Please ensure Javascript is enabled for purposes of website accessibility

What You Need to Know About Anthem's Q1 Earnings Results

By Keith Speights – Updated Apr 25, 2019 at 6:10AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Did the big health insurer beat expectations in its first-quarter performance?

Revenue up. Earnings down. That was the news for investors the last time Anthem (ELV 1.32%) reported its quarterly results in January. But a quarter has come and gone since then.

Anthem announced its first-quarter results before the market opened on Wednesday. Did investors receive good news or bad news? Here are the highlights from Anthem's Q1 update.

Man signing up for healh insurance with female insurance agent

Image source: Getty Images.

By the numbers

Anthem announced Q1 revenue of $24.7 billion, a 9.4% increase from the $22.5 billion reported in the same quarter of the previous year. The company's reported revenue was higher than the average analysts' revenue estimate of $24.28 billion .

The company announced GAAP net income of $1.55 billion, or $5.91 per share, in the first quarter. This represented an 18.2% increase from $1.31 billion, or $4.99 per share, reported in the same quarter of 2018.

The company's adjusted net income in the first quarter was $6.03 per share. This was an improvement over Anthem's result in the prior-year period, when the company announced net income of $5.41 per share. It was also better than the consensus analysts' adjusted earnings estimate of $5.86 per share.

Behind the numbers

There were several reasons Anthem's revenue grew this quarter. The company's medical enrollment increased by nearly 3% from the prior-year period to 40.8 million members. This growth stemmed largely from the growth in the company's Medicare and Medicaid programs. 

Anthem also benefited from premium rate increases. However, the impact of these increases was offset to some extent by the waiver of the health insurance tax in 2019.

The health insurer's strong earnings growth was primarily due to lower selling, general, and administrative costs and lower income tax expense compared to the prior-year period. These were offset somewhat, though, by a higher benefit expense ratio of 84.4%, compared with 81.5% in the prior-year period, an increase that resulted mainly from the one-year waiver of the health insurance tax. 

Looking ahead

Anthem anticipates full-year 2019 GAAP earnings per share (EPS) of $18.27, with adjusted non-GAAP EPS expected to be greater than $19.20. Medical membership is also expected to be between 40.9 million and 41.3 million. 

President and CEO, Gail K. Boudreaux expressed optimism about Anthem's prospects this year. She said: 

Looking ahead, the upcoming launch of IngenioRx is a key milestone in the realization of our vision and strategy. With IngenioRx, we finally have a strong integrated pharmacy and medical platform, one that is predicated on providing the lowest absolute cost of care, and we are well positioned for accelerated growth.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Elevance Health Inc. Stock Quote
Elevance Health Inc.
ELV
$513.86 (1.32%) $6.70

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.