By Tamara Mathias and Caroline Humer
(Reuters) - Anthem Inc on Wednesday posted a better-than-expected quarterly profit and laid out its plans to transition most customers to its revamped pharmacy benefits business this year.
Based on its first quarter results, including higher than anticipated revenue growth, the company said it now expects 2019 adjusted earnings to exceed $19.20 per share, up from its prior view of more than $19.00.
Anthem, which operates Blue Cross Blue Shield plans in 14 states, is facing a changed health insurance landscape after separate deals by rivals Aetna and Cigna Corp to merge with the biggest U.S. pharmacy benefits managers (PBMs) last year.
It is moving up plans made before those deals were announced to end years of relying on PBM Express Scripts, now part of Cigna, and will manage pharmacy benefits itself with help from CVS Health Corp.
Most members will be moved to Anthem's IngenioRx in the second half of the year and members from the company's government business will transition in 2020, Chief Financial Officer John Gallina said on a conference call with analysts.
Anthem also said next year it plans to provide point-of-sale rebates to members in its commercial business where Anthem takes on the risk of medical claim costs, typically for small employers. The company said it was prepared to do the same for its government-backed Medicare business, which provides insurance to people aged 65 and older.
The Trump administration in January proposed a rule that, if enacted, would require Medicare Part D prescription plans and Medicare Advantage health plans to pass on these after-market rebates to patients.
Anthem shares were down 0.5 percent at $249.48 with several rival health insurers also off on Wednesday.
"I would pin Anthem’s early stock dip to the larger S&P stall following yesterday’s surge and continued apprehension of health insurance market volatility ," Forrester analyst Jeff Becker said.
Anthem said it would allow fee-for-service customers, like large companies that cover healthcare costs for their employees, the flexibility to choose whether they pass rebates onto individual patients or if they will use the rebates to lower premium prices for all plan members.
Members in Anthem's health plans rose by 1.2 million to 40.8 million, helped by growth in its government business.
Excluding items, Anthem earned $6.03 per share, 22 cents higher than average analyst estimates, according to IBES data from Refinitiv.
Revenue rose 9.4 percent to $24.67 billion, beating Wall Street estimates of $24.28 billion, helped by membership growth and premium rate increases.
(Reporting by Tamara Mathias in Bengaluru and Caroline Humer in New York; Editing by Maju Samuel and Bill Berkrot)