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Anthem Inc ANTM

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Anthem Beats Second-Quarter Estimates and Raises 2021 Guidance; Shares Fairly Valued

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

Narrow-moat Anthem reported second-quarter operating results that beat consensus, and the firm raised its 2021 guidance for the second time this year. At first glance, those trends do not look significant enough to offset a potential increase in the U.S. corporate tax rate, which we plan to start modeling in 2022 and beyond. Therefore, we may trim our fair value estimate slightly, but any change appears likely to be limited to the low single digits on a percentage basis. 

In the quarter, Anthem turned in $7.03 of adjusted EPS, or well above FactSet consensus of $6.34 on lower-than-expected medical utilization. While lower than management expected, medical utilization appeared slightly higher than normal, pre-COVID-19 levels, which represents a turning point since the pandemic began. Also, these results reflected medical membership increasing 4% year over year on the strength of Anthem's government programs (17% growth primarily in Medicaid and Medicare Advantage) offset by weakness in commercial membership (1% decline). In total after the acquisition of MMM (a leading provider of Medicare Advantage and Medicaid plans in Puerto Rico), Anthem's medical membership stood at 44.3 million members at the end of June, overtaking Unitedhealth (44.1 million) as the largest health insurer on a U.S. medical membership basis this quarter. 

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Company Profile

Business Description

Anthem is one of the largest private health insurance organizations nationwide, providing medical benefits to roughly 43 million medical members. The company offers employer, individual, and government-sponsored coverage plans. Anthem differs from its peers in its unique position as the largest single provider of Blue Cross Blue Shield branded coverage, operating as the licensee for the Blue Cross Blue Shield Association in 14 states. Through acquisitions, such as the Amerigroup deal in 2012, Anthem's reach expands beyond those states through government-sponsored programs such as Medicaid, too.

220 Virginia Avenue
Indianapolis, IN, 46204
T +1 800 331-1476
Sector Healthcare
Industry Healthcare Plans
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Aggressive Growth
Employees 83,400


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