Anthem, Indianapolis, saw its operating income rise 32% in the third quarter, its last period as a not-for-profit mutual company.
The health insurer, which made its market debut on the New York Stock Exchange last month, reported an operating profit of $78.2 million, or 76 cents per share, in the quarter ended Sept. 30, up from $59.2 million, or 57 cents per share, in the year-ago period. Revenue climbed 12% to $2.53 billion, helped by membership growth and premium increases.
Anthem, formerly Blue Cross and Blue Shield of Indiana, has been on an eight-year buying binge and is now one of the nation's largest health insurers, operating Blues plans in Colorado, Connecticut, Indiana, Kentucky, Maine, Nevada, New Hampshire and Ohio. What's more, it's seeking regulatory approval to acquire 715,000-member Blue Cross and Blue Shield of Kansas, the state's largest insurer, for $370 million.
But Anthem, unlike many of its competitors, has managed to grow internally as well, reporting a 12% increase in membership over the year before. It now serves 7.8 million members.
With one-time gains included, the company's third-quarter net income jumped 76% to $111.5 million, or $1.08 per share, from $63.5 million, or 62 cents per share, in the year-ago period. Net income for the nine months ended Sept. 30 rose 65% to $254.5 million, or $2.47 per share.
Commercial premium yields rose 14% to 15% during the 12 months ended Sept. 30. Medical costs for commercial plans climbed at a slightly slower rate-12% to 13%. Outpatient and pharmacy costs continued to be the main drivers, Anthem officials said.
On Oct. 29, Anthem completed the biggest initial public offering by a health insurer since the HMO boom of the early 1990s, raising $1.73 billion through the sale of 48 million shares at $36 apiece. With a market value of more than $4 billion, the Blues-plan consolidator is now the fifth-largest publicly traded managed-healthcare company behind Aetna, Cigna Corp., UnitedHealth Group and WellPoint Health Networks. The offering was the final step in Anthem's conversion from a mutual insurance company owned by policyholders to a public company owned by investors.