A month has gone by since the last earnings report for Anthem . Shares have added about 1.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Anthem due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Anthem's Q4 Earnings Beat Estimates, Improve Y/Y
Anthem delivered fourth-quarter 2021 earnings of $5.14 per share, which beat the Zacks Consensus Estimate of $5.11. The bottom line also increased 102.4% year over year.
The strong fourth quarter earnings were supported by significant membership growth and increased premium, partially offset by higher expenses.
Operating revenues for the quarter grew 14.2% year over year to $36,018 million. However, it missed the consensus mark of $36,358 million.
Operational Update
Anthem’s benefit expense ratio of 89.5% expanded 60 basis points (bps) from the prior-year quarter’s figure.
As of Dec 31, 2021, medical enrolment was 45.4 million members, 5.7% higher than the year-ago quarter. Organic growth in Medicaid and Medicare Advantage businesses aided the upside. Commercial risk-based and fee-based membership also witnessed a jump in the fourth quarter.
The SG&A expense ratio of 11.7% contracted 200 bps from the year-ago quarter’s level on the back of repealing the health insurance tax in 2021 and better operating revenues.
Total expenses increased 12.7% year over year to $35.1 billion due to higher benefit expense, cost of products sold and amortization of other intangible assets.
Segmental Results
Commercial & Specialty Business
Operating revenues of $9.9 billion in the fourth quarter were up 7.4% year over year.
The segment reported an operating gain of $74 million, down 39.8% year over year. This downside was due to a spike in business optimization expenses in the fourth quarter of 2021 and the effect of the BCBSA litigation settlement accrual adjustment in the fourth quarter of 2020.
Operating margin was 0.7%, down 60 bps from the year-ago quarter’s figure of 1.3%.
Government Business
Operating revenues were $21.9 billion, up 16.8% from the prior-year quarter’s reading.
Operating gain was $748 million, up 342.6% year over year owing to the impact of the timing of Medicaid rate actions along with membership growth in the Medicaid and Medicare businesses.
IngenioRx
Operating revenues from the segment were $6.8 million in fourth-quarter 2021, up 16% year over year. Operating gain in the segment rose 17.6% year over year on the back of growth in membership.
Other
Operating revenues of $2.6 billion soared 51.3% from the prior-year quarter’s level.
The Other segment’s loss of $61 million was wider than the year-ago quarter’s loss of $50 million.
Financial Update (as of Dec 31, 2021)
Anthem’s cash and cash equivalents totaled $4.8 billion, down 15% from the level at 2020 end.
Anthem’s long-term debt less current portion increased 9.4% to $21.1 billion from the level at 2020 end.
Cash provided by operating activities was $8.4 billion for 2021, down 21.7% year over year.
Capital Deployment
During the fourth quarter, Anthem bought back shares worth $522 million. As of Dec 31, 2021, ANTM had shares worth $4.2 billion remaining under its share buyback authorization.
Anthem paid out a quarterly dividend of $1.13 per share in the fourth quarter, adding up to a distribution of cash worth $274 million.
Guidance for 2022
Following the announcement of fourth-quarter results, Anthem provided its 2022 outlook.
Adjusted net income for the current year is projected to be more than $28.25 per share. Medical enrollment is expected to be in the range of 45.6-46.2 million.
Anthem anticipates its operating cash flow view to be more than $6.9 billion.
Operating revenues for the year are expected to be around $152 billion.
For the current year, investment income is expected to be $1.1 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Anthem has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Anthem has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Anthem (ANTM) Up 1.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Anthem . Shares have added about 1.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Anthem due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Anthem's Q4 Earnings Beat Estimates, Improve Y/Y
Anthem delivered fourth-quarter 2021 earnings of $5.14 per share, which beat the Zacks Consensus Estimate of $5.11. The bottom line also increased 102.4% year over year.
The strong fourth quarter earnings were supported by significant membership growth and increased premium, partially offset by higher expenses.
Operating revenues for the quarter grew 14.2% year over year to $36,018 million. However, it missed the consensus mark of $36,358 million.
Operational Update
Anthem’s benefit expense ratio of 89.5% expanded 60 basis points (bps) from the prior-year quarter’s figure.
As of Dec 31, 2021, medical enrolment was 45.4 million members, 5.7% higher than the year-ago quarter. Organic growth in Medicaid and Medicare Advantage businesses aided the upside. Commercial risk-based and fee-based membership also witnessed a jump in the fourth quarter.
The SG&A expense ratio of 11.7% contracted 200 bps from the year-ago quarter’s level on the back of repealing the health insurance tax in 2021 and better operating revenues.
Total expenses increased 12.7% year over year to $35.1 billion due to higher benefit expense, cost of products sold and amortization of other intangible assets.
Segmental Results
Commercial & Specialty Business
Operating revenues of $9.9 billion in the fourth quarter were up 7.4% year over year.
The segment reported an operating gain of $74 million, down 39.8% year over year. This downside was due to a spike in business optimization expenses in the fourth quarter of 2021 and the effect of the BCBSA litigation settlement accrual adjustment in the fourth quarter of 2020.
Operating margin was 0.7%, down 60 bps from the year-ago quarter’s figure of 1.3%.
Government Business
Operating revenues were $21.9 billion, up 16.8% from the prior-year quarter’s reading.
Operating gain was $748 million, up 342.6% year over year owing to the impact of the timing of Medicaid rate actions along with membership growth in the Medicaid and Medicare businesses.
IngenioRx
Operating revenues from the segment were $6.8 million in fourth-quarter 2021, up 16% year over year. Operating gain in the segment rose 17.6% year over year on the back of growth in membership.
Other
Operating revenues of $2.6 billion soared 51.3% from the prior-year quarter’s level.
The Other segment’s loss of $61 million was wider than the year-ago quarter’s loss of $50 million.
Financial Update (as of Dec 31, 2021)
Anthem’s cash and cash equivalents totaled $4.8 billion, down 15% from the level at 2020 end.
Anthem’s long-term debt less current portion increased 9.4% to $21.1 billion from the level at 2020 end.
Cash provided by operating activities was $8.4 billion for 2021, down 21.7% year over year.
Capital Deployment
During the fourth quarter, Anthem bought back shares worth $522 million. As of Dec 31, 2021, ANTM had shares worth $4.2 billion remaining under its share buyback authorization.
Anthem paid out a quarterly dividend of $1.13 per share in the fourth quarter, adding up to a distribution of cash worth $274 million.
Guidance for 2022
Following the announcement of fourth-quarter results, Anthem provided its 2022 outlook.
Adjusted net income for the current year is projected to be more than $28.25 per share. Medical enrollment is expected to be in the range of 45.6-46.2 million.
Anthem anticipates its operating cash flow view to be more than $6.9 billion.
Operating revenues for the year are expected to be around $152 billion.
For the current year, investment income is expected to be $1.1 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Anthem has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Anthem has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.