But last week, the Justice Department filed a pair of lawsuits in a Washington, D.C., federal court challenging Anthem’s proposed acquisition of Cigna and Aetna Inc.’s planned combination with Humana Inc., alleging the mergers would harm consumers, employers and health-care providers with an unacceptable reduction in competition.
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Not only would a combined Anthem-Cigna “help stabilize pricing in this volatile market”, it would expand to nine additional state markets in which neither company now participates, potentially bringing in as many as a million new enrollees, he said.
Anthem Inc. boosted its revenue guidance for the year as results in the most recent quarter topped expectations, benefiting from continued strength in the health insurer’s government-business segments.
Anthem’s agreement last July to buy Cigna capped months of merger frenzy among top USA health insurers that is set to reshape the industry.
Sicker customers in Affordable Care Act plans led Anthem to say it now expects to lose money on those policies this year, though premium increases may help the insurer post profits next year.
Industry analysts have expressed serious doubts that the Cigna deal will go through. The insurer had previously said it was planning to break even on the ACA, also known as Obamacare, in 2016. “If they at least reach break even, that’s a big improvement”, said Leerink Partners analyst Ana Gupte.
“I think it’s dead”, Gupte said.
Morningstar analyst Vishnu Lekraj said, “There’s a very small chance that it will actually get done in its current form”. The rise was mostly owing to medical cost experience exceeding the net impact of annual premium rate adjustments and higher membership in the Medicaid business, which carries a higher benefit expense ratio than the company average.
Analysts surveyed by Thomson Reuters had predicted per-share earnings of $3.23 on $20.57 billion in revenue.
The Cigna acquisition would create the largest US health insurer by membership, with about 53 million members, and make it the leader in employer-sponsored health insurance.
Anthem reaffirmed its forecast for full-year adjusted earnings of greater than $10.80 per share, and raised its operating revenue outlook by $1.5 billion to $82.5 billion to $83.5 billion, reflecting strong enrollment trends.
Anthem sees its medical loss ratio, the percent of premiums it spends on claims, to be about 84.9 percent.
Revenue increased about 7.2 percent to $21.46 billion.
Memberships in its government business, which includes Medicare and Medicaid plans, increased 6.5 percent.
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Medical membership grew by 148,000 members during the quarter and totaled 39.8 million as of June 30, fueled by membership growth in the national and local group businesses, but offset by lower enrollment in the exchange business.
