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Anthem (ANTM) Beats on Earnings, Memberships Increase - Tale of the Tape

Zacks Equity Research
Updated

Anthem, Inc. (ANTM), earlier known as WellPoint Inc. is one of the premier healthcare service provider when it comes to providing medical and specialty products. This is one of the largest publicly traded managed care organizations in terms of membership and with the proposed acquisition of Simply Healthcare Holdings, Inc. it is slated to enhance its operations further, particularly in the Medicaid and Medicare programs.

 

The company has been working towards enhancing healthcare through the provision of reliable and superior quality services. Towards this end, Anthem has partnered with Eli Lilly and Company (LLY) and HealthCore, Inc., Critical Measures, Boehringer Ingelheim Pharmaceuticals, Inc. and American Lung Association.

 

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However, the reduced selling season for the Medicare Advantage plans, increased financial leverage, higher medical costs in the Senior, Local Group and State-Sponsored businesses, lower favorable prior year reserve development and the impact of minimum medical loss ratio requirements are a drag.

 

Though the company faces competition, positive tidings have been driving bullish sentiments as evident from consensus estimate being north bound. Anthem does have a decent history when it comes to earnings as the stock has beaten estimates in the last four quarters, making for an average surprise of 4.91%.

 

Currently, Anthem has a Zacks Rank #2 (Buy), but that could definitely change following its earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:

 

Earnings:  Anthem beat on earnings. Our consensus called for EPS of $1.72, and the company reported EPS of $1.73.

 

Revenue: Revenues missed our estimate. Our consensus called for revenues of $19 billion, and the company reported revenues of $18.8 billion.

 

Key Stats to Note: Medical enrollment continues to impress us with a year over year increase of nearly 2 million members. Additionally, management expects full-year 2015 membership to exceed medical enrollment in 2014.

 

Moreover, benefit expense ratio improved 330 basis points on account of an improvement in the Commercial & Specialty Business. However medical cost trend for 2015 is expected to be higher than that of 2014 thereby weighing on the benefit expense ratio.

 

 

Check back later for our full write up on this ANTM earnings report later!

 

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ANTHEM INC (ANTM): Free Stock Analysis Report
 
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Zacks Investment Research