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Anthem, Inc. delivered third-quarter 2021 earnings of $6.79 per share, which beat the Zacks Consensus Estimate of $6.35 by 6.9% owing to better revenues and solid Medicaid and Medicare businesses.
The bottom line also increased 61.7% year over year.
Quarterly Operational Update
Anthem’s benefit expense ratio of 87.7% expanded 90 basis points (bps) from the prior-year quarter’s figure.
The SG&A expense ratio of 11.1% contracted 620 bps from the year-ago quarter’s level on the back of repealing the health insurance tax in 2021, absence of charges related to business optimization and the BCBSA litigation settlement and better operating revenues.
Total expenses of the company increased 9.9% year over year to $33.8 billion due to higher benefit expense, cost of products sold and amortization of other intangible assets.
Operating revenues of $9.8 billion in the third quarter were up 5.8% year over year.
The segment reported an operating gain of $620 million against the year-ago quarter’s loss of $234 million. This upside was on the back of BCBSA litigation settlement and business optimization charges.
Operating margin was 6.3% against the year-ago quarter’s figure of (2.5%).
Government Business
Operating revenues were $21.6 billion, up 19.7% from the prior-year quarter’s reading.
Operating gain was $967 million, up 293.1% year over year owing to the impact of negative rate adjustments in the Medicaid business during third-quarter 2020 in relation to COVID-19, BCBSA litigation settlement and business optimization charges plus membership growth in the Medicare and Medicaid businesses.
IngenioRx
Operating revenues from the segment were $6.5 million in third-quarter 2021, up 17.3% year over year. Operating gain in the segment rose 29% year over year on the back of growth in integrated medical and pharmacy membership.
Other
Operating revenues of $2.6 billion soared 48.5% from the prior-year quarter’s level.
The Other segment’s gain of $27 million compared favorably with the year-earlier quarterly loss of $156 million owing to business optimization charges taken in the third quarter of 2020 along with decrease in unallocated corporate expenses.
Financial Update (as of Sep 30 2021)
Anthem’s cash and cash equivalents totaled $5.4 billion, down 4.4% from the level at 2020 end.
The company’s long-term debt less current portion increased 12.5% to $21.7 billion from the level at 2020 end.
Cash provided by operating activities was $6.6 billion for the first nine months of 2021, down 2.7% year over year.
Capital Deployment
During the third quarter, Anthem bought back shares worth $450 million. As of Sep 30, 2021, the company had shares worth $4.7 billion remaining under its share buyback authorization.
The company paid out a quarterly dividend of $1.13 per share, adding up to a distribution of cash worth $276 million.
The company announced a dividend of $1.13 per share on Oct 19, 2021 for third-quarter 2021. The new dividend will be payable Dec 21, 2021 to its shareholders of record as of Dec 3, 2021.
Guidance for 2021
Following the company’s third-quarter results, Anthem raised its full-year outlook.
Adjusted net income for the current year is projected to be more than $25.85 per share, higher than the prior estimate of more than $25.50.
The company anticipates its operating cash flow view of more than $6 billion, up from the previous expectation of $5.8 billion.
For the current year, investment income is expected to be $1.2 billion.
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Anthem's (ANTM) Q3 Earnings Beat Estimates, Increase Y/Y
Anthem, Inc. delivered third-quarter 2021 earnings of $6.79 per share, which beat the Zacks Consensus Estimate of $6.35 by 6.9% owing to better revenues and solid Medicaid and Medicare businesses.
The bottom line also increased 61.7% year over year.
Quarterly Operational Update
Anthem’s benefit expense ratio of 87.7% expanded 90 basis points (bps) from the prior-year quarter’s figure.
The SG&A expense ratio of 11.1% contracted 620 bps from the year-ago quarter’s level on the back of repealing the health insurance tax in 2021, absence of charges related to business optimization and the BCBSA litigation settlement and better operating revenues.
Total expenses of the company increased 9.9% year over year to $33.8 billion due to higher benefit expense, cost of products sold and amortization of other intangible assets.
Anthem, Inc. Price, Consensus and EPS Surprise
Anthem, Inc. price-consensus-eps-surprise-chart | Anthem, Inc. Quote
Segmental Results
Commercial & Specialty Business
Operating revenues of $9.8 billion in the third quarter were up 5.8% year over year.
The segment reported an operating gain of $620 million against the year-ago quarter’s loss of $234 million. This upside was on the back of BCBSA litigation settlement and business optimization charges.
Operating margin was 6.3% against the year-ago quarter’s figure of (2.5%).
Government Business
Operating revenues were $21.6 billion, up 19.7% from the prior-year quarter’s reading.
Operating gain was $967 million, up 293.1% year over year owing to the impact of negative rate adjustments in the Medicaid business during third-quarter 2020 in relation to COVID-19, BCBSA litigation settlement and business optimization charges plus membership growth in the Medicare and Medicaid businesses.
IngenioRx
Operating revenues from the segment were $6.5 million in third-quarter 2021, up 17.3% year over year. Operating gain in the segment rose 29% year over year on the back of growth in integrated medical and pharmacy membership.
Other
Operating revenues of $2.6 billion soared 48.5% from the prior-year quarter’s level.
The Other segment’s gain of $27 million compared favorably with the year-earlier quarterly loss of $156 million owing to business optimization charges taken in the third quarter of 2020 along with decrease in unallocated corporate expenses.
Financial Update (as of Sep 30 2021)
Anthem’s cash and cash equivalents totaled $5.4 billion, down 4.4% from the level at 2020 end.
The company’s long-term debt less current portion increased 12.5% to $21.7 billion from the level at 2020 end.
Cash provided by operating activities was $6.6 billion for the first nine months of 2021, down 2.7% year over year.
Capital Deployment
During the third quarter, Anthem bought back shares worth $450 million. As of Sep 30, 2021, the company had shares worth $4.7 billion remaining under its share buyback authorization.
The company paid out a quarterly dividend of $1.13 per share, adding up to a distribution of cash worth $276 million.
The company announced a dividend of $1.13 per share on Oct 19, 2021 for third-quarter 2021. The new dividend will be payable Dec 21, 2021 to its shareholders of record as of Dec 3, 2021.
Guidance for 2021
Following the company’s third-quarter results, Anthem raised its full-year outlook.
Adjusted net income for the current year is projected to be more than $25.85 per share, higher than the prior estimate of more than $25.50.
The company anticipates its operating cash flow view of more than $6 billion, up from the previous expectation of $5.8 billion.
For the current year, investment income is expected to be $1.2 billion.
Zacks Rank
Anthem currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Here are some stocks worth considering from the medical sector with the perfect mix of elements to surpass estimates in their upcoming releases:
Acadia Healthcare Company, Inc. (ACHC - Free Report) has an Earnings ESP of +3.00% and a Zacks Rank of 3, currently.
MEDNAX, Inc. (MD - Free Report) has an Earnings ESP of +4.41% and is a #3 Ranked player, presently.
Bausch Health Cos Inc. (BHC - Free Report) has an Earnings ESP of +0.75% and is Zacks #3 Ranked, presently.