Anthem (ELV -0.43%) is a good example of the market rotation away from high-growth stocks. Shares of the big health insurer rose only 6% in 2020 but are up nearly 19% so far this year -- with most of the gain coming since March.

The company announced its first-quarter results before the market open on Wednesday. The health insurance stock rose slightly in early trading. Here are the highlights from Anthem's Q1 update.

Client signing up for health insurance.

Image source: Getty Images.

By the numbers

Anthem reported revenue in the first quarter of $32.4 billion. This reflected a 9% increase from the prior-year period revenue total of $29.6 billion. However, it fell short of the consensus Wall Street revenue estimate of $32.9 billion.

The company reported net income in the first quarter of $1.7 billion, or $6.71 per share, based on generally accepted accounting principles (GAAP). In the prior-year period, Anthem's GAAP earnings totaled $1.5 billion, or $5.94 per share.

There was also solid improvement with Anthem's bottom line on a non-GAAP basis. The health insurance giant posted adjusted net income in the first quarter of $1.74 billion, or $7.01 per share, compared to adjusted earnings of $1.66 billion, or $6.48 per share, in the prior-year period. Anthem's Q1 adjusted earnings easily topped the average analysts' estimate of $6.51 per share.

Behind the numbers

The COVID-19 pandemic continued to weigh on Anthem's health insurance business. The company reported an operating gain of nearly $1.27 billion for its commercial & specialty business segment, down from $1.42 billion in the prior-year period. Higher costs related to COVID-19 testing and vaccine administration served as the primary factor behind this decline.

Its government business segment's operating gain jumped 16.3% year over year to $478 million in Q1. Medicaid membership growth was the key driver behind this increase. It also helped that there was one less calendar day in the first quarter of 2021 than in the prior-year period. However, increased COVID-19-related costs, along with Medicaid rebates and lower risk-based revenue, held back government business growth to some extent.

Anthem's IngenioRx pharmacy benefits management (PBM) business posted an operating gain of $407 million in Q1, up 16.6% year over year. The company attributed this increase to an out-of-period adjustment and growth in its integrated medical and pharmacy membership.

Looking ahead

Anthem projects that its full-year 2021 operating revenue will be around $135.1 billion, in line with the consensus Wall Street estimate. This total includes expected premium revenue between $114.5 billion and $115.5 billion. It anticipates GAAP net income of more than $24.05 per share with adjusted earnings greater than $25.10 per share -- higher than what analysts were projecting.

The company remains the second-largest health insurer in the U.S. based on market share, ranking behind only UnitedHealth Group. Anthem doesn't have all of the businesses that UnitedHealth has with its Optum unit, though, which helped boost UnitedHealth's growth in its first quarter.

However, Anthem CEO Gail Boudreaux likes her company's prospects. "We expect the positive momentum in the first quarter to persist through the balance of the year," she said. "I am confident that we are well positioned to capitalize on future opportunities for growth."