ACROFAN

Anthem Reports Fourth Quarter and Full Year 2020 Results

Published : Wednesday, January 27, 2021, 3:00 am
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INDIANAPOLIS--(BUSINESS WIRE)--$ANTM #earnings--Anthem, Inc. (NYSE: ANTM) reported fourth quarter 2020 results that reflected solid performance across the enterprise.

“Despite uncertainties with the pandemic, Anthem delivered strong growth across all of our businesses in 2020 reflecting the diversity and strength of our portfolio and our unwavering commitment to those we serve,” said Gail K. Boudreaux, President and CEO, Anthem, Inc. “I am proud of all that we accomplished during this challenging time, and we remain focused on supporting our members, customers and communities as a trusted health partner.”

As part of Anthem's efforts to combat the global pandemic, address health inequities, and adapt to the ever-changing healthcare environment, the Company has remained focused on fostering deeper relationships and developing innovative solutions to meet critical needs for its stakeholders. Actions taken during 2020 to support our members, customers, care providers and local communities include:

Care for our Anthem associates

  • Deployed business continuity plans and transitioned nearly all of our associates to work from home while maintaining service operations.
  • Waived one month of premium costs for associates enrolled in an Anthem health plan.
  • Expanded associate benefits to provide additional support, including providing up to 80 hours of additional paid leave, reimbursement of installation and monthly internet service fees for hourly associates, and offering virtual wellbeing resources.
  • Ensuring our frontline medical staff are following CDC guidelines and are provided with the proper equipment and supplies to minimize risk to themselves and patients.
  • Launched a Winter Wellbeing campaign to continue our commitment to associates' health and wellness by making additional resources easily accessible.
  • Launched the confidential Associate Care Service, a 24/7 hotline for emergencies such as food insecurity, childcare for caregiver needs, and support for other needs.

Care for our consumers, customers, and providers

  • Waived all cost-sharing for COVID-19 diagnostic tests and treatment.
  • Provided expanded telehealth coverage for our members and waived cost-sharing for in-network telehealth visits, including telephonic visits, and those for mental health.
  • Relaxed early prescription refill policies for maintenance and specialty medications.
  • Working with providers to accelerate claims processing, resolve claims, and accelerate payments to support state-specific Medicaid programs.
  • Providing financial assistance to care provider partners facing undue financial pressure and to support ramping up telehealth capabilities and the cost of PPE.
  • Offered in-network dental providers a $10 PPE credit per patient, per visit through the end of December 2020.
  • Suspended select prior authorization requirements.
  • Partnering with our states in the distribution of COVID-19 vaccines.
  • Launched the COVID-19 Vaccine tool to provide personalized vaccination insights for Anthem members.
  • Launched Sydney Care Daily COVID-19 Check-In to help employers and their employees quickly and safely return to work, and make informed decisions about keeping their workforce safe.
  • Deployed C19 Explorer, a digital tool that aggregates real-time COVID-19 data to present trends and predictions for communities across the nation to assess readiness to reopen, plan next steps, and respond to potential changes.
  • Deployed C19 Navigator, a dashboard solution designed for Anthem employer customers to help inform workplace decisions and resource planning with employee-level data.
  • Opened hundreds of digital solutions kiosks in health centers across California to provide real-time video interpretation services and access to telehealth.
  • Deployed a Coronavirus Assessment tool within our Sydney Care app to help people quickly and safely evaluate symptoms, assess their risk of having COVID-19, and connect directly to a board-certified doctor via text or video.
  • Introduced the Anthem Skill to members of our commercial medical and dental health plans. Through an Alexa-enabled device, members can use the Anthem Skill to take actions such as order prescriptions and quickly access some of their health and dental plan benefit information.
  • Facilitating connections with Medicaid beneficiaries and state and social services, helping newly eligible and at risk members enroll in the Supplemental Nutrition Assistance Program (SNAP) and Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
  • Outreach to Medicare Advantage and Medicaid consumers to make sure they have necessary medications on hand, their nutritional needs are being met, and critical health needs are addressed.
  • Providing resources to support the whole health needs of members, including resources to manage social isolation, job loss, food insecurity, and stress.

Care for our communities

  • Committed $50 million from the Anthem Foundation for COVID-19 response and recovery efforts to help areas of greatest need, including care provider safety, food insecurity, and mental and behavioral health resources.
  • Partnering with Lyft to provide transportation for at-risk communities to support universal access to the COVID-19 vaccine, with the goal of 60 million rides.
  • In collaboration with Gleaners Food Bank, we are working to provide more than 10 million meals in our home city of Indianapolis by providing a $1 million matching grant to fight food insecurity and expand access to nutritious food.
  • Collaborating with leading nonprofit partners and others to provide no-cost pop-up flu clinics in vulnerable communities across our markets to make it easier for people to get vaccinated and to increase health equity.
  • Providing virtual volunteer opportunities, such as remote teaching or mailing cards to seniors facing loneliness, to help associates safely give back to communities.
  • Anthem and the Anthem Foundation are founding anchor partners of XPRIZE Rapid COVID Testing, a collaboration with XPRIZE, OpenCovidScreen and other Blue Cross Blue Shield plans and innovative organizations to launch a $5 million competition to accelerate the development of high quality COVID-19 testing that is low cost, easy to use, and quick-reporting, paving the way for more frequent testing.
  • Managing a new study via our HealthCore subsidiary to help understand and combat Multisystem Inflammatory Syndrome in children, or MIS-C, arising from the COVID-19 pandemic.
  • Anthem's associates volunteered 110,000 hours in 2020.
  • In 2020, through our Associate Community Engagement Programs, associates raised nearly $6.7 million dollars for community organizations across the country.
  • Launched the Pandemic Response Innovation Challenge with MATTER and Blue Cross Blue Shield of Illinois to call on global innovators to develop creative solutions aimed at supporting the health care needs of those impacted by the COVID-19 pandemic.

Additional actions to support society

  • Pledged $50 million over the next 5 years focused on directly impacting racial injustice, strengthening our communities, and addressing health inequities.
  • Anthem Foundation and March of Dimes have partnered to tackle maternal and infant health disparities by addressing social determinants of health. The $1.1 million grant includes Breaking Through Implicit Bias in Maternal Healthcare training for providers at more than 20 hospitals.
  • Joined the UN Global Compact, deepening our dedication to improving health and shaping stronger, more inclusive, more sustainable communities.
  • Joined coalition of corporate and civic organizations to launch the Indy Racial Equity Pledge designed to drive measurable progress in advancing racial equity for African Americans in Central Indiana.

     

CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $2.19 per share in the fourth quarter, including net negative adjustment items of $0.35 per share. Adjusted net income was $2.54* per share. Full year GAAP net income was $17.98 per share, including net negative adjustment items of $4.50 per share. Adjusted net income was $22.48* per share.

*Please refer to the GAAP reconciliation tables.

Membership: Medical enrollment totaled approximately 42.9 million members at December 31, 2020, an increase of 1.9 million lives, or 4.7 percent from December 31, 2019. Total risk enrollment grew by 1.7 million lives, or 11 percent, and fee-based enrollment grew by 211 thousand lives, or 0.8 percent. Government Business enrollment increased by 1.9 million lives compared to the prior year, attributable to Medicaid, reflecting organic growth as a result of the temporary suspension of eligibility recertification efforts in our markets as well as our acquisition of the Medicaid plans in Missouri and Nebraska, and growth in Medicare Advantage. Commercial & Specialty Business enrollment increased by 67 thousand lives driven by the acquisition of AmeriBen and growth in our National business, partially offset by higher in-group change as a result of the economic environment.

During the fourth quarter of 2020, medical enrollment increased sequentially by 300 thousand lives, reflecting organic growth in Medicaid and Medicare businesses as well as sales exceeding lapses in our Local Group business, partially offset by in-group change in the National business.

Operating Revenue: Operating revenue was $31.5 billion in the fourth quarter of 2020, an increase of $4.4 billion, or 16.2 percent, versus the prior year quarter, driven by higher premium revenue due to growth in Medicaid and Medicare. The increase was further attributable to pharmacy product revenue related to IngenioRx and the return of the health insurance tax in 2020.

Benefit Expense Ratio: The benefit expense ratio was 88.9 percent in the fourth quarter of 2020, a decrease of 10 basis point from 89.0 percent compared to the prior year quarter. The decrease was driven by reduced non-COVID healthcare utilization due to the pandemic, and to a lesser extent, the return of the health insurance tax in 2020. Taken together, the decrease was largely offset by costs associated with COVID-19, including testing and treatment and the actions taken to support our members in response to the pandemic.

Medical claims reserves established at December 31, 2019 developed in line with the Company’s expectations during 2020.

Days in Claims Payable: Days in Claims Payable was 43.4 days as of December 31, 2020, an increase of 2.3 days from September 30, 2020 and an increase of 5.4 days as compared to December 31, 2019.

SG&A Expense Ratio: The SG&A expense ratio was 13.7 percent in the fourth quarter of 2020, an increase of 80 basis points from 12.9 percent in the fourth quarter of 2019, primarily driven by the return of the health insurance tax in 2020 and increased spend to support growth, partially offset by growth in operating revenue.

Operating Cash Flow: Operating cash flow was $3.8 billion in the fourth quarter of 2020, an increase of $2.5 billion compared to the prior year quarter. The increase was primarily due to the timing of working capital changes, including the early receipt of certain payments that were originally expected to be received in 2021, and growth in premium revenue due to the return of the health insurance tax in 2020 as well as membership growth in our Government business.

Share Repurchase Program: During the fourth quarter of 2020, the Company repurchased 4.4 million shares of its common stock for $1.4 billion, or a weighted average price of $305.66. For the full year, the Company repurchased 9.4 million shares for $2.7 billion, or a weighted average price of $286.35. As of December 31, 2020, the Company had approximately $1.1 billion remaining of Board-approved share repurchase authorization. On January 26, 2021, our Audit Committee, pursuant to authorization granted by the Board of Directors, authorized a $5.0 billion increase to the common stock repurchase program. The Company intends to utilize this authorization over a multi-year period, subject to market and industry conditions.

Cash Dividend: During the fourth quarter of 2020, the Company paid a quarterly dividend of $0.95 per share, representing a distribution of cash totaling $234 million.

On January 26, 2021, the Audit Committee declared a first quarter 2021 dividend to shareholders of $1.13 per share. On an annualized basis, this equates to a dividend of $4.52 per share. The first quarter dividend is payable on March 25, 2021 to shareholders of record at the close of business on March 10, 2021.

Investment Portfolio & Capital Position: During the fourth quarter of 2020, the Company recorded net realized gains of $5 million. During the fourth quarter of 2019, the Company recorded net realized gains of $7 million.

As of December 31, 2020, the Company’s net unrealized gain position in the investment portfolio was $1.2 billion, consisting primarily of fixed maturity securities. As of December 31, 2020 cash and investments at the parent company totaled approximately $1.7 billion.

REPORTABLE SEGMENTS

Effective January 1, 2020, Anthem, Inc. has four reportable segments: Commercial & Specialty Business (comprised of the Local Group, National Accounts, Individual and Specialty businesses); Government Business (comprised of the Medicaid, Medicare, and Federal Health Products & Services businesses); IngenioRx, and Other (comprised of the Diversified Business Group and corporate expenses not allocated to our other reportable segments).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anthem, Inc.

Reportable Segment Highlights

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

Three Months Ended December 31

 

Twelve Months Ended December 31

 

 

 

2020

 

2019

 

Change

 

2020

 

2019

 

Change

 

 

Operating Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

$

9,223

 

 

$

9,328

 

 

(1.1

)%

 

$

36,699

 

 

$

37,421

 

 

(1.9

)%

 

 

Government Business

 

18,763

 

 

 

16,213

 

 

15.7

%

 

 

71,572

 

 

 

62,632

 

 

14.3

%

 

 

IngenioRx

 

5,863

 

 

 

3,232

 

 

81.4

%

 

 

21,911

 

 

 

5,402

 

 

305.6

%

 

 

Other

 

1,780

 

 

 

613

 

 

190.4

%

 

 

6,057

 

 

 

2,293

 

 

164.2

%

 

 

Eliminations

 

(4,096

)

 

 

(2,254

)

 

NM2

 

 

(15,431

)

 

 

(4,607

)

 

NM2

 

 

Total Operating Revenue1

$

31,533

 

 

$

27,132

 

 

16.2

%

 

$

120,808

 

 

$

103,141

 

 

17.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Gain / (Loss)3

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

$

123

 

 

$

527

 

 

(76.7

)%

 

$

2,681

 

 

$

4,032

 

 

(33.5

)%

 

 

Government Business

 

169

 

 

 

586

 

 

(71.2

)%

 

 

2,444

 

 

 

2,056

 

 

18.9

%

 

 

IngenioRx

 

363

 

 

 

NM2

 

 

1,361

 

 

 

NM2

 

 

Other

 

(50

)

 

 

(15

)

 

NM2

 

 

(126

)

 

 

(89

)

 

NM2

 

 

Total Operating Gain1

$

605

 

 

$

1,098

 

 

(44.9

)%

 

$

6,360

 

 

$

5,999

 

 

6.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

1.3%

 

5.6%

 

(430) bp

 

7.3%

 

10.8%

 

(350) bp

 

 

Government Business

0.9%

 

3.6%

 

(270) bp

 

3.4%

 

3.3%

 

10 bp

 

 

IngenioRx

6.2%

 

 

NM2

 

6.2%

 

—%

 

NM2

 

 

Total Operating Margin1

1.9%

 

4.0%

 

(210) bp

 

5.3%

 

5.8%

 

(50) bp

 

 

 

 

 

 

 

 

 

 

 

 


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