Wellpoint sinks after results miss expectations, guidance reduced

Health insurer Wellpoint (WLP) reported weaker than expected second quarter results, and the company lowered its fiscal 2012 earnings per share guidance to $7.30-$7.40, from its previous guidance of at least $7.57. Wellpoint said that most of the reduction in its earnings per share guidance was caused by lower than expected enrollment in the company's insurance plans. Overall enrollment sank by 126,000 in the second quarter. Meanwhile, enrollment in Wellpoint's commercial plans sank 169,000 during the quarter, partly due to "competitive situations" and attrition caused by economic factors, Wellpoint said. The company added, however, that it's "cautiously optimistic" about its ability to improve commercial enrollment trends over the next year. Meanwhile, the company's medical costs were higher than expected in the second quarter, driven by higher than expected outpatient and doctor visits, as well as increases in the use of specialty drugs. Wellpoint now expects its medical cost trend to increase towards the upper end of its previous guidance for a 6.5%-7.5% increase this year. In early afternoon trading, Wellpoint dropped $7.47, or 12.16%, to $53.95. Other health insurers also dropped, with Humana (HUM) falling 2.87% to $70.01, Health Net (HNT) tumbling 9.28% to $22.57, Aetna (AET) dropping 4.64% to $35.35, and CIGNA (CI) falling 3.61% to $39.73.