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WellPoint Trims Guidance

The HMO cites a stronger-than-expected response to a refinancing effort.
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trimmed fourth-quarter guidance Friday, citing a stronger-than-expected response to a debt-retirement plan.

The Indianapolis-based HMO said it expects to post fourth-quarter earnings of 90 cents a share, down from its previous forecast of 95 cents to $1 a share.

The company said latest-quarter numbers will include a 47-cent-a-share loss on a debt refinancing transaction, and a 31-cent hit on merger issues in California and Georgia. On Nov. 30, WellPoint merged with Anthem to become what it calls the nation's largest health benefits company, following a bruising round of regulatory battles, particularly in California.

On Fridya, WellPoint blamed the shortfall on its recent repurchase of 9.125% and 9.000% surplus notes. The tender offer attracted more investors than projected, resulting in the repurchase of 86.6% of the notes available, as compared to the 75% target. This generated a pretax loss of approximately $146 million, rather than the expected $125 million pretax loss. The refinancing will result in lower interest rates over the next 23 years, WellPoint said.

For 2005 WellPoint expects to earn $7.75 a share, in line with its prior estimates.

Early Friday, WellPoint was flat at $115.40.