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Analysis

Anthem Releases Earnings Report, IngenioRx to Launch in Q2

By Jack O'Brien  
   January 30, 2019

The Indianapolis-based insurer posted an operating revenue of $23.3 billion in Q4 and announced the upcoming debut of its PBM, IngenioRx.

Anthem Inc. released its Q4 earnings report Wednesday morning, which was highlighted by the announced that the much-anticipated launch of IngenioRx has been moved up from 2020 to Q2 2019.

The insurer produced a strong quarter to round out 2018, with more than $23 billion in operating revenues in Q4, up nearly 4% year-over-year. Anthem also achieved an adjusted net income of $644 million in Q4, down from the previous quarter but well above the $339 million posted in Q4 2017. 

Still, beyond the company's financial performance in Q4, the most significant announcement was that IngenioRx would be launching in Q2 2019, after previously being slated for its debut in 2020. As a result of the move, Anthem will be ending its PBM contract with Express Scripts early on March 31, though the contract was originally set to expire at the end of 2019.

C-SUITE PERSPECTIVE: 

"In 2018, we achieved our objectives of improving execution and strengthening our value proposition with innovative and affordable solutions designed to more effectively meet the unique needs of our customers," Gail Boudreaux, CEO of Anthem, said in a statement. "Our fourth quarter and full year performance provides a strong foundation for 2019. In addition, I am pleased to announce that we are accelerating the launch of IngenioRx and now expect to begin transitioning members in the second quarter of this year." 

Boudreaux added that the company is confident it can execute this PBM transition on an accelerated timeline and "go to market with better economics earlier."

Previously, Boudreaux stated during Anthem's Q1 2018 earnings call that IngenioRx provides the insurer "significant opportunities" to grow its core operations and investment strategies in the Medicare space.

Related: Anthem to Pay Biggest HIPAA Settlement in History

The Indianapolis-based insurer also added 37,000 medical enrollment members in Q4, bringing its total for 2018 up to 39.9 million members. The company said this was attributable to continued growth among fully insured and fee-based local group businesses but suffered from a continued decline in individual enrollment. 

A key for Anthem's ability to succeed has been its Medicare members enrollment, which slipped slightly compared to 2017. The company, along with the other Big 5 insurers, remain unlikely to make a return to the ACA individual market, even as markets have stabilized following a hectic 2018.

Related: Anthem Bests Key Q3 Metrics, Including 29% Net Income Growth

Regarding its 2019 financial outlook, Anthem projects its net income to be above $18 per share, a 27% increase compared to 2018, with an adjusted net income above $19 per share thanks to the accelerated launch of IngenioRx. 

ADDITIONAL ANTHEM Q4 EARNINGS REPORT HIGHLIGHTS:

  • In Q4, Anthem posted an operating cash flow of $463 million, down from $607 million in Q3, but bringing its 2018 total to $3.8 billion.
  • For 2019, the insurer expects its operating cash flow to exceed $5.2 billion.
  • Similarly, Anthem is estimating an operating revenue above $100 billion for 2019, outpacing the $91.3 billion posted in 2018.

Related: If Anthem's Policy Spreads, 1 in 6 ER Visits Could Be Denied Coverage

For complete financial information, review Anthem Inc.'s filing with the Securities and Exchange Commission.

Jack O'Brien is the finance editor at HealthLeaders. 

Photo credit: Murcia, Spain; Oct 23, 2018: Anthem logo in phone with earnings graphic on background. Anthem, Inc. is an American health insurance company - Image / Editorial credit: Pedro Martinez Valera / Shutterstock.com


KEY TAKEAWAYS

IngenioRX, Anthem's PBM slated for debut in 2020, is now expected to launch in Q2.

The subsidiary is expected to achieve gross annual savings north of $4 billion, including more than 20% returned to shareholders.

Anthem added 37,000 medical enrollment members in Q4, and saw its operating gain grow by 30% year-over-year.


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