Anthem's profits slide 19 percent despite revenue, enrollment gains
Operating revenue totaled nearly $20.3 billion in the first quarter, a $1.5 billion, or 7.7 percent increase, over 2015.
Anthem Headquarters in Indianapolis, IN. Photo by Google Earth.
Anthem's first quarter profit fell 18.7 percent from $865 million in the first quarter of 2015 to $703 million for the first three months of 2016, the company disclosed Wednesday.
Primarily driven by expenses related to its pending acquisition of Cigna, Anthem reported an operating loss of $47.6 million in the "other" segment, compared with an operating loss of $12.1 million in that segment during the first quarter of 2015, it said.
The commercial and specialty business increased by 2.1 percent, driven by expense efficiency and growth in the self-funded enrollment sector, the report said.
The government business segment increased by 0.2 percent, reflecting improved cost performance in the Medicare business and enrollment increases in Medicaid, but the latter gains were offset by a higher benefit expense ratio, Anthem said.
Anthem's enrollment increased by 1.1 million members, or by 2.8 percent, compared to end-of-March 2015, for a total close to 40 million members as of March 31.
Operating revenue was nearly $20.3 billion in the first quarter of 2016, an increase of approximately $1.5 billion, or 7.7 percent, versus the nearly $18.9 billion in the prior year quarter, the report said.
Full year revenue operating revenue is now projected to be $81 to $82 billion, Anthem said.
[Also: California Insurance Commission to weigh in on Anthem's $54 billion acquisition of Cigna]
The growth in revenue reflects premium increases to cover overall costs and higher enrollment in the Medicaid and commercial self-funded businesses, Anthem said. These increases were partially offset by a decline in local group fully insured enrollment.
Revenues on premiums increased by 7.8 percent, from $17.6 billion in 2015 to $18.9 billion in 2016, according to the financial statement.
Anthem said it expected medical enrollment to grow by 700,000 to 900,000 members this year.
"Our solid first quarter results represent a strong start to 2016 with higher than expected enrollment growth in both Commercial and Government business segments," said Joseph Swedish, president and CEO. "We remain firmly focused on advancing affordability and quality on behalf of our members, which will be enhanced by the pending Cigna acquisition."
[Also: Anthem, Aetna, Cigna among insurers trying to limit special enrollment signups, report says]
Anthem's $54 billion bid to take over Cigna is expected to be decided by federal regulators this year.
During the first quarter of 2016, Anthem recorded net realized losses on investments totaling $125.1 million and other-than-temporary impairment losses totaling $66.9 million, it said.
Twitter: @SusanJMorse
