Anthem profit beats on IngenioRx strength; backs 2020 earnings forecast

Anthem beat quarterly estimates for revenue on Wednesday, helped by the launch of pharmacy benefits business IngenioRx, and as more people opted for its health plans.

Shares of the second-largest U.S. health insurer rose 1.4% in trading before the bell after the company also stood by its 2020 profit goals for the year, joining rivals UnitedHealth, Centene, and Humana.

The company, however, warned of uncertainty around the impact from the Covid-19 pandemic and withdrew its forecast for some key performance metrics such as benefit expense ratio — a measure of premiums paid out for medical services.

For the first quarter, the company’s benefit expense ratio improved to 84.2% from 84.4% a year earlier. Analysts on average expected 84.37%, according to Refinitiv IBES data. A smaller ratio is better for health insurers.

Anthem, which began moving members to IngenioRx last year, also reported operating revenue of $5.2 billion from the in-house unit.

Early last year, the health insurer surprised Wall Street by speeding up the launch of IngenioRx, which is expected to help the company save billions of dollars in annual costs.

“In the midst of the emergence of the Covid-19 pandemic, Anthem delivered its cleanest quarterly print in a number of quarters,” Stephens analyst Scott Fidel said.

Operating revenue from its top-earning business unit, which sells government-backed Medicare and Medicaid plans rose 17% to $17.47 billion.

Enrollment in its government-backed health plans increased by 849,000 over the prior year, as more people signed up for its Medicaid health plans for low-income Americans.

The company, however, reported a 1.8% drop in quarterly profit on Wednesday, hurt by weaker sales in the unit that sells employer-sponsored health plans.

Total revenue rose to $29.62 billion, beating estimates of $28.6 billion.

Excluding items, the company earned $6.48 per share in the quarter ended March 31, in line with estimates.