Anthem and Aetna sell off 2,000 shares at a loss
Health plans and other health insurers sold more than 2,700 shares of the health care industry’s leading insurer at a profit, with Aetne losing a record $7 billion, according to people familiar with the matter.
Anthem and Cigna said the sales were in part driven by an improved performance in the third quarter and that the stock had gained 1% in the past week.
Anthem’s share price is up 14% this year.
Anthem has lost $3.4 billion in the last year.
Shares of Aetan Healthcare, which operates more than 30,000 Medicare Advantage plans, fell about 5% in after-hours trading.
Aetana’s stock is up 7% this week.
Cignas shares fell 0.5% in premarket trading.
Anthem had been in talks with AET and A&M, two of the industry’s top insurers, about the sale of its business.
The talks fell apart last week after the two companies said they would not sell off some of their businesses.
Anthem shares rose nearly 3% in late trading.
“We’ve been able to leverage our industry-leading financial performance, but we are continuing to review our portfolio, and we will continue to monitor our portfolio in the near term,” Aetanes chief executive, Mike Fisch, said in a statement.
Anthem declined to comment.
A&am has been working to reduce its healthcare expenses and is looking to sell some businesses, Chief Financial Officer Mark Schulze said in an earnings call with analysts.
AET has not announced a plan to sell its businesses.
A merger between Aetlan and CVS would add Aethanem to a group that includes UnitedHealth, Aetnico and Aurobindo Hospitals and Clinics.
CVS is also in talks to buy Aetnan Healthcare.
Anthem is among the health insurers that lost money in the financial year that ended in May.
Anthem reported earnings of $2.17 a share, up about 5 cents from the year-ago period.
Anthem said the share price gain is partly offset by a decline in its financials for the year, which fell from $3 billion in 2018 to $2 billion in 2019.
Anthem expects adjusted earnings before interest, taxes, depreciation and amortization to be $4.40 a share in 2020.
Anthem also reported earnings in the fourth quarter that beat Wall Street estimates by 3 cents.
Anthem was not included in the analysts’ report on Wednesday.
Anthem, which is owned by American Express Co., said in its earnings call that the company’s “unadjusted net loss for the fiscal fourth quarter of $4 billion was below Wall Street’s estimates, while its adjusted net loss was lower than expected.”
Aetans shares have gained more than 40% this decade.
Anthem stock rose about 4% in 2017 after Anthem agreed to sell off a major chunk of its U.S. operations.
Anthem announced plans in March to sell the company.
Cuts to Medicare Advantage programs, Medicare Advantage premiums and health insurance subsidies for people who buy individual policies have also helped drive the share market’s price rise.
Anthem sold some of its Medicare Advantage business in 2017.
A spokesman for Aetnah, the health insurer that is the parent of AET, did not respond to a request for comment.
Anthem did not disclose how much it is losing from the sale.
A report earlier this month by the Kaiser Family Foundation found that insurers are slashing enrollees and premiums.
Anthem Chief Financial Officers Mark Schuette and David Kostrzewa said in the statement that the business is “on track to deliver a net loss of $8.6 billion for fiscal 2021, a year in which we expect to maintain a significant profit margin, while continuing to drive our cost reduction initiatives.”
The statement did not mention how much Anthem has paid out in premium payments to enrollees in the health plan since the merger.
The shares of A&ams share price have risen since its peak in late 2017, as the stock has gained $9.10 per share.
In its earnings report in April, Anthem said it would sell off 1,000 of its shares.
The company said in April that it was cutting the number of its full-service and small group insurers to 5,000 from 20,000.
Anthem will retain the smaller group insurers in the United States and Europe.
The announcement was delayed by a week.
The Aetane company has been facing a steady decline in business as well as declining revenues.
In the fiscal first quarter of 2020, A&as revenue was down nearly 40% from the same quarter a year earlier.
Anthem lost $9 billion in that period, according the company statement.