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Health insurer Anthem raises 2021 profit forecast after quarterly beat – Metro US

Health insurer Anthem raises 2021 profit forecast after quarterly beat

FILE  PHOTO: The office building of health insurer Anthem
FILE PHOTO: The office building of health insurer Anthem is seen in Los Angeles, California

(Reuters) -Anthem Inc beat Wall Street estimates for second-quarter profit and marginally raised its 2021 earnings target, as the health insurer reined in rising medical costs from a rebound in demand for non-COVID healthcare services.

The company said on Wednesday it expected to earn over $25.50 adjusted earnings per share this year, compared to its previous estimate of over $25.10.

This follows a similar move last week by UnitedHealth Group. The largest U.S. health insurer raised its 2021 earnings target for the second time this year, even as it maintained its expectations of a $1.80 per share hit to profit due to COVID-19 treatment and testing costs.

Health insurers seem to be adding in some additional earnings cushion for the second half by not raising by the full amount of the second-quarter beat, given the potential for medical costs to continue to rise, Stephens analyst Scott Fidel said.

“This seems totally reasonable following the blow-out second quarter earnings print we just saw from HCA yesterday where we saw their admissions recover strongly,” Fidel said.

Hospital operator HCA Healthcare said demand for its healthcare services rebounded in the second quarter, adding that current levels should persist over the rest of 2021.

Anthem said its benefit expense ratio – the percentage of premiums paid for medical services – worsened to 86.8% in the second quarter, from 77.9% a year earlier. Analysts on average expected 87.78%, according to Refinitiv IBES data.

The increase was fueled by a jump in non-COVID and COVID-19 related healthcare costs, including vaccine administration and testing, as compared to relatively depressed levels in the same quarter a year ago, the company said.

Excluding items, Anthem earned $7.03 per share in the quarter ended June 30, ahead of the average analyst estimate of $6.33 per share.

The company’s shares rose about 2% to $397.1 in trading before the bell.

(Reporting by Manojna Maddipatla in Bengaluru; Editing by Sriraj Kalluvila)