UPDATE 2-Anthem profit beats estimates on lower non-COVID costs
(Adds details on the quarter, analyst comment)
Jan 27 (Reuters) – Health insurer Anthem Inc beat fourth-quarter profit estimates on Wednesday, as lower demand for elective surgeries offset higher costs related to COVID-19 testing and treatment for coronavirus infections.
The company joined rival UnitedHealth in predicting an adverse impact on its full-year earnings as cases of coronavirus infections continue to surge.
Anthem forecast adjusted profit of over $24.50 per share for the year 2021, while analysts were expecting $25.34 per share, according to Refinitiv IBES estimates.
The company said it expects a net negative impact of $0.50-$0.70 on its adjusted profit per share, partly due to COVID-19 impact on its business that sells government-backed Medicare plans.
Cantor Fitzgerald analyst Steven Halper called the company’s 2021 outlook “a bit of a setback,” but said its quarterly results were “solid.”
Rival UnitedHealth last month posted 2021 profit estimates below Wall Street expectations and predicted a $1.80 per share hit to its profit for the year due to treatment and testing costs related to COVID-19.
Anthem expects its benefit expense ratio, the share of premiums paid for medical services, to be about 88%, plus or minus 50 basis points for 2021.
The ratio improved to 88.9% in the fourth quarter from 89% a year earlier, while analysts on average had expected 89.87%.
The improvement was partly driven by reduced healthcare utilization due to the pandemic, the company said. However, it added that the benefit was largely offset by costs associated with COVID-19, including testing, treatment and the actions taken to support its members in response to the pandemic.
Excluding items, Anthem earned $2.54 per share, compared with analysts’ estimate of $2.52.
Total revenue rose about 16% to $31.82 billion. (Reporting by Trisha Roy and Manojna Maddipatla in Bengaluru; Editing by Shinjini Ganguli)