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Healthcare Earnings to Watch this Week: AET, ANTM, CNC

The first-quarter earnings season is in full swing with more than 71 companies of the S&P 500 having reported already, as per our Earnings Trends report. Revenues increased 0.6% but total earnings declined 9%. However, the beat ratio is 80.3% for the bottom line and 54.9% for the top line.

Coming to the Medical sector, 9.3% has already reported. These companies saw total earnings improvement of 7.7% on 15.1% higher revenues – much better than the S&P 500 figures. Also the beat ratio of 100% for the bottom line and 80% for the top line is better than the S&P index.

Overall, the Medical sector is expected to deliver 1.9% earnings growth on 9% higher revenues in the first quarter. This compares favorably with the projected 9.7% earnings decline on 0.8% lower revenues in the S&P 500 index.

Healthcare is part of the broader medical sector. Let’s see what factors might have influenced its performance in the first quarter.

The exchange business seems to have been in good shape for some while it brought bad news for some others. UnitedHealth Group UNH has decided to exit the exchange business by 2017 if it remains unprofitable and has in fact already announced its exit from a few exchanges.

While diversified product offerings, increasing membership and expansion into international markets are likely to have beefed up revenues, cost management should give the bottom line a boost.

However, healthcare companies continued to face pressures from pricing, regulatory compliance costs, rising medical costs and competition.

With more than 175 index members releasing results from Apr 25–29, let’s find out what’s in store for three major healthcare providers that will report first-quarter earnings results this week.

Anthem Inc. ANTM is one of the largest publicly traded managed care organizations. The company is also the largest Blue Cross Blue Shield plan provider in the United States. Anthem delivered a 7.32 % negative surprise last quarter. The company has an http://www.zacks.com/earnings/earnings-surprise-predictions/">Earnings ESP of +0.30% and a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the quarter is pegged at 34 cents.

Anthem is likely to have benefitted from increasing membership thanks to the expansion of the Affordable Care Act. While Medicare business remained strong, medical cost trends are likely to have been favorable. However, individual business likely has remained soft. (Read more: Anthem: Stock Poised to Beat on Q1 Earnings)

With respect to the surprise trend, Anthem surpassed expectations in three of the last four quarters, with an average beat of 9.93%.

Aetna Inc, AET Aetna, Inc., based in Hartford, CT, was founded more than 150 years ago, and is a provider of healthcare, dental, pharmacy, group life, disability, and long-term care benefits. The company delivered a 14.17% positive surprise in the last quarter. For the first quarter of 2016, Aflac has an Earnings ESP of -1.35%. It currently carries a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the quarter is pegged at $2.22.

Aetna is expected to have benefitted from its strong Medicare Advantage. The ACA-compliant businesses will see improved margins in the first quarter while membership is expected to have increased. However, medical cost may have risen. Also, the absence of share buyback may dent the bottom line. (Read more: Aetna Q1 Earnings: Is a Surprise in Store for Stock?)

With respect to the surprise trend, Aetna surpassed expectations in each of the last four quarters, with an average beat of 13.57%.

Centene Corp. CNC is a provider of programs and services to under-insured and uninsured individuals in the United States. Centene delivered an 11.76% positive surprise in the last quarter. The company has an Earnings ESP of -4.05%   and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for the quarter is pegged at 74 cents.

Centene is poised to benefit from its diversified product portfolio and strong membership alongside a favorable exchange business. However, business seasonality, higher general and administrative costs ratio and interest expense likely to weigh on the results. (Read more: Centene Q1 Earnings: Surprise in Store for Stock?

With respect to the surprise trend, Centene surpassed expectations in each of the last four quarters, with an average beat of 8.4%.

Keep an eye on our full earnings articles to see how these S&P 500 members finally fared.

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AETNA INC-NEW (AET): Free Stock Analysis Report
 
UNITEDHEALTH GP (UNH): Free Stock Analysis Report
 
ANTHEM INC (ANTM): Free Stock Analysis Report
 
CENTENE CORP (CNC): Free Stock Analysis Report
 
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