Insurer Anthem’s Earnings Jump 30 Pct as Medical Costs Fall

INDIANAPOLIS (AP) — Anthem’s first-quarter earnings shot up 30 percent, and the Blue Cross-Blue Shield insurer hiked its 2018 forecast, as a drop in medical expenses bolstered its performance.

The nation’s second-largest health insurer joined rival UnitedHealth Group Inc. in topping analyst expectations for the quarter and hiking its 2018 forecast.

Anthem said Wednesday that it now expects 2018 adjusted earnings to be greater than $15.30 per share after saying in January that they would exceed $15 per share.

The new estimate tops the average analyst forecast for $15.13 per share, according to FactSet.

In the first quarter, Anthem saw its largest expense, medical costs, fall 3 percent to $17.05 billion. New CEO Gail Boudreaux attributed that drop in part to the insurer’s push to create “value based care models” across its markets.

Anthem and other insurers are trying to base more of their reimbursement for care on a patient’s health or how the person does. They want to get away from simply paying for each service performed, an approach they say leads to over use of some forms of care, which drives up costs.

Anthem also added 135,000 Medicare Advantage customers in the quarter after completing an acquisition. But it’s total enrollment slipped more than 2 percent to 39.6 million, as the insurer scaled back the individual coverage it sells on the Affordable Care Act’s public insurance exchanges. Several other insurers also have withdrawn from those markets after getting hit by higher than expected costs and other complications.

Overall, Anthem Inc. earned $1.31 billion in the quarter, with earnings adjusted for one-time gains and costs at $5.41 per share.

That trumped expectations on Wall Street, where analysts forecast, on average, earnings of $4.83 per share, according to Zacks Investment Research.

Operating revenue, which excludes investment gains, came in relatively flat at $22.34 billion, and that missed expectation for $22.53 billion.

Shares of Indianapolis-based Anthem advanced $2 to $227 before markets opened.

Anthem shares have dropped slightly since the beginning of the year, but the stock has risen 34 percent in the last 12 months.