Anthem tops 3Q profit expectations, hikes 2017 forecast
By TOM MURPHY
Oct. 25, 2017
INDIANAPOLIS (AP) — Anthem trumped Wall Street third-quarter profit expectations and pushed its 2017 forecast higher, as the health insurer continued to sell more coverage to Medicare customers and employers who need more than just benefit management.
Shares of the Blue Cross-Blue Shield insurer surged past $200 for the first time to reach a new all-time high Wednesday after the company said it now expects full-year adjusted earnings to range between $11.90 and $12 per share. That's up from the company's previous prediction for earnings of greater than $11.70 per share.
Analysts forecast $11.83 per share, according to FactSet.
Anthem covers more than 40 million people as the nation's second-largest health insurer, and most of its business comes from private coverage sold to employers. One element of that segment stood out in the third quarter. The insurer saw enrollment climb more than 3 percent to nearly 15.9 million people in its "local group" business.
That segment includes employer-sponsored coverage for companies with fewer than 5,000 people. This is generally a more profitable business for insurers like Anthem than larger clients who pay their own medical bills and hire an insurer to manage the coverage.
Anthem's Medicare enrollment also climbed more than 4 percent to 1.5 million in the quarter. The insurer plans to fuel that business with the acquisition of America's 1st Choice, a privately held company that provides coverage to about 130,000 people. Terms of that deal, which was announced Tuesday evening, were not disclosed.
Anthem Inc. also said it did slightly better than it expected in individual coverage that complies with the Affordable Care Act, a small part of its business. Anthem covers about 900,000 people on the ACA's insurance marketplaces, but it has cut participation steeply for next year due in part to the uncertain fate of some government subsidies for insurance sold to low-income customers.
Chairman and CEO Joseph Swedish said he now expects that business to break even this year and bring in a slight profit next year.
Overall, the Indianapolis insurer's earnings climbed 21 percent to $746.9 million, and earnings adjusted for one-time items totaled $2.65 per share. Excluding investment gains and one-time items, operating revenue rose 4.6 percent to $22.1 billion.
Analysts expected earnings of $2.41 per share on $22.43 billion in revenue, according to Zacks Investment Research.
The price of Anthem shares reached $209.74 Wednesday morning, while broader indexes slumped.
The stock price had already climbed 36 percent since the beginning of the year.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on ANTM at https://www.zacks.com/ap/ANTM