Anthem Q2 Earnings Best Expectations, Despite Enrollment Decline

The Indianapolis-based health plan saw its net income, benefit expense ratio, and operating revenue rise in Q2 after a flat Q1.

Anthem Inc. exceeded expectations for its benefit expense ratio due to widespread strength in its medical cost performance, according to its Q2 earnings report released Wednesday morning.

With a benefit expense ratio of 83.4%; calculated as the percentage of money paid out by an insurer to members through claims, Anthem beat a projected drop due to the return of the health insurance tax at the start of 2018. Additionally, Anthem reported a net income of $1.1 billion for Q2, a 23% increase year-over-year, and an operating revenue of $22.7 billion.

"We remain focused on improving fundamental execution across the enterprise and we expect the positive momentum exhibited in the first half of 2018 to persist for the balance of the year," Gail Boudreaux, CEO of Anthem, said in a statement. "We will also continue to invest in capabilities that will enable us to more effectively meet the needs of our customers and seamlessly adapt to the ever-changing healthcare landscape."

Anthem's earnings come at a time when the company is at the center of a legal controversy over its emergency room coverage policy, that denies payment for visits that are later deemed non-emergent. The insurer also recently completed its acquisition of Aspire Health, a community-based palliative care provider, ahead of schedule.

Below are highlights from Anthem's Q2 earnings report:

In Q2, Anthem posted an operating cash flow of $542 million, an increase of $149 million compared to Q1, but down from $2.8 billion this time last year.
Anthem had another quarter of declining enrollment, losing 129,000 members in Q2, and 888,000 year-over-year. However, Medicare enrollment grew by 254,000 in Q2.
Medical enrollment totalled 39.5 million members by the end of Q2, which the company attributed to a smaller presence in the ACA marketplace and membership losses through Medicaid.

Additional information is available in Anthem's filing with the Securities and Exchange Commission.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.