Anthem Earnings Beat Expectations, Operating Revenues up 5.8%

Gregory A. Freeman, February 5, 2018

The company reported benefits from the recent corporate tax reform bill. Anthem also increased medical enrollment over the previous year.

Anthem beat Wall Street expectations with a quarterly profit report showing 2017 fourth-quarter net income was $4.67 per share, including a net positive adjustment items of $3.38 per share related to a one-time, non-cash deferred tax benefit from the recent tax reform passed by Congress.

Operating revenues grew 5.8% year-over-year to $89.1 billion, and adjusted net income was $1.29 per share. Medical enrollment was up overall for the year, despite a decline in the fourth quarter.

Related: Higher Admissions Drive HCA's Q4 Earnings, Stock Price

Anthem raised its quarterly dividend by 7.1% to 75 cents per share and said it expects 2018 adjusted earnings to exceed $15 per share. Wall Street analysts had predicted earnings just over $14.

About $2 per share in the forecast is attributable to the benefits of corporate tax reform, noted Gail K. Boudreaux, president and CEO of Anthem. The company presented its fourth quarter earnings in a recent webcast.

“We are pleased with our 2017 performance, which is the result of improved execution in all areas of our business and an increased focus on aligning strategic investments and capabilities to more effectively meet the changing needs of the more than forty million consumers we are privileged to serve,” Boudreaux said. “Moving forward, we will continue to leverage our broad business portfolio and extensive care provider, consumer and analytics capabilities to deliver high quality healthcare solutions as we work to create a healthcare system that is more affordable and simpler to navigate for all Americans.”

Medical enrollment totaled approximately 40.2 million members at December 31, 2017, an increase of 325,000 members, or 0.8%, from 39.9 million at December 31, 2016. That overall increase came even though Medical enrollment declined by 13,000 lives sequentially during the fourth quarter of 2017. The enrollment declines in the Individual business line were partially offset by growth in the Medicare, Medicaid, and Local Group self-funded businesses.

Commercial & Specialty Business enrollment increased by 278,000 medical members as the Company experienced growth in both self-funded and fully-insured Local Group businesses, partially offset by a decline in membership in the National and Individual businesses. Enrollment also grew by 47,000 in the Government business as growth in Medicare was partially offset by a decline in Medicaid enrollment.

Operating revenue was $22.4 billion in the fourth quarter of 2017, an increase of $1.0 billion, or 4.5%, versus the $21.5 billion in the prior year quarter. The growth in revenue reflected premium rate increases to cover overall cost trends, Anthem reported.

“Additionally, the increase was driven by higher enrollment in Medicare and both Local Group insured and self-funded businesses. These increases were partially offset by the impact of the one-year waiver of the health insurance tax in 2017,” the company reported.

Gregory A. Freeman

Gregory A. Freeman is a contributing writer.

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