, bigger is definitely better.
The company -- which ranks as the nation's largest health insurer after last year's merger with Anthem -- posted some huge first-quarter numbers. Notably, net income more than doubled to $612, and operating profits of $1.88 a share beat the consensus estimate by a full nickel. Moreover, the company has now raised the bar for the future. It expects to beat second-quarter profit estimates by a penny and has established new full-year guidance of $7.94 (including a special gain) that's well ahead of the $7.80 consensus estimate.
Importantly, WellPoint also believes it will surpass its original enrollment target for the year. In the meantime, the company added 793,000 new members -- bringing total enrollment to 28.5 million -- in the latest quarter.
It also announced a 2-for-1 stock split set for May 31.
"This action, along with our increased guidance for 2005, signals the confidence the board of directors has in the future of the company and the success the newly merged company is already realizing," said CEO Larry Glasscock. "During our first full quarter as an integrated company, we were able to deliver outstanding results, which is indicative of how smoothly our integration has gone and just how well our combined company is performing."
WellPoint did fall a bit short in one major category. Revenue jumped 145% to $11 billion, primarily due to the acquisition, but missed Wall Street expectations by $260 million.
Some may have banked on more merger synergies and share repurchases as well. During the first quarter, WellPoint simply hit its synergies target of $25 million. But Goldman Sachs analyst Matthew Borsch was looking for signs that the company may be on its way to exceeding its full-year target of $150 million by now.
The company also spent just $88.5 million on stock repurchases in the quarter, when Borsch had thought that its full-year target of $400 million -- which averages out to $100 million a quarter -- could prove conservative and lend some upside potential to full-year earnings.
Still, WellPoint delivered where it matters most. It posted a 4% jump in enrollment and expects to keep that growth rate up through the year.
Borsch, for one, expected WellPoint -- unlike most of its peers -- to fare well in this crucial area.
"WellPoint is projecting 2005 commercial enrollment growth of 3.5%," he wrote just ahead of the company's earnings release. "We believe this is achievable and see potential for upside ... even though we believe most managed care companies will fall short of target this year."
Borsch, who is generally cautious on the group, has an outperform rating on WellPoint's shares.