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WELLPOINT TAKES A HIT AFTER MERGER Q4 NET INCOME DROPS 12%, CLOSE TO ANALYST PREDICTIONS.

Byline: Evan Pondel Staff Writer

WellPoint Inc.'s fourth-quarter net income dropped 12 percent, mostly related to costs associated with its $16.5 billion merger with Anthem that created the largest health care company in the nation.

Now based in Indianapolis, WellPoint on Monday reported fourth-quarter net income of $184.5 million, or 92 cents a share, compared with net income of $208.8 million, or $1.47 a share, in the same period a year ago. The results beat the company's expectations by two cents.

Revenue rose to $6.2 billion from $3.9 billion recorded a year earlier. Analysts were not surprised by the results, acknowledging the billions of dollars that brought Anthem Inc. and WellPoint Health Networks together last November.

``They reported a solid as expected quarter,'' said Thomas Carroll, analyst with Legg Mason Wood Walker Inc. in Maryland. ``And I'm thinking WellPoint will become a good revision story looking ahead.''

For the full year of 2004, the company reported net income of $960 million, or $6.10 a share, on revenue of $20.8 million, versus $774 million, or $5.45 a share, on revenue of $16.8 billion in 2003.

WellPoint forecasts earnings of $7.75 a share in 2005, leaning toward the high end of previous expectations of between $7.65 and $7.75 a share.

``The big data point for the company will be the first and second quarters,'' said Carroll, who also noted that WellPoint picks up about one- third of its business during the first quarter.

The newly combined company is still integrating its operations, with plans to bolster its product line later this year. ``We fully expect to ... achieve an even greater sustainable competitive advantage,'' Larry Glasscock, president and chief executive officer, said in a statement.

Anthem Inc. bought Thousand Oaks-based WellPoint Health Networks in November after a year of regulatory hurdles. The combined company now provides health care benefits to 27.7 million individuals.

Adam Miller, analyst with Williams Capital Group in Maryland, said Wisconsin remains a challenge for the company as it decides how to tackle the state competitively. ``I expect these guys to continue to march along and we'll see if they can deliver on their synergies,'' he said.

Shares of WellPoint declined $4.04, or 3.2 percent, to close at $120.85 Monday on the New York Stock Exchange.

Evan Pondel, (818) 713-3662

evan.pondel(at)dailynews.com
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Date:Feb 8, 2005
Words:403
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