Anthem Inc. on Wednesday became the second major U.S. health insurer to raise its full year profit forecast, after beating third-quarter profit estimates on the back of lower-than-expected medical costs.
The number two U.S. health insurer raised its outlook for the third time this year, saying it now expected 2021 adjusted profit to exceed $25.85 per share, up from an earlier forecast of more than $25.50.
The results confirm Anthem and its rivals were conservative with their medical cost assumptions after a bumpy second quarter, Cantor Fitzgerald analyst Steven Halper said in a note.
Indianapolis-based Anthem said its benefit expense ratio—the percentage of premiums paid for medical services—was 87.7 percent in the third quarter, better than the 88.38 percent forecast by analysts according to Refinitiv IBES data.
Its shares were up about 1 percent in light pre-market trade.
Health insurers’ medical costs have been in flux since the COVID-19 outbreak, with lower costs linked to elective procedure delays being offset by a jump in direct COVID-19 treatment and testing costs.
Industry leader UnitedHealth Group last week also raised its full year profit outlook while predicting smaller impact from the pandemic on earnings next year as infections decline and more people get vaccinated.
Excluding one-time items, Anthem earned $6.79 per share in the quarter ended Sept. 30, ahead of the average analyst estimate of $6.37.
The company also beat Wall Street quarterly revenue estimates, helped by growth in its government health plans and IngenioRx pharmacy benefit management businesses.
