Yesterday, the State Sponsored Business division of WellPoint Inc. (WLP) announced an agreement to serve as an administrative subcontractor for the Texas STAR and CHIP contract of Blue Cross and Blue Shield of Texas (BCBST).
Consequently, WellPoint Partnership Plan LLC, which is affiliated with the group company, will provide claims administration, customer service and medical and quality management to BCBST in the Travis Service area, comprising the counties of Travis, Bastrop, Burnet, Caldwell, Fayette, Hays, Lee and Williamson. The company will also help in the development and implementation of infrastructure for BCBST programs.
The alliance will be mutually beneficial to the two companies. While BCBST will gain from WellPoint’s proficiency in Medicaid managed care, the managed care organization will reap the benefits of BCBST’s strong membership count in Texas.
WellPoint is an independent licensee of the Blue Cross Blue Shield Association (BCBSA), which is a federation of 39 separate health insurance organizations and companies in the United States. The company’s State Sponsored Business division is a part of the Consumer Business segment, which recorded a 13.3% year-over-year hike to $4.6 billion in the third quarter of 2011.
WellPoint reported third-quarter 2011 operating income of $1.77 per share, striding ahead of the Zacks Consensus Estimate of $1.69. Results were also 1.7% higher than $1.74 in the year-ago quarter.
Currently, the Zacks Consensus Estimate for WellPoint’s fourth-quarter earnings stands at $1.11 per share, down about 16.5% year over year. Of the 19 firms covering the stock, 3 revised their estimates upward, while 12 downward revisions were witnessed in the last 30 days.
For 2011, earnings are expected to be $7.09 per share, climbing about 5.2% year over year. WellPoint is the largest insurer on the basis of enrollment, beating competitors like Aetna Inc. (AET), CIGNA Corporation (CI) and UnitedHealth Group Inc. (UNH).
The company carries a Zacks #2 Rank, implying a short-term Buy rating, with a slight upward pressure over the near term. On Thursday, the shares of WellPoint closed at $68.26, up 0.18%, on the New York Stock Exchange.
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