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WELLPOINT RAISES ITS EARNINGS GUIDANCE.

Byline: Evan Pondel Staff Writer

THOUSAND OAKS - WellPoint Health Networks Inc. said Wednesday that declining medical costs helped boost the health care company's earnings guidance.

The Thousand Oaks-based company raised its earnings guidance for the year ended Dec. 31, 2003, to $6.15 per diluted share from $6 per diluted share. For 2004, the company said it expected to earn $7.10 per share, up from an earlier forecast of $6.90 to $7 per share.

On a quarterly basis, WellPoint sees earnings per share of $1.55 for the first quarter of 2004, $1.72 in the second quarter, $1.88 in the third quarter and $1.95 in the fourth quarter.

``I'm feeling very good about the environment,'' said David Colby, WellPoint's chief financial officer, during a conference call Wednesday.

Rising medical costs have been a major source of double-digit premium increases in the last two years. If medical costs are declining, the trend could very well ease health care costs for employers.

Looking ahead, WellPoint is in the process of merging with Anthem, making the combined company the largest health care provider in the country.

As health-care companies continue to swell with profits, consolidation has become a key tactic to help reduce costs and competition. The combination of two mammoth companies like Anthem and WellPoint highlights an overall trend for the industry as partnerships are preferred over fierce corporate takeovers.

Classified as a merger by WellPoint and Anthem, their move probably foreshadows a string of similar transactions over the next two years, Adam Miller, analyst with Williams Capital Group in New York, said in a previous interview.

WellPoint and Anthem share certain characteristics, most notably their reputations for acquiring Blue Cross-Blue Shield plans throughout the country. The plans are enticing because they are generally less expensive to purchase, and they already have a pool of loyal medical members.

WellPoint shares gained 59 cents to close at $96.60 Wednesday 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)
Article Type:Statistical Data Included
Date:Jan 8, 2004
Words:337
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