CI Cigna Group

Health insurer Anthem Inc. on Wednesday posted a better-than-expected increase in its top and bottom lines in the first quarter of the year, driven in part by strong performance in its government-business segments.

The company also said it now expects revenue for the 2016 year in the range of $81 billion to $82 billion, up from its previous forecast for $80 billion to $81 billion. It backed its view of adjusted earnings of greater than $10.80 a share.

In the latest quarter, medical enrollment grew 2.8% from a year earlier to about 39.6 million as of March 31. Revenue in the government-business segment jumped 14% to $10.8 million.

Anthem said the increase was driven by improved medical cost performance in the Medicare business and enrollment increases in the Medicaid business.

Enrollment in its commercial and specialty business increased 2.1% from a year earlier to 30.56 million members, while members in its government business grew 4.9% to 9.04 million.

Over all, the company posted a profit of $703 million, or $2.63 a share, down from $865.2 million, or $3.09 a share, a year earlier. On an adjusted basis, earnings rose to $3.46 from $3.14. Revenue climbed 6.5% to $20.29 billion.

Analysts surveyed by Thomson Reuters forecast per-share earnings of $3.32 on revenue of $19.86 billion.

Medicaid membership rose 7.6% from the prior-year period to 6.05 million in the quarter. Revenue from premiums grew 7.8% to $18.99 billion.

Anthem's medical benefit ratio—the amount of premiums used to pay patient medical costs—was 81.8% in the first quarter, up from 80.2% a year earlier. The climb was largely driven by the extra calendar day in the quarter, a higher ratio in the Medicaid and individual businesses and higher membership in the Medicaid business, which carries a higher benefit expense ratio than the company average.

In July, Anthem agreed to buy Cigna Corp. for $48 billion, capping months of merger frenzy among top U.S. health insurers that is set to reshape the industry. The deal combines the second- and fifth-largest health insurers by revenue and would create a company with a huge footprint in commercial insurance, the type of coverage provided to employers and consumers.

The biggest companies in the field are seeking more cost efficiency and scale as the health-care landscape changes because of the Affordable Care Act and other factors.

Shares of Anthem, inactive premarket, have risen 12% over the past three months.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

April 27, 2016 07:35 ET (11:35 GMT)

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