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Modest Commercial Enrollment Growth to Help Anthem in 1Q15

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Net income

Analysts projected that Anthem’s revenue and net income will be higher in 1Q15 compared to 1Q14. In addition to strong Medicaid enrollments, the company has projected a decent growth in its commercial enrollments, especially in the individual segment.

The above graph shows that Anthem’s net income margins in 1Q15 are estimated to be 2.7% higher than the margins in 1Q14. This projection is in sync with the company’s expectation of strengthened Medicaid and commercial business in 2015.

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Commercial business

In 2015, Anthem (ANTM) expects to witness a modest enrollment growth of about 2% in the individual exchange business. This is an improvement from the decline of 121,000 members the company saw in its individual business in 4Q14.

In 2015, the company also expects to witness growth in its employer-sponsored national group business of about 200,000 members. The national group, which forms about 33.2% of Anthem’s total membership, consists of multi-state employers that have more than 5,000 employees, and that are headquartered mostly in the Anthem service area. These large employers are also expected to increasingly enter into self-insured contracts with Anthem.

To find out more about the shift to self-insured employer-sponsored enrollments in the health insurance industry (XLV), please refer to Shift to self-insurance plans affects health insurance stocks.

Small group employers

In 2015, Anthem expects to witness a decline of about 100,000 enrollments in its small group business. Anthem’s small group segment declined by about 400,000 members and reached 1.46 million people in 2014. Health insurance companies such as Anthem, Cigna (CI), Aetna (AET), and UnitedHealth Group (UNH) have been witnessing an increasing number of small group employers availing the public exchanges to provide health insurance to their employees.

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