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Category: Stock Market and Anthem Inc.
Date: 15 October 2019 Stock Price: $234.82 We take a look at the 2nd quarter earnings report of their 2019 fiscal year of Anthem Inc. a provider of health and medical aid plans that currently serves more than 78 million people.
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About Anthem Inc.
Anthem is a leading health benefits company dedicated to improving lives and communities, and making healthcare simpler. Through its affiliated companies, Anthem serves more than 78 million people, including over 40 million within its family of health plans. We aim to be the most innovative, valuable and inclusive partner.
- One in eight Americans receives coverage for their medical care through Anthem's affiliated plans.
- We offer a broad range of medical and specialty products.
Overview of Anthem's latest earnings report
Data below refers to quarterly data unless specified otherwise:
- Total revenues: $25.446 billion (up from $22.944 billion for the same period of the previous year)
- Total revenues increased by 11% over the last 12 months
- Total expenses: $24.013 billion (up from $21.440 billion for the same period of the previous year)
- Total expenses increased by 12% over the last 12 months
- Net income: $1.139 billion (up from $1.045 billion for the same period of the previous year)
- Diluted earnings per share: $4.36 (up from $3.98 for the same period of the previous year)
- PE ratio of Anthem Inc.: 13.5
- Diluted weighted-average shares outstanding: 261 million (down from 264.5 million for the same period of the previous year)
- Cash and cash equivalents: $4.078 billion
- Cash and cash equivalents per share: $15.62
- Cash and cash equivalents makes up 6.65% of Anthem's market capital
- Cash and cash equivalents makes up 5.17% of Anthem's total assets
- Premiums receivable: $4.751 billion
- Premiums receivable makes up 6.26% of Anthem's total assets
- Goodwill: $20.5 billion
- Goodwill per share: $78.54
- Goodwill makes up 27% of Anthem's total assets
- Stockholders equity in Anthem Inc.: $30.793 billion
- Stockholders equity per share in Anthem: $117.98
- So Anthem Inc. is trading at 2 times its stockholders equity per share which is within the expected range of between 2 and 4 most firms tend to trade at
- Cash generated from operations (for the 6 months): $3.067 billion
- Cash generated from operations per share (for the 6 months): $11.75
Anthem's management commentary on the results and fiscal guidance provided
Indianapolis, Ind. – July 24, 2019 – Anthem, Inc. (NYSE: ANTM) reported second quarter financial results driven by strong revenue growth and steady progress on the implementation of IngenioRx.
"Our second quarter results reflect solid top line growth across our businesses and reinforce our commitment to innovation and performance execution,” said Gail K. Boudreaux, President and CEO. “We began successfully migrating members to IngenioRx on May 1 and have received transition approvals from all of our 14 Blue states and the majority of our Medicaid states. We are tracking ahead of expectations, and as a result, we now expect IngenioRx to achieve the upper end of our $0.70 - $0.90 guidance.” “Contributing to the momentum of IngenioRx, we are pleased to announce our first external pharmacy contract win with Blue Cross of Idaho beginning January 1, 2020, further demonstrating the strength of our pharmacy offering and our ability to deliver more affordable care with a simplified consumer experience. I am excited about our future growth opportunities as we continue to leverage our growing suite of integrated solutions, including our recently announced acquisition of Beacon Health Options, to create greater value for the customers, members and care providers that we are privileged to serve.”
Membership:
Medical enrollment totaled approximately 40.9 million members at June 30, 2019, an increase of 1.3 million, or 3.3 percent, from June 30, 2018. Total fully insured enrollment grew by 1.1 million, or 7.7 percent, and self-funded enrollment increased by 188 thousand, or 0.7 percent. Government Business enrollment increased by 1.0 million, driven by growth in Medicaid and Medicare. Commercial & Specialty Business enrollment increased by 290 thousand, driven by growth in all lines of business. Medical enrollment increased 9 thousand sequentially, reflecting growth in Medicaid and Medicare, partially offset by declines in Commercial & Specialty Business enrollment.
Outlook Full Year 2019:
"Our second quarter results reflect solid top line growth across our businesses and reinforce our commitment to innovation and performance execution,” said Gail K. Boudreaux, President and CEO. “We began successfully migrating members to IngenioRx on May 1 and have received transition approvals from all of our 14 Blue states and the majority of our Medicaid states. We are tracking ahead of expectations, and as a result, we now expect IngenioRx to achieve the upper end of our $0.70 - $0.90 guidance.” “Contributing to the momentum of IngenioRx, we are pleased to announce our first external pharmacy contract win with Blue Cross of Idaho beginning January 1, 2020, further demonstrating the strength of our pharmacy offering and our ability to deliver more affordable care with a simplified consumer experience. I am excited about our future growth opportunities as we continue to leverage our growing suite of integrated solutions, including our recently announced acquisition of Beacon Health Options, to create greater value for the customers, members and care providers that we are privileged to serve.”
Membership:
Medical enrollment totaled approximately 40.9 million members at June 30, 2019, an increase of 1.3 million, or 3.3 percent, from June 30, 2018. Total fully insured enrollment grew by 1.1 million, or 7.7 percent, and self-funded enrollment increased by 188 thousand, or 0.7 percent. Government Business enrollment increased by 1.0 million, driven by growth in Medicaid and Medicare. Commercial & Specialty Business enrollment increased by 290 thousand, driven by growth in all lines of business. Medical enrollment increased 9 thousand sequentially, reflecting growth in Medicaid and Medicare, partially offset by declines in Commercial & Specialty Business enrollment.
Outlook Full Year 2019:
- GAAP net income is now expected to be greater than $18.34 per share, including approximately $0.96 per share of net unfavorable items. Excluding these items, adjusted net income is now expected to be greater than $19.30* per share.
- Medical membership is now expected to be in the range of 41,000,000 - 41,300,000. Fully-insured membership is expected to be in the range of 15,600,000 - 15,800,000 and self-funded membership is expected to be in the range of 25,400,000 - 25,500,000.
- Operating revenue is now expected to be approximately $102.0 billion, including premium revenue of $93.0 billion - $94.0 billion.
- Benefit expense ratio is now expected to be in the range of 86.2% - 86.5%.
- SG&A ratio is now expected to be in the range of 13.2% - 13.5%.
- Cost of products sold is expected to be $1.6 billion - $1.8 billion.
- Operating cash flow is expected to be greater than $5.2 billion.
Anthem Inc. (NYSE: ANTM) stock price history
The image below, obtained from Google, shows the stock price history of Anthem Inc. over the last 5 years. And it's been a very good time for Anthem Inc. stockholders. 5 years ago the stock was trading at around $115 a stock and its currently trading at $234.82 a stock. That's a return of 104.2% returned to Anthem Inc. stockholders over the last 5 years.
The stock of Anthem Inc. is trading at a lot closer to its 52 week low of $227.16 than it is to its 52 week high of $317.99 which to us is a clear indication that the momentum and sentiment of Anthem Inc. stock is very negative at this point in time.
The stock of Anthem Inc. is trading at a lot closer to its 52 week low of $227.16 than it is to its 52 week high of $317.99 which to us is a clear indication that the momentum and sentiment of Anthem Inc. stock is very negative at this point in time.
Recent coverage of Anthem Inc.
The extract below discusses the latest regarding Anthem acquiring WellCare's Missouri and Nebraska MedicAid plans as obtained from TheStreet.com
ST. LOUIS and TAMPA, Fla., Sept. 26, 2019 /PRNewswire/ -- Centene Corporation (NYSE: CNC) ("Centene") and WellCare Health Plans, Inc. (NYSE: WCG) ("WellCare") announced today that, in connection with the previously announced merger agreement between Centene and WellCare, a subsidiary of WellCare has entered into a definitive agreement under which Anthem, Inc. (NYSE: ANTM) ("Anthem") will acquire WellCare's Missouri and Nebraska Medicaid plans. The closing of the transaction with Anthem is subject to U.S. federal antitrust clearance, receipt of Missouri and Nebraska state regulatory approvals and other customary closing conditions, as well as the closing of the Centene - WellCare transaction. In connection with the transaction, the companies are developing a plan to ensure that there is a smooth transition for members. "This agreement represents an important milestone toward completing the combination of Centene and WellCare," said Michael F. Neidorff, Centene's Chairman, President and Chief Executive Officer. "This transaction demonstrates the strength and quality of WellCare's Medicaid healthcare plans, and we are pleased to have reached an agreement where the WellCare employees who operate and manage these plans will become part of Anthem and continue providing members and communities with solutions to help them achieve better health outcomes.".
ST. LOUIS and TAMPA, Fla., Sept. 26, 2019 /PRNewswire/ -- Centene Corporation (NYSE: CNC) ("Centene") and WellCare Health Plans, Inc. (NYSE: WCG) ("WellCare") announced today that, in connection with the previously announced merger agreement between Centene and WellCare, a subsidiary of WellCare has entered into a definitive agreement under which Anthem, Inc. (NYSE: ANTM) ("Anthem") will acquire WellCare's Missouri and Nebraska Medicaid plans. The closing of the transaction with Anthem is subject to U.S. federal antitrust clearance, receipt of Missouri and Nebraska state regulatory approvals and other customary closing conditions, as well as the closing of the Centene - WellCare transaction. In connection with the transaction, the companies are developing a plan to ensure that there is a smooth transition for members. "This agreement represents an important milestone toward completing the combination of Centene and WellCare," said Michael F. Neidorff, Centene's Chairman, President and Chief Executive Officer. "This transaction demonstrates the strength and quality of WellCare's Medicaid healthcare plans, and we are pleased to have reached an agreement where the WellCare employees who operate and manage these plans will become part of Anthem and continue providing members and communities with solutions to help them achieve better health outcomes.".
Anthem Inc. (NYSE: ANTM) latest stock valuation
So what is Anthem Inc. stock worth based on the release of their latest earnings report and their outlook for the rest of their 2019 fiscal year? Based on Anthem Inc. latest earnings report and their outlook our valuation models provide a target (full value) price for Anthem Inc. stock at $293.40 a stock. We therefore believe that the stock of Anthem Inc. is undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $293.40 Therefore we believe a good entry point into Anthem Inc. stock is at $264 or below. And since Anthem Inc. is trading at well below our suggested entry point into the stock we rate Anthem Inc. stock as a strong buy.
We believe the release of Anthem Inc. 3rd quarter 2019 earnings report on the 23 October 2019 will provide guidance for the future direction of the stock price. And if there are no nasty surprises in their 3rd quarter 2019 earnings release, we expect the stock price of Anthem Inc. to kick upwards to levels closer to our target (full value) price in coming weeks and months.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $293.40 Therefore we believe a good entry point into Anthem Inc. stock is at $264 or below. And since Anthem Inc. is trading at well below our suggested entry point into the stock we rate Anthem Inc. stock as a strong buy.
We believe the release of Anthem Inc. 3rd quarter 2019 earnings report on the 23 October 2019 will provide guidance for the future direction of the stock price. And if there are no nasty surprises in their 3rd quarter 2019 earnings release, we expect the stock price of Anthem Inc. to kick upwards to levels closer to our target (full value) price in coming weeks and months.
Next earnings release date for Anthem Inc.
It is expected that Anthem Inc. (NYSE: ANTM) 3rd quarter 2019 earnings report will be released on 23 October 2019.