(Adds company comments, analyst comment, background)
Jan 27 (Reuters) - Health insurer Anthem Inc said on Wednesday it expects its 2021 profit to take a hit from the ongoing COVID-19 pandemic on its business that sells government-backed Medicare plans.
Shares of the company fell 6.6% to $291.85 in early trade, after Anthem said it sees a net negative impact of 50-70 cents per share on its 2021 adjusted profit.
Cowen analyst Charles Rhyee said Anthem’s outlook “disappoints” as it fell below the company’s long-term growth outlook of 12%-15%.
Anthem expects to earn over $24.50 per share this year, compared with Street estimates of $25.34 per share.
This implies a profit growth of 9% or more from 2020, compared to the earlier forecast of low-end of 12%-15% or the implied $25, according to Mizuho analyst Ann Hynes.
The company also said its 2021 results could be impacted by the pace of COVID-19 vaccine rollout and its effectiveness.
If the vaccine is extremely successful, patient use of non-COVID related healthcare services would go up, Anthem Chief Financial Officer John Gallina said on a post-earnings conference call.
Anthem’s outlook falls in line with that of larger rival UnitedHealth, which last month gave its 2021 profit estimates below analysts’ expectations, and predicted a $1.80 per share hit to its profit for the year due to COVID-19 treatment and testing costs.
Anthem posted adjusted profit of $2.54 per share for the fourth quarter, beating analysts’ average estimate of $2.52, according to Refinitiv IBES estimates.
The company, which saw a slightly improved benefits expense ratio of 88.9% in the quarter versus 89% a year ago, said it benefited from lower non-COVID costs that offset testing and treatment costs related to virus infections. (Reporting by Trisha Roy and Manojna Maddipatla in Bengaluru; Editing by Shinjini Ganguli)