Dive Brief:
- Anthem beat Wall Street expectations for the third quarter on earnings and revenue, posting operating revenue of $ 26.4 billion, a 15% increase over the prior-year period, according to financial results released Wednesday morning. Net income was up 23% year over year to $ 1.18 billion.
- The payer’s medical loss ratio, however, was up — hitting 87.2% for the third quarter this year from 84.8% last year and slightly above analyst predictions.
- Anthem executives said on a call with investors Wednesday they expect all members to be on the company’s new pharmacy benefit manager platform, IngenioRx, by Jan. 1. The payer’s acquisition of behavioral health services network Beacon Health Options is on track to close late in the fourth quarter, they added.
Dive Insight:
The company said the MLR increase was driven by the one-year waiver for the health insurance tax and the Medicaid reverification process. Jefferies analysts said the miss was “likely close to buyside expectations after management had talked down expectations.”
Anthem CEO Gail Boudreaux told investors the company is slightly upping its earnings guidance for the full year and sees “tailwinds that lay the foundation for compelling long-term growth” next year, including the PBM launch, membership growth, increased penetration of value-added services and margin improvements in Medicaid.
She also said, however, the company is “very disappointed” in star ratings scores for 2020 Medicare Advantage plans. The migration to IngenioRx should improve scores in the clinical pharmacy area and consumer metrics. “We’ve dug in very deeply to figure out where we can have an impact,” she said.
Anthem’s total medical enrollment grew by about 1 million members to 41 million for the quarter, mostly from increases in fully-insured businesses. Government business grew about 14%, and operating gain from that segment was 35%.
Anthem boosted its Medicaid segment last month by scooping up WellCare’s plans in Nebraska and Missouri, gaining nearly 300,000 members. WellCare divested the Medicaid business in those states to satisfy regulators’ antitrust concerns ahead of its planned acquisition by Centene.
The nation’s largest commercial health insurer, UnitedHealth Group, kicked off earnings season last week by reporting a nearly 7% year-over-year revenue increase to more than $ 60 billion. Rivals Cigna will post its third quarter report next week and Humana the week after.