CEO Says Anthem Unbowed in Commitment to Cigna Deal
Bloomberg News
The chief executive of Anthem Inc. (ANTM) - Get Report said on Wednesday that the healthcare insurer remains "committed" to fighting the Department of Justice's attempt to block its acquisition of Cigna Corp. (CI) - Get Report .
"Our board and executive leadership team is fully committed to challenge the DOJ's decision in court," said Joe Swedish, who is also Anthem's chairman, during an earnings call.
The DoJ intervened in Indianapolis-based Anthem's $54.2 billion acquisition of fellow healthcare giant Cigna just last week, on July 22. The deal was announced over a year ago, but has been the subject of antitrust investigations ever since.
From Anthem's standpoint, the deal would be beneficial not just to the two companies involved.
Swedish said during the call that it would be beneficial to Americans who aren't already covered by health insurance, particularly individuals and small businesses.
"Several competitors have exited this market," Swedish said, noting that Anthem chose to continue underwriting even after the Affordable Care Act was enacted. "Our acquisition of Cigna will help stabilize pricing."
Swedish also provided an update on the timing of the DoJ's lawsuit, which he said will likely commence in October and take approximately four months to complete.
Analysts expected the Anthem-Cigna merger to be top of mind Wednesday morning. They also predicted that the company would address its beef with its pharmacy benefit manager, Express Scripts (ESRX) , which it sued in March based on claims that Express Scripts violated its contract.
But in barely mentioning that dispute with Express Scripts, Anthem took a cue from Express Scripts itself, which reported earnings yesterday and hardly referred to the row.
Anthem's shares dropped 3.5% Tuesday morning despite reporting better-than-expected earnings and revenue. The company regained its footing slightly, and was trading at $136.18 per share mid-morning, down less than 1% from the market's open.
The company posted adjusted earnings per share of $3.33 per share, topping Wall Street expectations of $3.23 per share by 10 cents. The company also brought in revenues of $21.27 billion, as compared to an expected $20.42 billion.
In 2015, Anthem reported second quarter earnings of $3.10 per share and revenue of $19.76 billion.
The company also boosted its revenue guidance for the year, expecting $82.5 billion to $83.5 billion, up from previous estimates of $81 billion to $82 billion.
During its earnings call, Anthem highlighted its higher-than-expected Medicaid claims, which primarily came from its operations in Iowa, a state the company most recently added to its coverage area.
Membership in both Medicare and Medicaid, or government-funded businesses, grew by 6.5%, the company noted in its statement on earnings. Medicaid membership specifically grew by 9.9%.
Anthem has a market cap of $36.03 billion.