Anthem misses 3Q Street profit forecast, medical costs rise

Markets Associated Press

Anthem's third-quarter earnings slid nearly 6 percent and missed Wall Street expectations, as rising medical costs countered revenue growth and some cost cutting for the nation's second-largest health insurer.

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The Blue Cross-Blue Shield insurer also updated on Wednesday a 2016 forecast that falls short of analyst forecasts.

Anthem said its largest expense, medical claims paid, climbed more than 9 percent in the quarter to $16.92 billion. Operating revenue, which excludes investment gains, rose 7 percent to $21.12 billion

Overall, the insurer earned $617.8 million in the quarter, down from $654.8 million last year. Earnings, adjusted for one-time gains and costs, totaled $2.45 per share in this year's quarter.

Analysts expected, on average, earnings of $2.49 per share on $20.74 billion in revenue, according to Zacks Investment Research.

The Indianapolis-based insurer also said Wednesday it now expects 2016 adjusted earnings to total about $10.80 per share. In July, Anthem predicted earnings would surpass that amount.

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Analysts expect, on average, earnings of $10.85 per share, according to FactSet.

Anthem runs Blue Cross Blue Shield plans in several states, including big markets like California, New York and Ohio. It's trying to get bigger by pursuing an approximately $48-billion acquisition of rival Cigna Corp., but federal regulators sued this summer to block that deal. Anthem has vowed to fight the litigation.

The company's stock slid 64 cents to $116.78 in premarket trading ahead of the market open.

After topping $170 and setting several all-time high prices last year, Anthem shares have slid 16 percent so far in 2016. The Standard & Poor's 500 index, in contrast, has climbed about 3 percent.

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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

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Keywords: Anthem, Earnings Report