Earnings Review and Free Research Report: Anthem Reported Q2 FY17 Results Along with an Updated Guidance
Research Desk Line-up: Centene Post Earnings Coverage
LONDON, UK / ACCESSWIRE / August 7, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Anthem, Inc. (NYSE: ANTM), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=ANTM, following the Company's release of its financial results on July 26, 2017 for Q2 FY17. The Company reported net income of $3.16 per share, including net negative adjustment items of $0.21 per share, and an adjusted net income of $3.37 per share on revenues of $22.2 billion. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Earnings Reviewed
Anthem generated net operating revenues of $22.20 billion for Q2 FY17 versus $21.27 billion for Q2 FY16; noting a y-o-y increase of 4.3%. The Company noted that the growth in revenue reflected premium rate increases to cover overall cost trends across the business, in addition to higher enrollment in the Local Group insured and self-funded businesses as well as in Medicaid and Medicare.
Anthem reported operating margin for Q2 FY17 at $5.5% compared to 7.1% in Q2 FY16 which reflected a decrease 160 basis points (bp) y-o-y. The net income reported by the Company was $855.3 million, or $3.16 per share, for Q2 FY17 compared to $780.6 million, or $2.91 per share, in Q2 FY16; noting a rise of 9.6% y-o-y. The operating profit was at $1.23 billion for Q2 FY17 compared to $1.50 billion for Q2 FY16; a decrease of 18.2% y-o-y.
The Company also reported a rise in the benefit expense ratio for Q2 FY17 of 86.1% compared to 84.2 % in Q2 FY16; an increase of 190 bp.
Excluding the items noted in each period, the Company reported adjusted net income of $3.37 per share in Q2 FY17 compared to $3.33 per share in Q2 FY17; noting a slight increase of 1.2% y-o-y. Anthem also reported total medical enrollment at about 40.4 million at the end of Q2 FY17, an increase of 0.6 million members, or 1.6%, from 39.8 million at the end of Q2 FY16.
Anthem outperformed analysts' estimates for adjusted earnings per share of $3.25 by 3.7%, but revenues missed estimates of $22.3 billion.
Segment Information
In Q2 FY17, Anthem's Commercial & Specialty Business segment generated operating revenues of $10.31 billion compared to $9.90 billion in Q2 FY16; an increase of 4.1% y-o-y. The operating profit for the segment was $967.9 million in Q2 FY17 compared to $1.08 billion in Q2 FY16; a decrease of 10% y-o-y. The operating margin for the segment was 9.4% in Q2 FY17 compared to 10.9% in Q2 FY16; a decrease of 150 bp. The segment reported increase of total membership of 389,000 y-o-y at the end of Q2 FY17.
The Company's Government Business generated operating revenues of $11.88 billion in Q2 FY17 compared to $11.37 billion in Q2 FY16; an increase of 4.5% y-o-y. The operating gain for the segment was $293.3 million in Q2 FY17 compared to $450.5 million in Q2 FY16; a decrease of 34.9% y-o-y. The operating margin for the segment in Q2 FY17 was 2.5% compared to 4.0 % in Q2 FY16; also noting a decrease of 150 bp.
Under the ‘Other' segment head, Anthem generated operating revenues of $5.8 million in Q2 FY17 compared to $5.1 million in Q2 FY16; an increase of 13.7% y-o-y. The operating loss for the segment in Q2 FY17 was $34.2 million compared to a loss of $25.6 million in Q2 FY16.
Anthem also reported growth in enrollment in the Medicaid business by 193,000 y-o-y and in the Medicare business by 58,000 y-o-y.
Cash Matters
Anthem also reported operating cash flow of $393 million, or 0.5 times net income for Q2 FY17. The Company repurchased 2.5 million shares of its common stock in Q2 FY17 for $0.5 billion, or a weighted-average price of $182.83. As of June 30, 2017, the Company had approximately $3.7 billion of Board-approved share repurchase authorization remaining.
On July 25, 2017, the Company's Audit Committee declared a Q3 FY17 dividend to shareholders of $0.70 per share payable on September 25, 2017, to shareholders of record at the close of business on September 08, 2017.
Outlook
The Company expects its full year 2017 operating cash flow to be greater than $3.5 billion. Anthem' s guidance for net income for the full year 2017 is greater than $10.35 per share, including approximately $1.35 per share of net unfavorable items and the adjusted net income greater than$11.70. The Company anticipates operating revenue to be in the range of $88.5 billion-$89.5 billion and benefit expense ratio to be in the range of 87.0% plus or minus 30 basis points.
The Company expects medical membership to be in the range of 40.2 million – 40.4 million, including fully insured membership in the range of 15.2 million – 15.3 million and self-funded membership in the range of 25.0 million – 25.1 million.
Stock Performance
On Friday, August 04, 2017, the stock closed the trading session at $190.48, marginally slipping 0.50% from its previous closing price of $191.44. A total volume of 967.63 thousand shares have exchanged hands. Anthem's stock price skyrocketed 5.65% in the last three months, 19.74% in the past six months, and 50.20% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have soared 32.49%. The stock is trading at a PE ratio of 18.02 and has a dividend yield of 1.47%. At Friday's closing price, the stock's net capitalization stands at $50.27 billion.
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