Anthem's fourth-quarter earnings tumbled 64 percent, as the Blue Cross Blue Shield insurer absorbed some sizeable one-time expenses but it stuck by previous its forecast for the year.
The Indianapolis insurer also said Wednesday that continued gains in its government business, which includes Medicaid and Medicare coverage, helped counter tighter profitability in its commercial coverage, which includes benefits sold through employers and on the Affordable Care Act's public insurance exchanges.
Anthem booked $51.5 million in costs tied to its pending acquisition of rival insurer Cigna Corp. and another $42.3 million charge related to changes in tax calculations for California.
Fourth-quarter earnings were $180.9 million, down from $506.7 million in the previous year's quarter.
Adjusted results totaled $1.14 per share and operating revenue rose more than 6 percent to around $20 billion.
Analysts expected, on average, per-share earnings of $1.21 on $19.91 billion in revenue, according to a survey by the data firm FactSet.
Anthem operates plans in big markets like California, New York and Ohio. It also sells coverage on several public insurance exchanges.
Operating revenue from the insurer's government business, which includes Medicaid and Medicare coverage, jumped 17 percent to more than $10.6 billion, countering a decline from commercial and specialty coverage. Anthem made its name nationally as a provider of private Blue Cross Blue Shield coverage, but it is pegging more of its future growth on government business, which also includes coverage for federal employees.
It now draws more than half of its operating revenue from government business.
Anthem is the nation's second-largest health insurer, trailing only UnitedHealth Group Inc. in both enrollment and revenue. Its total medical membership climbed 3 percent to $38.6 million compared to the end of 2014, helped by a 14 percent jump in enrollment for state and federally funded Medicaid coverage.
The company expects to expand its government business even more once it completes its $48-billion acquisition of Cigna and adds that company's Medicare Advantage customers. That acquisition is undergoing regulatory review, and it has drawn scrutiny from doctor groups and some members of Congress over how it may affect consumer coverage options.
Anthem still expects the transaction to close in the second half of this year and it backed its previous forecast for 2016 adjusted earnings per share of greater than $10.80.
Analysts expect, on average, $10.90 per share.
Anthem Inc. shares closed at $137.76 Tuesday and have slipped about 1 percent so far this year after climbing around 11 percent in 2015.