Anthem results top expectations, as firm projects growth in ’15

Indianapolis-based Anthem Inc. has hiked the quarterly dividend it pays shareholders nearly 43 percent after reporting fourth-quarter results that topped Wall Street expectations.

The nation's second-largest health insurer said Wednesday that it will start offering in March a payout of 62.5 cents per share, up from its previous dividend of 43.75 cents per share.

The new total helps the yield from the quarterly payout keep up with Anthem's rising stock price. It adds up to an annual dividend of $2.50 per share, and that raises the yield to 1.8 percent from 1.3 percent, based on Tuesday's closing price. The dividend yield is calculated by dividing the annual dividend by the company's stock price.

Anthem shares advanced 36 percent last year, setting several new all-time high prices along the way. The price has continued to rise in 2015, topping $142 per share earlier this month before settling back to close at $137.78 on Tuesday.

Investors have warmed up to health insurance stocks after watching the companies weather taxes, fees and other changes brought by the health care overhaul and Medicare Advantage funding cuts. They now see much less uncertainty ahead for the industry.

Shares of Anthem competitors UnitedHealth Group Inc. and Aetna Inc. also rose about 30 percent or more last year.

Anthem executives said last fall they were considering another dividend increase.

The insurer also announced Wednesday that its profit more than tripled in the fourth quarter to $506.7 million, or $1.80 per share, compared to the previous year, when it saw an unusual spike in medical claims.

Adjusted earnings totaled $1.73 per share, which beat average analyst expectations by a penny, according to the data firm FactSet.

The insurer's operating revenue, which excludes investment gains, climbed more than 6 percent, to $18.78 billion. Analysts forecast about $19.04 billion.

Adjusted earnings for 2014 were in line with an estimate the company gave on Jan. 13. Profit rose to $2.6 billion from $2.5 billion a year earlier.

Anthem predicted a bright 2015, with adjusted net income topping $9.70 a share. The company had 2014 adjusted earnings per share of $8.85. Revenue will probably be $78 billion to $78.5 billion, the company said, missing the average analyst estimate of $79.2 billion.

U.S. health insurers are adding customers as people buy insurance through the Patient Protection and Affordable Care Act, the 2010 law that requires all Americans to have health insurance and provides subsidies and online shopping markets for them to do so.

Anthem forecast that medical enrollment will climb to as many as 38.2 million customers this year, from 37.5 million in 2014. Last week, UnitedHealth Group Inc. said insurance membership under the law was increasing faster than expected.

Anthem Inc. runs Blue Cross-Blue Shield coverage in several states. The insurer changed its name late last year from WellPoint to reflect a brand that is more familiar to consumers in part because it sells coverage on the health care overhaul's public insurance exchanges.

 

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets on
{{ count_down }}