Insurer Anthem underwhelms Wall Street with 2021 forecast

In this May 14, 2019, file photo a flag flies the outside of the corporate headquarters building of health insurance company Anthem is shown in Indianapolis. Anthem and Wall Street are starting 2021 with different ideas for how the health insurer’s year will turn out. The Blue Cross-Blue Shield insurer said Wednesday that it expects adjusted annual earnings to be greater than $24.50 per share, counting hits it expects from the COVID-19 pandemic and a recently passed Congressional spending bill. (AP Photo/Michael Conroy, File)

INDIANAPOLIS (AP) — Anthem and Wall Street are starting 2021 with different ideas for how the health insurer’s year will turn out.

The Blue Cross-Blue Shield insurer said Wednesday that it expects adjusted annual earnings to be greater than $24.50 per share, counting hits it expects from the COVID-19 pandemic and a recently passed Congressional spending bill.

That floor falls short of the average analyst expectation for earnings of $25.37 per share, according to FactSet. The insurer’s stock slipped in Wednesday trading. Anthem also started last year with a lower-than-expected forecast.

Anthem said its forecast for this year includes a hit of between 50 and 70 cents per share due partly to the Consolidated Appropriations Act, which passed late last year and includes a one-year hike in Medicare doctor rates. The company also factored in other COVID-19 related hits to its Medicare business.

Counting those items, the insurer is expecting EPS growth of 9% in the new year, Jefferies analyst David Windley said in a research note. Without them, growth climbs to 12%, which fits in the lower end of the company’s long-range goal.

Health insurers like Anthem benefited earlier last year from a pandemic-induced drop in claims as people stayed home and away from doctor’s offices or surgery centers. But insurers have warned that that care would be rescheduled, and they expect to absorb more costs from testing and treating COVID-19 patients.

Anthem earned $551 million in the final quarter of 2020, with adjusted results totaling $2.54 per share. The insurer beat Wall Street per-share expectations by a penny.

Revenue excluding investment income climbed 16% in the quarter to $31.5 billion.

Analysts expected $30.9 billion in revenue.

Anthem covers nearly 43 million people in several states, including big markets like New York and California. It also runs a pharmacy benefits management business called IngenioRx.

The health insurer's enrollment grew nearly 5% compared to the final quarter of 2019. The company said growth in its Medicaid and Medicare businesses helped raise revenue.

Windley also noted that the insurer’s commercial enrollment, which includes employer-sponsored coverage, stabilized in the fourth quarter after declining in the previous two quarters.

Health insurers lost some customers earlier in the pandemic as employers laid off workers.

For the full year, Anthem earned $4.57 billion on $121.87 billion in revenue.

Shares of Indianapolis-based Anthem Inc. tumbled 6% to $293.60 Wednesday morning, while broader indexes dropped about 1%.

The stock had already slipped more than 2% so far this year.

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