Anthem Inc.’s second-quarter profit doubled on a year-over-year basis, to nearly $2.3 billion, as a pandemic-induced drop in claims and a new business pushed the Blue Cross-Blue Shield insurer’s earnings past expectations.
Shares in the Indianapolis-based company jumped 6% at the start of trading Wednesday, erasing about half of the loss it had incurred so far this year.
The nation’s second-largest insurer also said Wednesday it was leaving its 2020 earnings forecast unchanged, following a pattern established by its competitors. Insurers haven’t touched their guidance despite big quarterly earnings growth because they aren’t sure what lies ahead.
The COVID-19 pandemic shut down most of the economy in the second quarter, which meant fewer surgery bills or other big claims. But companies expect at least some of those postponed procedures to take place later this year.
Anthem executives told analysts during a Wednesday morning call that they don’t expect another full shutdown like earlier this year, even as COVID-19 cases spike in many regions of the country. They also said they’re already seeing some surgeries like joint replacement procedures rebound.
“Some things can only be delayed so long,” noted Chief Financial Officer John Gallina.
Anthem said its adjusted earnings jumped to $9.20 per share in the quarter that ended June 30. Operating revenue, which excludes investment gains, climbed 16%, to $29.18 billion. That was lighter than Wall Street expected.
Analysts expected, on average, earnings of $8.77 per share on $29.43 billion in revenue, according to Zacks Investment Research.
Anthem covers more than 42 million people in several states, including big markets like New York and California. It also started a pharmacy benefits management business called IngenioRx, with help from CVS Health Corp.
That new business injected a $304 million operating gain into the insurer’s second-quarter performance.
But the operating gain from its commercial and specialty insurance business—which excludes government programs like Medicare Advantage—soared nearly 40% to $1.37 billion mainly due to lower benefits use during the pandemic.
The insurer’s total enrollment grew 4%, to 42.4 million, compared to last year’s quarter. That was helped by a jump in enrollees for the government-funded Medicaid program that Anthem manages in several states.
Insurers have emphasized that they aren’t hoarding all the money they save from the lack of claims. Anthem’s earnings report, for instance, starts with three dozen bullet points emphasizing things the insurer has done to support customers or care providers.
That includes providing $2.5 billion in financial assistance, as it offered premium credits and waived costs for COVID-19 related care and treatment.
The insurer also set aside some money to help shareholders. It resumed buying back its stock again in late June, a practice that can boost share value. Anthem spent $55 million on share repurchases in the quarter.
For 2020, Anthem still expects adjusted earnings to be greater than $22.30 per share.
Analysts predict earnings of $22.33 per share, according to FactSet.
The price of Anthem shares climbed more than $16, to $281.91 each, Wednesday morning, while broader indexes rose slightly.
Anthem’s stock price had dropped 12% so far this year after closing 2019 slightly above $300. The S&P 500 is up slightly in the same time frame.