Anthem, other insurers stick to 2020 outlooks as COVID-19 pandemic spreads

Indianapolis-based Anthem Inc. and Louisville-based Humana Inc. became on Wednesday the latest health insurers to stick with their 2020 earnings forecasts, even as the COVID-19 pandemic forces companies in many other sectors to abandon outlooks.

The pandemic has shut down large portions of the economy and forced many companies to abandon their forecasts. But insurers so far have said they don’t know enough yet about COVID’s impact to take such a radical step.

They are still trying to understand the cost of treating patients, especially those who wind up spending days in the hospital. They also don’t know yet how many companies will cut employees with health coverage and dent their enrollment.

Then there are elective surgeries or procedures that aren’t emergencies.

Many have been postponed or canceled. Most will be rescheduled so those bills won’t go away. But they may arrive later this year or in 2021, depending on how jammed surgery center schedules become once people feel comfortable enough to leave quarantines.

“The future may look markedly different from what anyone expects,” Anthem Chief Financial Officer John Gallina told analysts in a Wednesday morning conference call to discuss the first quarter.

The pandemic spread too late in the quarter in the United States to have much of an impact on health insurer income statements.

But insurers expect to see their enrollment shift as companies lay off workers who may then lose their employer-sponsored health insurance.

As many as 50% of Anthem customers who lose coverage could shift to the government-funded Medicaid program for people with low incomes, CEO Gail Boudreaux told analysts. Another 30% may wind up on the Affordable Care Act’s insurance marketplaces.

That doesn’t necessarily amount to lost business, since Anthem manages Medicaid coverage in many states and sells individual plans on those marketplaces.

Anthem still expects adjusted earnings to be greater than $22.30 per share this year.

Analysts forecast, on average, earnings of $22.01 per share, according to FactSet.

Anthem is the nation’s second-largest insurer, covering more than 42 million people in several big states including New York and California.

The company on Wednesday reported a first-quarter profit of $1.52 billion, or $5.94 per share. Earnings, adjusted for one-time gains and costs, were $6.48 per share.

The results fell short of Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for adjusted earnings of $6.54 per share.

Anthem reported revenue of $29.62 billion in the period, an increase of 20% compared wit the same quarter of 2019. Its adjusted revenue was $29.45 billion, which topped forecasts. Four analysts surveyed by Zacks expected revenue of $28.7 billion.

Shares in Anthem were up 1.4% Wednesday morning, to $272.01 each.

Indianapolis-based Blue Cross-Blue Shield insurer

Medicare Advantage coverage provider Humana Inc. said it still expects adjusted earnings in the range of $18.25 to $18.75 this year “while acknowledging the inherent uncertainty surrounding the ongoing crisis.”

Wall Street predicts earnings of $18.46 per share.

The nation’s largest health insurance provider, UnitedHealth Group Inc., and Medicaid specialist Centene Corp. also reaffirmed their forecasts earlier this month.

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