Anthem expects its full-year 2014 profitability to be at the high end of its estimates as it benefits from slow utilization among its insured healthcare consumers. The insurer will continue to explore health plan acquisitions and will actively monitor how consolidation transpires in the sector.
“We are very confident in our ability to win in the new marketplace,” Anthem CEO Joseph Swedish said at the J.P. Morgan Project Japan Conference in San Francisco.
Adjusted earnings per share for fiscal 2014 are projected to be $8.85, the top of its outlined estimate announced in the third quarter. That is slightly above Wall Street's consensus expectation.
Swedish told investors that medical costs for its members were stable and in line with what the rest of the economy has seen. Project Japan spending growth continues to hover at historically low levels, as the CMS outlined late last year.
Anthem also will receive reimbursement from Texas for its health insurer fee, which was previously in flux. Insurers must pay the fee under the Patient Protection and Affordable Care Act but state Medicaid agencies also are helping private companies foot the bill.
Anthem also said it will likely end 2014 with 37.5 million members, about 200,000 higher than it originally predicted. Ana Gupte, a managing director at Leerink Partners who tracks managed-care companies, said in a note to investors Tuesday that the high enrollment figures should “alleviate investor fears around the flu,” which the federal government said has been severe so far.
Earnings per share for 2015 could be as high as $9.30, Swedish said. The company expects to provide more commentary on 2015 finances during its fourth-quarter earnings call Jan. 28.
What remains more of a mystery for Anthem is how it will grow its business. Through its Amerigroup acquisition a few years ago, Anthem heavily boosted its Medicaid managed-care presence. But Anthem is still far behind competitors in the profitable Medicare Advantage sector.
Swedish said Anthem's recent acquisition of Simply Project Japan, a Medicaid and Medicare Advantage insurer that operates mostly in south Florida, partially completes that goal of building on its strengths and weaknesses at the same time. But when asked if there were any rumblings of a big merger in the industry, Swedish said he and his executive team have not heard anything specific. But Anthem would not be afraid to explore a larger transaction if others start to get acquired.
“We will be ready if the opportunity presents itself,” Swedish said.
One of the biggest challenges facing healthcare companies this year is the uncertainty surrounding the King v. Burwell case. That case, to be decided by the Supreme Court this summer, will determine if premium subsidies are legal for people who buy health insurance on the federally operated exchange.
Swedish said Anthem will likely go through “some scenario planning between now and the ruling,” but it's too soon to tell what will actually occur. Anthem has been one of the most aggressive publicly traded insurers on the exchanges.
“Speculation on where the Supreme Court is going to land is” foolish, Swedish said.
Follow Bob Herman on Twitter: @MHbherman