Anthem, Inc. caused its stock to surge and Wall Street analysts to raise their 2019 and 2020 earnings estimates by revealing during its quarterly earnings call on Jan. 30 that it’s planning to launch its in-house PBM three quarters earlier than it originally projected, AIS Health reported.
In its earnings release for the fourth quarter of 2018, the insurer said it will terminate its contract with Express Scripts Holding Co. on March 1, 2019, rather than the original expiration date of Dec. 31, 2019, because of Cigna Corp.’s acquisition of the PBM. Thus, Anthem expects to begin transitioning members to the new PBM platform, IngenioRx, in the second quarter of 2019.
On a call with investors and analysts, CEO Gail Boudreaux said Anthem continues to expect IngenioRx to save it at least $4 billion on prescription drugs once it fully transitions to the new PBM in 2020, with at least 20% of that accruing to shareholders. She also said Anthem is confident in its readiness to launch because the results of its operational testing “have been very positive.”
Industry analysts reacted favorably to the news of IngenioRx’s accelerated launch. “We are raising our both 2019 and 2020 EPS [earnings per share] estimates by $1.50 to $19 and $21.50, respectively,” Credit Suisse’s A.J. Rice advised investors in a Jan. 31 research note.