Thursday, November 8, 2012

Earnings Effect: WellPoint, Tenet Healthcare Corporation – WLP, THC

Shares of WellPoint, Inc.(NYSE:WLP) fell 5.50% to $57.85 in Wednesday’s session after President Barack Obama won re-election, a victory that helps cement the future of his health care overhaul.

The health care reform aims at giving more business to the insurers by covering millions of uninsured people starting in 2014, but the imposed fees and restriction on sector expects to squeeze the profits for the concern.

Citi analyst Carl McDonald wrote "There's been an undercurrent of concern among many regarding the potential for bad news out of WellPoint's third quarter earnings, but the trepidation wasn't warranted."
For the last quarter Wellpiont earned $691.2 million, or $2.15 per share, a rise by 1% in comparison to last year.

Excluding investment gains, adjusted earnings were $2.09 per share which beats analyst expectation of $1.83 per share.

Excluding investments the insurer’s revenue was $15.13 billion. Analyst expected revenue of $15.3 billion.
Reaffirming the forecast of $7.30 to $7.40 per share for its fiscal year 2012 was WellPoint.

Analysts expect, on average, earnings of $7.38 per share.

Shares of Tenet Healthcare Corporation(NYSE:THC) rose 10% to $27.4 after the re-election of President Barack Obama ensured survival of health reform, buoying the sector.

"Last night's election results are encouraging for the full implementation of the Affordable Care Act," Tenet Chief Executive Trevor Fetter said on a conference call.

“Investors are excited about the prospect of hospitals seeing improved profitability in 2014," said Jefferies & Co analyst Brian Tanquilut.

For the third quarter Tenet posted earnings of $40 million or 37 cents per share, a rise by 640% in comparison to last year.

Earnings before interest, tax, depreciation and amortization increased 40% to $269 million, in line with analyst forecasts. Net operating revenue rose 5.8% to $2.22 billion.

Excluding one-time items company expects full-year EBITDA of $1.2 billion.

For 2013, it forecast EBITDA in a range of about $1.33 billion to $1.43 billion, slightly above analyst consensus estimates.

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