Enrollment gains help Anthem trump 1Q Street forecasts

Anthem's first-quarter earnings soared past Wall Street forecasts, and the health insurer raised its 2017 forecast after jumping deeper into government-funded business and cutting costs.

The nation's second-largest insurer said Tuesday that operating revenue, which excludes investment gains, climbed 10 percent to $22.32 billion due in part to price hikes and growth in Medicaid and Medicare plans as well as other enrollment gains.

The Blue Cross-Blue Shield insurer operates employer-sponsored and individual plans in big markets like New York and California and sells coverage on several public exchanges created by the Affordable Care Act.

It also has been pushing deeper into the state- and federally funded Medicaid program that covers people with low incomes. Medicaid enrollment climbed more than 8 percent in the first quarter to about 6.6 million people, but some of that gain was tempered by higher medical costs, especially in Iowa.

The insurer countered rising expenses by trimming selling, general and administrative costs. It also saw a 17-percent drop in income tax expense due to a health insurance tax moratorium, and it booked higher investment income.

Anthem also had lower expenses from its attempt to acquire rival health insurer Cigna Corp. A federal judge blocked that $48-billion deal earlier this year, and the two companies are now fighting in court over the agreement.

Overall, the insurer earned $1 billion in the quarter. Earnings, adjusted for non-recurring costs and amortization costs, came to $4.68 per share.

Analysts expected, on average, earnings of $3.85 per share on $21.27 billion in revenue.

Anthem now expects full-year earnings to top $11.60 per share.

That edges the average analyst forecast of $11.58 per share, according to FactSet.

Anthem shares climbed to $173.28 on Tuesday, 31 cents away from the all-time high the stock reached nearly two years ago. Anthem shares have risen 20 percent since the beginning of the year. The stock has climbed 18 percent in the last 12 months.


Elements of this story were generated by Automated Insights using data from Zacks Investment Research. Access a Zacks stock report on ANTM at https://www.zacks.com/ap/ANTM


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