Upgrade to SI Premium - Free Trial

Anthem (ANTM) Tops Q4 EPS by 2c, Revenues Beat; Offers FY21 EPS Guidance Below Consensus, FY21 Revenue Outlook Above Consensus

January 27, 2021 6:04 AM

Anthem (NYSE: ANTM) reported Q4 EPS of $2.54, $0.02 better than the analyst estimate of $2.52. Revenue for the quarter came in at $31.5 billion versus the consensus estimate of $30.78 billion.

“Despite uncertainties with the pandemic, Anthem delivered strong growth across all of our businesses in 2020 reflecting the diversity and strength of our portfolio and our unwavering commitment to those we serve,” said Gail K. Boudreaux, President and CEO, Anthem, Inc. “I am proud of all that we accomplished during this challenging time, and we remain focused on supporting our members, customers and communities as a trusted health partner.”

CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $2.19 per share in the fourth quarter, including net negative adjustment items of $0.35 per share. Adjusted net income was $2.54* per share. Full year GAAP net income was $17.98 per share, including net negative adjustment items of $4.50 per share. Adjusted net income was $22.48* per share.

*Please refer to the GAAP reconciliation tables.

Membership: Medical enrollment totaled approximately 42.9 million members at December 31, 2020, an increase of 1.9 million lives, or 4.7 percent from December 31, 2019. Total risk enrollment grew by 1.7 million lives, or 11 percent, and fee-based enrollment grew by 211 thousand lives, or 0.8 percent. Government Business enrollment increased by 1.9 million lives compared to the prior year, attributable to Medicaid, reflecting organic growth as a result of the temporary suspension of eligibility recertification efforts in our markets as well as our acquisition of the Medicaid plans in Missouri and Nebraska, and growth in Medicare Advantage. Commercial & Specialty Business enrollment increased by 67 thousand lives driven by the acquisition of AmeriBen and growth in our National business, partially offset by higher in-group change as a result of the economic environment.

During the fourth quarter of 2020, medical enrollment increased sequentially by 300 thousand lives, reflecting organic growth in Medicaid and Medicare businesses as well as sales exceeding lapses in our Local Group business, partially offset by in-group change in the National business.

Operating Revenue: Operating revenue was $31.5 billion in the fourth quarter of 2020, an increase of $4.4 billion, or 16.2 percent, versus the prior year quarter, driven by higher premium revenue due to growth in Medicaid and Medicare. The increase was further attributable to pharmacy product revenue related to IngenioRx and the return of the health insurance tax in 2020.

Benefit Expense Ratio: The benefit expense ratio was 88.9 percent in the fourth quarter of 2020, a decrease of 10 basis point from 89.0 percent compared to the prior year quarter. The decrease was driven by reduced non-COVID healthcare utilization due to the pandemic, and to a lesser extent, the return of the health insurance tax in 2020. Taken together, the decrease was largely offset by costs associated with COVID-19, including testing and treatment and the actions taken to support our members in response to the pandemic.

Medical claims reserves established at December 31, 2019 developed in line with the Company’s expectations during 2020.

Days in Claims Payable: Days in Claims Payable was 43.4 days as of December 31, 2020, an increase of 2.3 days from September 30, 2020 and an increase of 5.4 days as compared to December 31, 2019.

SG&A Expense Ratio: The SG&A expense ratio was 13.7 percent in the fourth quarter of 2020, an increase of 80 basis points from 12.9 percent in the fourth quarter of 2019, primarily driven by the return of the health insurance tax in 2020 and increased spend to support growth, partially offset by growth in operating revenue.

Operating Cash Flow: Operating cash flow was $3.8 billion in the fourth quarter of 2020, an increase of $2.5 billion compared to the prior year quarter. The increase was primarily due to the timing of working capital changes, including the early receipt of certain payments that were originally expected to be received in 2021, and growth in premium revenue due to the return of the health insurance tax in 2020 as well as membership growth in our Government business.

Share Repurchase Program: During the fourth quarter of 2020, the Company repurchased 4.4 million shares of its common stock for $1.4 billion, or a weighted average price of $305.66. For the full year, the Company repurchased 9.4 million shares for $2.7 billion, or a weighted average price of $286.35. As of December 31, 2020, the Company had approximately $1.1 billion remaining of Board-approved share repurchase authorization. On January 26, 2021, our Audit Committee, pursuant to authorization granted by the Board of Directors, authorized a $5.0 billion increase to the common stock repurchase program. The Company intends to utilize this authorization over a multi-year period, subject to market and industry conditions.

Cash Dividend: During the fourth quarter of 2020, the Company paid a quarterly dividend of $0.95 per share, representing a distribution of cash totaling $234 million.

On January 26, 2021, the Audit Committee declared a first quarter 2021 dividend to shareholders of $1.13 per share. On an annualized basis, this equates to a dividend of $4.52 per share. The first quarter dividend is payable on March 25, 2021 to shareholders of record at the close of business on March 10, 2021.

Investment Portfolio & Capital Position: During the fourth quarter of 2020, the Company recorded net realized gains of $5 million. During the fourth quarter of 2019, the Company recorded net realized gains of $7 million.

As of December 31, 2020, the Company’s net unrealized gain position in the investment portfolio was $1.2 billion, consisting primarily of fixed maturity securities. As of December 31, 2020 cash and investments at the parent company totaled approximately $1.7 billion.

GUIDANCE:

Anthem sees FY2021 EPS of $24.50, versus the consensus of $25.34. Anthem sees FY2021 revenue of $135.1 billion, versus the consensus of $129.54 billion.

OUTLOOK

Full Year 2021:

For earnings history and earnings-related data on Anthem (ANTM) click here.

Categories

Corporate News Earnings Guidance Hot Guidance Management Comments

Next Articles