Anthem raises outlook after posting $1.5B in Q3 profit thanks to strong membership boost

Anthem headquarters
Anthem saw an enrollment increase of 2.4 million people for the third quarter compared to the same period in 2020, helping fuel a profit of $1.5 billion. (Anthem)

Anthem posted a $1.5 billion profit for the third quarter of 2021 thanks in part to an enrollment boost in its Medicaid business.

The insurer’s earnings report released Wednesday showed that operating revenue grew by 16% compared to the same quarter in 2020 to $35.5 billion. Anthem’s enrollment across all plan offerings increased by 2.4 million members compared to the same period last year.

“The strong growth we saw across all of our benefits business in the third quarter demonstrates that our core offerings, as well as additional innovative products and services continue to resonate in the market,” said President and CEO Gail Boudreaux in a statement.

Anthem raised its full year adjusted net income outlook for 2021 from greater than $25.50 a share to $25.85 a share based on the results.

The insurer’s medical enrollment topped out at approximately 45.1 million, an increase of 5.7% compared to the same period in 2020.

Anthem’s government business grew by 2.3 million people in the quarter thanks primarily to growth in its Medicaid business. The insurer ended the quarter with 10.3 million people on its Medicaid managed care plans, compared with 8.5 million in the third quarter of 2020.

Medicare Advantage enrollment also increased slightly from 1.4 million in the third quarter of 2020 to 1.8 million.

The insurer saw major growth in its commercial and specialty business compared to 2020. It posted an operating gain of $620 million for the quarter, an improvement compared to the $234 million loss in 2020.

Anthem also saw growth in its Medicaid and Medicare business.

Operating gains in its government business segment totaled $967 million for the quarter, compared with $246 million in 2020.

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Anthem was aided by a provision in federal law that temporarily halts states from dropping people off their Medicaid rolls for the duration of the COVID-19 public health emergency, which was just renewed into January.

Once the public health emergency ends, states have a year to re-determine the eligibility of Medicaid enrollees and could drop some off its rolls.

Anthem wasn’t worried about major enrollment losses due to redetermination.

“We are really taking a look at where we think these members are going to go,” said Chief Financial Officer John Gallina during an investor call Wednesday.

The insurer assumes that redeterminations will start sometime in the second quarter of 2022 and that 35% of the new members will continue to stay on Medicaid with another 45% going back on employer-sponsored plans and 20% getting subsidized coverage on the Affordable Care Act’s exchanges, Gallina said.

“We have products in all those things,” he said. “We feel very good about our opportunity and ability to keep membership within the Anthem family over the course of the next year.”

The insurer saw gains in its commercial and specialty business compared to 2020. It posted an operating gain of $620 million for the quarter, an improvement compared to the $234 million loss in 2020.

Anthem also expects strong growth in commercial membership next year thanks in part to the “strongest national account selling season in the history of the company,” Gallina said.