Anthem's Profits Surge on Trigon Buy

Revenue and enrollment also jump, and it affirms earnings estimates.
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Anthem's

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earnings almost doubled in the first quarter over last year thanks to securities gains and a litigation gain. Excluding those, earnings rose 27% as enrollment grew and expenses fell.

The health insurance company earned $191.7 million, or $1.36 a share, in the latest quarter, compared with $99.8 million, or 95 cents a share, last year. Excluding securities gains and the litigation gain, the company earned $1.18 a share in the latest quarter, matching expectations, compared with 93 cents a year ago.

Anthem acquired Trigon Healthcare in July of 2002, and as a result its enrollment and revenue grew substantially year-over-year. First-quarter revenue rose to $4 billion from $2.7 billion, while enrollment jumped 41% to more than 11.5 million. Excluding the acquisition, enrollment rose 10% from a year ago and is up 4% since the end of 2002.

Profits reflected a higher operating margin, as commercial premium yields rose by about 13% while commercial medical costs rose by 11% in the trailing 12 months. "Medical cost increases were driven primarily by increased member utilization and higher fees for physician services and outpatient facility care," Anthem said.

Looking ahead, Anthem said it expects to earn $5 to $5.05 a share for the year, excluding items. Analysts had been forecasting full-year earnings of $5.06 a share.