On Wednesday, one of America's largest health insurers, Anthem (ELV 1.11%) reported its results from the first three months of 2020. Thus far, it said, the COVID-19 pandemic hasn't affected the company's operating performance. However, management withdrew most of the details from the 2020 guidance it provided just a few months ago.
Thinking ahead
In January, Anthem forecast that its benefit ratio would drop about 1% compared to last year, to 85.8%, while operating earnings were expected to rise 23.3% to $7.4 billion. Due to the enormous level of uncertainty introduced by the coronavirus pandemic, the insurer has withdrawn these numbers and nearly all the other detailed predictions from its 2020 guidance.
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The company said it would provide more details once visibility improves, but for now, the only figure it was ready to reaffirm was its forecast for the bottom line. Adjusted earnings are expected to rise at least 14.7% this year to $22.30 per share.
Unprecedented uncertainty
It's hard to tell if asking nearly all associates to work from home will affect earnings, but Anthem will record significant expenses associated with COVID-19 diagnostic tests and other services offered to members without any co-pays to offset them. In addition, Anthem has also waived cost-sharing for telehealth services and phone visits.
During the first quarter, Anthem spent around $529 million repurchasing about 0.7% of its outstanding shares. Anthem had plans to spend another $3.3 billion on shares of its own stock, but buybacks will have to take a backseat to maintaining liquidity while the health insurer heads into uncharted economic territory.
