The insurer dealt with a 'reduced footprint' in the Affordable Care Act-compliant marketplace as well as the return of the health insurance tax.
Anthem Inc. released its first-quarter earnings report Wednesday, highlighting $22.3 billion in operating revenues, flat compared to the first quarter of 2017; operating cash flows of $2.2 billion, which were down from $2.7 billion this time last year; and a decline in medical enrollment.
Anthem's maintained operating revenues were driven by premium rate increases, the return of the health insurance tax, the acquisitions of Health Sun and America's 1st Choice, and organic membership growth in the Medicare business. The organization said the increases were offset by less activity in the individual ACA-compliant marketplace, as well as declines in membership among local group fully insured and Medicaid businesses.
Anthem's medical enrollment totalled 39.6 million members, a decline of 616,000 members during the first quarter. This is a decrease of 1 million members compared to this time last year. The organization said it expects medical enrollment to increase by 500,000 to 700,000 members for the full year, totalling between 40.1 and 40.3 million members.
"We are pleased with our first quarter 2018 financial performance, which reflects our commitment to strong medical cost performance by effectively leveraging community based innovative and integrated clinical and value based care models across our markets," Gail Boudreaux, CEO of Anthem, said in a statement.
Below are highlights from Anthem's first quarter earnings report:
First quarter net income increased 30% to $1.3 billion with an adjusted net income of $5.41 per share, which grew by 15.6% year-over-year.
Operating revenues are expected to be reach $91 to $92 billion for the full year.
Operating cash flow is expected to be greater than $4 billion for the full year.
Fully-insured membership is expected to be reach 14.8 to 14.9 million members.
Self-funded membership is expected to reach 25.3 to 25.4 million members.
The organization paid a quarterly dividend of $0.75 per share, representing a distribution of cash totaling $191.9 million.
Medical claims reserves established at the end of last year developed "moderately better" than the organization's expectation during the first quarter of 2018.
Boudreaux said Anthem knows they have more work to do to improve their performance.
Boudreaux said IngenioRx, Anthem's new pharmacy benefits manager, provides "significant opportunities" to grow, as well as core growth and investment strategies in the Medicare space.
Boudreaux said Anthem will be able to create a "cash-efficient PBM" through leveraging buying power, adding the organization is advantaged to build the next generation of PBM with an ability to expand in its own business and across others.
Executives said they want to be "opportunistic" about M&A and best serve its members, not just make a deal to make a deal.
Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.