
sufficient premium rate increases; our ability to contract with providers
consistent with past practice; competitor pricing below market trends of
increasing costs; reduced enrollment, as well as a negative change in our
health care product mix; risks and uncertainties regarding the Medicare Part C
and Part D Prescription Drug benefits programs, including those related to CMS
sanctions, potential uncollectability of receivables resulting from processing
and/or verifying enrollment (including facilitated enrollment), inadequacy of
underwriting assumptions, inability to receive and process correct
information, uncollectability of premium from members, increased medical or
pharmaceutical costs, and the underlying seasonality of the business; a
downgrade in our financial strength ratings; litigation and investigations
targeted at health benefits companies and our ability to resolve litigation
and investigations within estimates; our ability to meet expectations
regarding repurchases of shares of our common stock; funding risks with
respect to revenue received from participation in Medicare and Medicaid
programs; non-compliance with the complex regulations imposed on Medicare and
Medicaid programs; events that result in negative publicity for us or the
health benefits industry; failure to effectively maintain and modernize our
information systems and e-business organization and to maintain good
relationships with third party vendors for information system resources;
events that may negatively affect our license with the Blue Cross and Blue
Shield Association; possible impairment of the value of our intangible assets
if future results do not adequately support goodwill and other intangible
assets; possible inability to realize the value of our deferred tax assets;
intense competition to attract and retain employees; unauthorized disclosure
of member sensitive or confidential information; changes in the economic and
market conditions, as well as regulations, that may negatively affect our
investment portfolios and liquidity needs; possible restrictions in the
payment of dividends by our subsidiaries and increases in required minimum
levels of capital and the potential negative affect from our substantial
amount of outstanding indebtedness; general risks associated with mergers and
acquisitions; various laws and our governing documents which may prevent or
discourage takeovers and business combinations; future bio-terrorist activity
or other potential public health epidemics; and general economic downturns.
Readers are cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date hereof. Except to the extent
otherwise required by federal securities law, we do not undertake any
obligation to republish revised forward-looking statements to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events. Readers are also urged to carefully review and consider
the various disclosures in our SEC reports.
SOURCE: WellPoint, Inc.
http://www.wellpoint.com
