INDIANAPOLIS (AP) — Growing government business fueled Anthem in the first quarter, as earnings for the nation's second-largest health insurer easily topped Wall Street expectations.
The Blue Cross-Blue Shield insurer said Wednesday that operating revenue from its work for the government, which includes Medicaid and Medicare Advantage coverage, jumped 14 percent and makes up slightly more than half of its total of $20.31 billion. Operating revenue excludes investment gains.
Anthem's enrollment in the state and federally funded Medicaid program climbed 7.6 percent from last year's first quarter to more than 6 million people, as the company's total membership grew past 39 million.
Medicaid has become a prime focus for health insurer growth because many states have expanded eligibility for the program as part of the health care overhaul, the federal law bringing insurance coverage to millions more people. States also are seeking insurers to manage care for their most expensive patients with Medicaid coverage.
Overall, Anthem's net income fell nearly 19 percent to $703 million, as benefits paid, the company's largest expense, grew by more than $1 billion to $15.54 billion.
The insurer also booked added expenses from its pending, $48 billion purchase of rival health insurer Cigna, a deal Anthem expects to complete later this year.
Adjusted first-quarter results of $3.46 per share beat the average analyst expectation for $3.34 per share, according to Zacks Investment Research.
Analysts also expected revenue of $19.84 billion.
Anthem Inc., based in Indianapolis, runs Blue Cross-Blue Shield plans in several big markets, including California, New York and Ohio. It said earlier this year that it also sells commercial coverage in 14 states through public insurance exchanges created by the overhaul.
The insurer also reaffirmed on Wednesday its forecast for 2016 adjusted earnings of greater than $10.80 per share.
Analysts expect, on average, $10.91 per share, according to FactSet.
Anthem shares fell $3.30, or 2.2 percent, to $143.77 in afternoon trading Wednesday. Its shares are down almost 5 percent over the past year.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on ANTM at http://www.zacks.com/ap/ANTM
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