Anthem Becomes Second Insurer to Ease 3Q MLR Worries

by Leslie Small

Anthem, Inc.'s third-quarter 2021 financial results — combined with UnitedHealth Group's strong showing less than a week earlier — have helped to ease investors' concerns about the Delta variant's potential impact on insurers' medical costs, according to equities analysts.

Anthem's MLR beats estimates:

• The Blue Cross Blue Shield insurer said on Oct. 20 that its medical loss ratio (MLR) was 87.7% for the quarter, beating the Wall Street consensus of 88.4%. Anthem's "government business drove MLR upside, with commercial earnings below expectations — consistent with the pandemic pattern of more persistent commercial utilization and more COVID sensitivity/deferred care in Medicare/Medicaid," Evercore ISI analyst Michael Newshel pointed out in a note to investors.
• Citi analyst Ralph Giacobbe, meanwhile, declared that Anthem's third quarter results offered "another good 3Q MCO print showing ability to manage MLR." And SVB Leerink's Whit Mayo observed that "investor anxiety around a potential MLR miss in 3Q ran high and was somewhat diminished" when Anthem beat the consensus estimate.
• Anthem's adjusted earnings per share (EPS) of $6.79 also beat the Street's expectations of $6.37, results that were driven by better medical cost performance, upside from Anthem's government business and the PBM IngenioRx, and higher investment income.
• Anthem also raised its full-year adjusted net income outlook from greater than $25.50 per share to greater than $25.85 per share. Anthem's overall medical enrollment rose 5.7% compared with the third quarter of 2021.

National account selling season was 'robust':

• During Anthem's Oct. 20 call to discuss third quarter results, CEO Gail Boudreaux highlighted the company's group Medicare Advantage contract win to serve New York City retirees and its impending launch of a statewide Medicaid managed care contract in Ohio in summer 2022.
• "We're nearing the end of the most robust national account selling season in Anthem's history," Boudreaux said, touting gains in the commercial segment. She noted that "IngenioRx is also showing exciting growth with a more than five-fold increase in new sales at this point in the selling season compared to the relatively depressed base a year ago when the pandemic weighed heavily on employer decision making."
• Leerink's Mayo observed that Anthem's earnings call "brought forth strong themes of customer retention, Ingenio carve-in penetration, disciplined pricing, and [the] overall strength of [an] integrated benefits platform."

From Health Plan Weekly