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Anthem enrollment fuels second-quarter profits

Anthem enrollment fuels second-quarter profits

Anthem Inc. reported strong revenue growth and double-digit profit growth in the second quarter of 2015, primarily due to improved performance and enrollment gains in its government segments, the company announced on Wednesday.

The Indianapolis-based health insurer's second-quarter net income grew by 17.5%, to $859 million in 2015 from $731 million in 2014.

Anthem collected $20.02 billion in total revenue in the three months ending June 30, 2015, an increase of 8.3% over results from the same period last year.

During a conference call with investment analysts Wednesday, executives at Anthem said the revenue growth was driven by increases in the company's Medicaid and commercial self-funded enrollments through the first six months of this year, additional premium revenue to cover its overall medical cost trend and new fees associated with health care reform.

“We're pleased with the overall results through the first half of 2015, which we think bode well for the full year,” Wayne DeVeydt, Anthem's executive vice president and chief financial officer, said during the conference call. “We continue to see 2015 as a year of continued growth across our business.”

Anthem — which figures to become the nation's largest health insurer through its proposed acquisition of rival Cigna Corp., announced last week grew its government-based, which includes Medicare, Medicaid and federal employees, operating revenue by 25.7% in the second quarter of 2015, and improved the operating margin of that segment to 5.9%, up from 3.8% in the second quarter of 2014.

“Our government business segment had another strong quarter, adding 147,000 members, driven by strong organic growth in Medicaid,” Joe Swedish, Anthem's president and CEO, told investment analysts.

Mr. Swedish said Anthem's government membership growth through the first half of the year has exceeded the company's expectations, growing by approximately 630,000 members since the end of 2014.

“The pipeline of opportunity for our government business remains substantial,” Mr. Swedish said. “We continue to expect $65 billion of new business to be awarded by the end of 2018, split about evenly between traditional Medicaid and new populations in specialized services.”

Anthem executives said the government segment's results were also aided by improved operations in its Medicare business.

“Medicare is actually performing quite well,” Mr. DeVeydt said. “A number of the items that we were fixing in previous years, including risk adjusters and other issues are no longer impacting that business.”

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