(Reuters) – Anthem Inc ( ANTM.N ) reported a quarterly profit that exceeded Wall Street's estimates on Wednesday, helped by lower commercial insurance costs and adjusted full-year results increased prognosis.
The office building of health insurer Anthem as seen in Los Angeles, California, 5 February 201
The expense ratio of the insurer – the expenses of an insurer for claims against the premiums it earns – is close to consensus misses estimate of 84.7 percent through the mediation of Evercore ISI. However, the ratio improved in the quarter to 84.8 percent, compared to 87 percent in the same period last year.
Anthem now expects the full year rate to be 84.2 percent, an improvement from the previous forecast of 84.4 percent.
Evercore analyst Michael Newshel said in a statement that any concerns about the small quarterly deficit could be mitigated by the lower outlook for performance spending.
With the health insurance industry doubling their ability to cut spending, rivals Anthem Aetna Inc. ( AET.N ) and Cigna Corp. ( CI.N ) have invested billions of dollars Deals to merge with pharmacy benefit managers.
However, Anthem has decided to internally take over its pharmacy use business by 2020, when it will start managing billions of patient prescriptions to cut costs.
In the third quarter, total membership decreased by 753,000 members from 40.3 million members in the year-ago period as the company continues to leave its business in Obamacare and can no longer buy members who have purchased its Medicaid health plans for low-income members.
However, the number of members in the Medicare business, which targets older people and people with disabilities, increased by almost 18 percent year-on-year to 1.77 million. This was reinforced by the acquisition of Anthem at health insurers HealthSun and America's 1st Choice.
Anthem said full-year adjusted earnings guidance of more than $ 15.60 per share is expected compared to the previous forecast of over $ 15.40 per share.
Net income increased to $ 960 million or $ 3.62 per share for the third quarter ended September 30. Excluding line items, the company earned $ 3.81 per share, exceeding the average analyst estimate of $ 3.70 per share.
Total revenue increased 3.7 percent to $ 23.25 billion, outstripping the average analyst estimate of $ 22.94 billion.
coverage by Aakash Jagadeesh Babu and Tamara Mathias in Bengaluru; Edited by Arun Koyyur