Anthem Inc. reported fourth-quarter 2016 net income of $368.4 million, or $1.37 per share, up from $180.9 million, or 68 cents per share, in the year-ago quarter.
Results for the fourth quarter included net negative adjustment items of 39 cents per share, compared with net negative adjustment items of 46 cents per share in the fourth quarter of 2015.
Excluding these items, adjusted EPS for the quarter was $1.76 per share, up from $1.14 per share in the year-ago period.
The S&P Capital IQ consensus normalized EPS estimate for the quarter was $1.76.
Total operating revenue increased 7.3% year over year to $21.48 billion from $20.02 billion, reflecting premium increases to cover overall cost trends and higher enrollment in the Medicaid and commercial self-funded businesses. The increases were partially offset by a decline in local group fully insured enrollment.
Total medical membership was 39.9 million at Dec. 31, 2016, up from 38.6 million at Dec. 31, 2015. Medicaid enrollment increased by 613,000 in the fourth quarter. Commercial and specialty business enrollment increased by 706,000 medical members due to growth in national and local group self-funded businesses.
The benefit expense ratio increased 20 basis points to 87.2% for the quarter, from 87.0% in the prior-year period. The increase was driven by higher medical cost experience in the Medicaid business, exceeding the net impact of annual premium rate adjustments and higher membership, which carries a higher benefit expense ratio than the consolidated company average. The impact of higher medical cost experience in the individual business also contributed to the increase.
The selling, general and administrative expense ratio was 15.2% for the quarter, down 110 basis points from 16.3% in the year-ago period. The company attributed the decrease to the impact of lower administrative costs resulting from expense efficiency initiatives and higher operating revenue.
Anthem did not purchase any common shares during the fourth quarter due to the pending acquisition of Cigna Corp.
For the full year 2016, the company reported net income of $2.47 billion, or $9.21 per share, down from $2.56 billion, or $9.38 per share, in 2015. Adjusted EPS for the year was $11.00, compared with $10.16 per share in the previous year.
The S&P Capital IQ consensus normalized EPS estimate for 2016 was $11.00.
Anthem also issued guidance for the full year 2017. The company expects net income to be greater than $11.11 per share, including about 39 cents per share of net unfavorable items.
Excluding these items, adjusted net income is projected to be greater than $11.50 per share for 2017.
The S&P Capital IQ consensus normalized EPS estimate for 2017 is $11.57.
Medical membership is expected to be in the range of 40.1 million to 40.3 million. Fully insured membership is projected to be between 15.1 million and 15.2 million, and self-funded membership is expected to be in the range of 25.0 million to 25.1 million.
The company expects operating revenue for 2017 in the range of $86.5 billion to $87.5 billion. Benefit expense ratio is expected to be 87.0% plus or minus 30 basis points. Selling, general and administrative expense ratio is projected to be 13.3% plus or minus 30 basis points.
The outlook for 2017 does not include any benefits or transaction costs associated with the pending acquisition of Cigna.