Anthem reported a better-than-expected quarterly profit on Wednesday as the idea kept a tight leash on patient payouts, prompting the health insurer to raise its full-year profit forecast.
The company said the idea was prioritizing investments throughout 2018 on infrastructure which can quickly respond to the evolving needs of its customers – a sign the idea may continue to steer clear of major acquisitions.
The healthcare sector has been rapidly consolidating over the past year with companies looking for brand new ways to bolster profits as the industry faces greater scrutiny for rising costs.
Rival Aetna is actually likely to be bought for $69 billion by pharmacy chain CVS Health along with also Cigna has proposed acquiring Express Scripts, the largest U.S. independent pharmacy benefit manager, for $54 billion.
Last year, Anthem announced a plan to launch an in-house pharmacy benefit management business in 2020.
On Wednesday, the company said its benefit expense ratio improved upon to 81.5 percent through 83.7 percent within the same period a year ago. The metric measures an insurer’s expenditure on claims against the premiums the idea earns.
The decrease was primarily driven by the return of a health insurance tax in 2018 along with also improved upon medical cost performance across its businesses, the company said.
Piper Jaffray analyst Sarah James said she was encouraged by the lower medical loss ratio, believing which This specific could be evidence of the beginning of modifications under Chief Executive Gail Boudreaux, who joined the company late last year.
“This specific was a clean along with also positive quarter for Anthem,” she added.
Anthem’s net income rose 30 percent to $1.31 billion, or $4.99 per share, within the first quarter ended March 31.
Excluding items, the company earned $5.41 per share, way above the average analyst estimate of $4.88, according to Thomson Reuters I/B/E/S.
Medical enrollment totaled about 39.6 million members at March 31, a fall of 2.5 percent, driven predominantly by a reduced footprint in Obamacara market.
Total revenue was largely flat at $22.54 billion.
The insurer said the idea today expects 2018 adjusted net earnings to be greater than $15.30 per share, up through its previous estimate of earnings of greater than $15 per share.
Anthem shares were up nearly 1 percent in light premarket trading. They are up 33.6 percent within the past 12 months nevertheless flat year to date.