WELLPOINT SHARES OFF DESPITE PROFITS HIKE.

Byline: Ben Sullivan Daily News Staff Writer

Woodland Hills-based Wellpoint Health Networks Inc. saw its share price slide more than 10 percent Thursday despite reporting strong third-quarter earnings.

Investors sent the managed-care company's shares down $5.50, or 10.3 percent, to close at $47.68, on a day when the market as a whole dropped 125 points.

The sharp slide came after the company announced a 23 percent increase in third-quarter earnings compared with the same period a year ago. Profits rose from $45.1 million in third-quarter 1996 to $55.6 million for the three-month period ended Sept. 30.

What hurt Wellpoint, analysts say, was an increase in the company's spending on medical care vs. the revenue it collects on premiums.

``Investors weren't happy with the rise in the medical-loss ratio from the second quarter to the third,'' said Peter Costa, an analyst at ABN Amro Chicago Corp. ``In a better market, I think investors might not have been so cynical, but in the current market everyone's very cautious.''

Wellpoint CEO Leonard Schaeffer acknowledged the company has seen its medical-loss ratio creep up, but attributed it to recent acquisitions of East Coast health plans where spending had been more excessive.

``Their loss ratios were much higher, so combined, our loss ratio has gone up. But we've said that over time we will take those loss ratios down,'' Schaeffer said. In California, Wellpoint markets its HMO and PPO managed-care products under the Blue Cross of California name.

Year to year, the company's medical-loss ratio increased nearly 4 percent, from 78.3 percent to 82.2 percent of premium revenue going to health care delivery.

Wellpoint's share price was also a victim of bad timing, Schaeffer said Thursday. ``You don't want to (announce earnings) the day after the market drops 550 and Oxford implodes,'' he said.

Schaeffer was referring to Monday's news from Norwalk, Conn.-based Oxford Health Plans that it would suffer a major third-quarter loss. The announcement sent shares in the managed-care company plummeting 61 percent and dragged the prices of many publicly traded managed-care companies with it.

Wellpoint was the hardest-hit company on the West Coast, with its price falling $8.37 Monday. Cumulatively, Wellpoint shares have dropped $8.44, or 15 percent, in value in the last week.

Still, ABN Amro's Costa said he recommends Wellpoint shares to investors. ``Their earnings are rising, and eventually they'll be rewarded for that rising,'' he said.

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Chart: (Color) HAMMERED

Woodland Hills-based Wellpoint Health Networks has seen its shares fall in the last six trading days.

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