Anthem, Inc. (NYSE:ANTM) Q4 2014 Earnings Conference Call - Final Transcript

Jan 28, 2015 • 08:30 am ET


Anthem, Inc. (NYSE:ANTM) Q4 2014 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by, and welcome to the Anthem Conference Call. At this time all lines are in a listen-only mode. Later there will be a question-and-answer session; instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to the Company's management.

Doug Simpson

Good morning and welcome to Anthem's fourth quarter 2014 earnings call. This is Doug Simpson, Vice President of Investor Relations. Presenting today are Joe Swedish, President and Chief Executive Officer and Wayne DeVeydt, Executive Vice President and CFO. Joe will start with a discussion of our fourth quarter 2014 financial results and the macro backdrop, and then Wayne will review the quarter's financial highlights in more detail and provide additional commentary on our 2015 outlook, Q&A will follow Wayne's remarks.

During the call, we will reference certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available on our website at (Forward-Looking Cautionary Statements)

I will now turn the call over to Joe.

Joe Swedish

Thank you, Doug, and good morning. In our first quarterly discussion since our corporate name change from WellPoint to Anthem, we're pleased to announce strong 2014 adjusted earnings per share of $8.85 as we pre-viewed two weeks ago with membership and margins tracking well in the fourth quarter.

We ended 2014 with 37.5 million members, which was about 250,000 higher than the midpoint of our previously guided range. For the full-year 2014, we added over 1.8 million members, representing growth of 5.2% versus year-end of 2013. Our growth was balanced in 2014 as we added 815,000 Medicaid members, 607,000 national members, and 412,000 local group members. With attrition in the fourth quarter, as expected, our public exchange enrollment stands at 707,000 members at the end of the year.

Driving our strong fourth quarter results were solid contributions from both our government and commercial divisions. Specifically in the fourth quarter, we reported earnings per share of $1.80 on a GAAP basis to $1.73 on an adjusted basis. Our GAAP earnings per share and adjusted earnings per share increased from the fourth quarter of 2013 driven by an improved medical loss ratio, administrative expense control and opportunistic capital deployment. As we discussed in our preview two weeks ago, we did see an adverse impact in the quarter from the delay of certain Medicaid revenues into 2015, a possibility we discussed on the third quarter call. Additionally, the flu season started earlier than expected, however, these issues were largely offset by the positive underlying financial performance of the business and the recognition of reimbursement of the 2014 health insure fee in Texas.

Further supporting the quality of our earnings, we generated strong operating cash flow of approximately $305 million in the quarter, bringing our year-to-date cash flow to approximately $3.4 billion. We've remained focused on our capital deployment strategies as well, repurchasing over 2.8 million shares during the quarter for approximately $343