Anthem Announces Pharmacy Contract and 2019 Earnings Outlook

Shares of health insurer Anthem Inc. (NYSE: ANTM) soared to a record high Wednesday after it announced plans to roll out its new pharmacy benefits management unit IngenioRx sooner than expected and issued earnings guidance for this year that also beat forecasts.

“IngenioRx will improve our ability to integrate pharmacy benefits within our already strong medical and specialty platform driving greater value for the consumer and increasing transparency,” said Anthem Chief Executive Officer Gail Boudreaux on the Company’s earnings conference call. “To date we have completed more than 15 months of preparation against our transition goal. The results of our operational testing have been very positive giving us confidence in our readiness to launch.”

Anthem’s shares soared as much as 12.2% to an all-time, intraday high of USD 305.99 per share.

Anthem contracted with CVS Health to help launch its own pharmacy benefits manager in 2020, after a public dispute with its previous contractor Express Scripts over high fees. Anthem estimates once the transition to IngenioRx is completed next year, it will see roughly USD 4 Billion in annual savings. Executives pledged to return at least 20% of those savings to shareholders.

Executives were less specific in response to analyst questions about how much customers would see in savings. Pharmacy benefit managers are a type of middleman working between the drug makers and pharmacies and consumers.

“Our customers will see value upon conversion to the new platform, so we think that there’s a significant opportunity to drive meaningful value for them in terms of affordability as well as the member and consumer experience,” said Boudreaux.

Anthem shares surged after reporting adjusted fourth quarter profits of USD 2.44 per share, 24 cents above the Refinitiv average analyst estimate of USD 2.20 per share. Revenues were slightly below expectations at USD 23.3 Billion.

The stronger profits were driven by lower administrative fees and medical costs than estimated, and higher premium revenues than expected.

For 2019, Anthem is now forecasting annual earnings of more USD 19 per share, and revenues over USD 100 Billion.

2 Comments
  1. Frank Blaze 5 months ago
    Reply

    In October 2017, $ANTM had first revealed its plan to takes pharmacy business in house, and with a launch period of 2020.

  2. Paul Monica 5 months ago
    Reply

    For how well the insurance companies do, it baffles me on why politicians only go after drug pricing. It’s insane how much money they make and seems no one questions it. $ANTM $UNH

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