Three key things to watch when WellPoint reports ahead of the bell Thursday:
1. Obamacare Enrollment. WellPoint offered Obamacare exchange plans in the 14 states where it already operated, and is expected to have the largest market share of any of the major carriers.
Leerink analyst Ana Gupte estimated WellPoint gained 1.2 million new members by the end of the March ACA enrollment deadline, with nearly half of the enrollees coming from California and New York. In addition, she expects that the insurer added 400,000 new Medicaid enrollees.
The big question is whether WellPoint priced those plans correctly. During its fourth-quarter conference call in January, the company said it was confident from early data that it had priced plans profitably, and projected margins of 3 percent to 5 percent.
2. Sovaldi Costs. Another big risk for insurer profits this year is the explosive launch of Gilead's expensive new hepatitis C drug Sovaldi, which costs $84,000 for a 12-week regimen.
UnitedHealth Group reported spending $100 million on Sovaldi and hepatitis C treatments in the first quarter, which was more than expected. But Aetna and Centene reported lower hep C costs, which were in line with their projections.
WellPoint said it had filled 100 Sovaldi prescriptions for commercial members through mid-February. Gupte estimated that WellPoint could see close to 1,300 patients across its commercial, Medicaid and Medicare membership on the drug this year, which could hurt profits by as much as 22 cents per share.