Anthem profit tops expectations as people delay medical care during pandemic

(Reuters) - Anthem Inc ANTM.N reported a quarterly profit that topped Wall Street expectations on Wednesday, aided by lower medical costs as people delayed non-essential procedures during the first surge of the U.S. coronavirus outbreak.

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Shares of the second largest U.S. health insurer rose more than 6%.

As states across the country reopened for business, patients began to catch up on delayed surgeries, Anthem said, echoing comments made by larger rival UnitedHealth Group Inc UNH.N earlier this month.

Healthcare utilization recovered to about 90% of pre-pandemic levels in June, after falling 40% below expectations in April, Anthem said.

We have seen an increase in procedures such as joint replacement surgeries, Chief Executive John Gallina said on a conference call.

“Some things can only be delayed so long until the pain or the severity is so significant that the person is going to go in and actually get the procedure,” he said.

As a result, Anthem expects to have to pay out more for medical services in the second half of 2020.

For the quarter, the percent of premiums collected that went to medical expenses improved to 77.9% from 86.7% a year earlier.

Anthem maintained its full-year adjusted profit outlook of more than $22.30 per share but did not provide other forecasts, citing uncertainty from the pandemic. The company last month said it expected to generate about 70% of those profits in the first half of the year.

When comparing Anthem’s record financial performance in the first half of 2020 with a stock price that has underperformed peers so far this year, it is fair to say investors are pessimistic about future profits, Stephens analyst Scott Fidel said.

Operating revenue rose 16% to $29.18 billion, slightly below Wall Street estimates, as members who lost jobs moved to Medicaid or Obamacare plans from higher-margin commercial health plans. The company expects further attrition as unemployment grows.

Adjusted profit of $9.20 per share topped analyst expectations by 33 cents, according to Refinitiv data.

Reporting by Manojna Maddipatla in Bengaluru and Caroline Humer in New York; Editing by Shinjini Ganguli and Bill Berkrot