Anthem's first-quarter earnings jumped 23 percent thanks in part to a spike in Medicaid enrollment, and it became the latest health insurer to raise its forecast for the year after breezing past Wall Street's expectations.
The nation's second largest health insurer said Wednesday that its Medicaid enrollment jumped 25 percent to 5.6 million people compared with last year's quarter. That helped push total enrollment up more than 4 percent and above 38.5 million people.
Medicaid is the state-federal program that covers the poor and those over 65. States hire insurers to administer the coverage, which has been growing as the federal health care overhaul expands coverage to millions of uninsured people.
Enrollment in federally funded Medicare coverage also climbed, and government business made up more than 50 percent of Anthem's quarterly revenue for the first time in company history.
"The pipeline of opportunity for our government business remains substantial," CEO Joseph Swedish told analysts during a Wednesday morning conference call.
Overall, Anthem earned $865.2 million, or $3.09 per share, in the quarter that ended March 31. That compares to $701 million, or $2.40 per share, last year.
Earnings adjusted for one-time items totaled $3.14, which trumped analyst expectations.
The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of $2.69 per share.
Operating revenue, which excludes investment gains, rose nearly 7 percent to $18.85 billion.
Analysts expected $19.28 billion, according to Zacks.
The Indianapolis insurer runs Blue Cross-Blue Shield plans in several states and is a prominent player on the overhaul's public insurance exchanges, which allow customers to buy individual insurance with help from income-based tax credits or subsidies. It changed its name from WellPoint last year.
On Wednesday, Anthem joined competitors UnitedHealth Group Inc. and Aetna Inc., among other insurers that have topped quarterly expectations and raised 2015 forecasts.
Anthem now expects full-year, adjusted earnings of greater than $9.90 per share, which compares to its previous forecast for greater than $9.70 per share.
Analysts forecast, on average, $9.79 per share, according to FactSet.
Health insurers are dealing with much less uncertainty this year compared with 2014. They're learning how to deal with additional fees from the health insurance overhaul as well as the new customers the law gives them through its coverage expansion. They're also facing less-severe cuts to the federally funded Medicare Advantage program, a key growth component.
"We continue to like the solid fundamentals currently supporting commercial managed care business," BMO Capital Markets analyst Jennifer Lynch said in a research note.
Anthem shares fell $3.38, or 2.1 percent, to $151 in midmorning trading Wednesday after rising as high as $157 earlier in the session. The stock had climbed about 23 percent since the beginning of the year and 62 percent in the last 12 months through Tuesday's close. Anthem's stock, like the shares of other insurers, has hit several new all-time high prices in recent months.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on ANTM at http://www.zacks.com/ap/ANTM