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Oct 25 (Reuters) - Anthem Inc reported better-than-expected profit in the third quarter as United States' second biggest health insurer added more members in its commercial and specialty business and increased its premium rates.
The company, which has reduced its presence in the Obamacare markets, raised its 2017 adjusted earnings forecast to $11.90 to $12.00 per share, up from its previous expectation of earnings of greater than $11.70.
Anthem said on Tuesday it would acquire America's 1st Choice, a privately held for‐profit Medicare Advantage company, expanding its presence in Florida.
Medicare Advantage, an alternative to the standard fee-for-service Medicare in which private insurers manage health benefits, is the fastest growing form of government healthcare.
Anthem's "solid beat & raise" third quarter is likely to quell investor fears ahead of the quarter, which Leerink analysts expect will bid up the stock.
Anthem's shares were up 4 percent at $203.53 in light premarket trading on Wednesday.
Anthem's earnings come two days after a U.S. judge appeared skeptical toward a request from several states that want him to order the Trump administration to continue payments to health insurers under Obamacare that help cover out-of-pocket medical expenses for low-income Americans.
Earlier this month, Trump terminated the payments but has alternately supported, and dismissed, an effort by Republican and Democratic senators that would reinstate the subsidies for two years.
Net income rose to $746.9 million, or $2.80 per share, in the third quarter ended Sept. 30, from $617.8 million, or $2.30 per share, a year earlier.
Excluding items, the company earned $2.65 per share, ahead of analysts expectation of $2.42 per share, according to Thomson Reuters I/B/E/S.
Total revenue rose nearly 5 percent to $22.43 billion, above analysts estimate of $22.05 billion.
Anthem's benefit expense ratio, a metric that measures an insurer's expenditure on claims against the premiums it earns, came in at 87 percent, up from 85.5 percent in the year-ago period. The lower the ratio, the better it is for insurers.
This increase was largely driven by the impact of the one year waiver of the health insurance tax in 2017, the company said. (Reporting by Ankur Banerjee in Bengaluru; Editing by Supriya Kurane)