Insurer Anthem Tops 3Q Forecasts, Hikes 2018 Outlook Again

By TOM MURPHY, AP Health Writer

INDIANAPOLIS (AP) — Anthem beat Wall Street expectations and hiked its 2018 forecast again as the Blue Cross-Blue Shield insurer added more Medicare customers and continued to clamp down on its biggest expense, benefit payouts, in the third quarter.

The nation's second-largest health insurer now expects full-year adjusted earnings to exceed $15.60 per share after hiking that forecast to more than $15.40 in July.

Analysts forecast $15.50 per share, on average, according to FactSet.

Anthem's net income jumped 29 percent to $960 million in the three-month window that ended Sept. 30. Earnings adjusted for one-time gains and costs totaled $3.81 per share. Operating revenue, which excludes investment gains, grew 4 percent to $22.98 billion.

Analysts had predicted earnings of $3.67 per share on $22.91 billion in revenue, according to Zacks Investment Research.

Lower taxes and higher investment income helped fuel that better-than-expected earnings performance, Jefferies analyst David Windley said, calling it "low-quality" in a research note to clients.

Anthem Inc., based in Indianapolis, sells coverage in several states, including big markets like New York and California. Much of its business centers on providing employer-sponsored coverage for companies with fewer than 5,000 people. This is generally a more profitable business for insurers than larger employers who pay their own medical bills and hire an insurer to manage the coverage.

Enrollment in that key business grew slightly to 15.7 million people, while membership in Anthem's Medicare business jumped nearly 18 percent from last year's quarter, to almost 1.8 million people. That helped to counter a nearly 60 percent drop that pushed individual enrollment below 1 million people as Anthem pulled back from the Affordable Care Act's insurance marketplaces.

Overall, total membership slipped 2 percent to fall under 40 million people.

Anthem's largest expense, what it pays in benefits, was relatively flat at $18.18 billion after declining for consecutive quarters. Income taxes also fell 24 percent to $282 million.

Shares of Anthem advanced 2 percent, or $5.84, to $271.33 while broader indexes also jumped after markets opened Wednesday.

Anthem shares had climbed about 18 percent so far this year.

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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