MM Curator summary
Anthem Medicaid revenues help grow YOY revenues overall, and CEO thinks pent-up demand for services is not there.
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- Anthem’s net income grew more than 9% year over year in the first quarter, driven by strong performance of its pharmacy benefit management arm and a major increase in Medicaid membership not including the announcement this month of a new contract in Ohio.
- On a call with investors Wednesday on the results, executives said they do not anticipate high levels of pent-up demand due to the COVID-19 pandemic, noting they haven’t seen much difference in care levels from markets with higher levels of vaccination compared to areas with lower levels.
- Expenses for the quarter were up nearly 10%. Executives noted some concern for a fourth spike in COVID-19 cases and pegged estimated costs from the virus for the payer this year at $600 million, pointing to the federal government’s mandate to increase vaccination reimbursement to providers.
Insurers (and providers) are watching closely whether and how quickly patients may return for in-person care as the coronavirus vaccination rollout in the U.S. continues. For payers, whether people seek out increased levels of services they avoided during the worst of the pandemic — as well as whether their needs are more acute because of conditions ignored — are key.
But Anthem CFO John Gallina said that while it’s still to early to be sure, the company isn’t majorly concerned. “People were still able to largely get care in 2020 after the stay-at-home mandates were eased, so the giant backlog we don’t think is there,” he said.
Forrester analyst Arielle Trzcinski, however, called that characterization “somewhat optimistic” in a Wednesday morning note on the results.
The payer’s revenue of more than $32 billion missed Wall Street expectations, but it beat on earnings and hiked its full-year guidance in that area as a result.
The company’s PBM, IngenioRx, posted a year-over-year increase in operating revenue to $5.9 billion. Executives said that its business was picking up after some pause during the pandemic.
Anthem CEO Gail Boudreaux touted the payer’s high-performance network, launched earlier this year, marking its savings as averaging 11% throughout markets by using AI and machine-learnings tools. She said the product was key to the company’s attempt — announced at this year’s investor day — to drive commercial medical cost trend down to match the consumer price index by 2025.
She touched on digital and home health trends, particular with the payer’s pending acquisition of post-acute benefits management company myNexus. She said the buy, expected to close in the second quarter of this year, will give the company a change to “managing a greater portion of the healthcare dollar.”
Trzcinski noted the acquisition of the home-based nursing management company is needed for Anthem to compete with payers like Humana that already have similar segments under their brand, as well as the upcoming threat from Amazon’s new virtual primary care business, called Amazon Care.
Boudreux also teased a partnership with an unnamed major retail employer to provide on-site coordinators addressing social factors that affect health like housing, nutrition and transportation. Trzcinski praised the move, saying it “will set Anthem up well to continue to differentiate in the employer based commercial market.”