Valuation
Value $456 Price $265. Underpriced by 42%.
현재 시장기대치와 스토리
현재 가격에 반영된 가정
매출성장 향후 5년간 연 5% , 타깃 영업이익률 3.5%(Converge 5년) . 시장은 의료비용 증가로 인한 수익성 악화를 우려.
스토리
매출성장 향후 5년간 연 5% , 타깃 영업이익률 6.5%(Converge 5년) .
영업이익률은 항상 일정. 해당 시장은 베이비부머 보험가입자 수 증가로 인해 향후 몇 년간 연 두자릿수 성장 전망. 해당 기업 매출은 지난 20년간 들쭉날쭉하게 CAGR 5%.
시뮬레이션
추후 해볼 것. 영업이익률에 민감.
Pricing
- PE: 14.4
- PB: 2.1
- P/TangB: 26.3
- PS: 0.65
- P/CF: 11.2
- P/FCF: 13.7
- EV/Sales: 0.6
- EV/EBITDA: 7.9
- EV/EBIT: 9.2
- EV: 61.7B
기타
소스
Value Screen Feb2020
자료(시트)
Description
Company Description
Anthem Inc. operates as a health benefits company. The Company provides health, dental and vision, and pharmacy benefits, as well as life insurance, and life and disability insurance benefits. Anthem offers a broad spectrum of network-based managed care plans to large and small employer, individual, medicaid, and medicare markets.
Extended Company Description (Source: Hoover’s Inc., a Dun & Bradstreet Company)
OVERVIEW
Health benefits provider Anthem, through a number of subsidiaries, provides health coverage to more than 40 million members in the US. One of the nation’s largest health insurers, Anthem is a Blue Cross and Blue Shield Association licensee in more than a dozen states (where it operates as Anthem, Empire, and BCBS) and provides non-BCBS plans under the Unicare, Amerigroup, CareMore, Simply Healthcare, HealthSun, HealthLink, and other brands in more than 25 states. Plans include PPO, HMO, POS, indemnity, and hybrid plans offered to employers, individuals, and Medicare and Medicaid recipients. Anthem also provides administrative services to self-insured groups, as well as specialty insurance.
Operations
Anthem operates through three segments: Government Business, Commercial and Specialty Business, and Other.
The Government Business segment, accounting for about 60% of Anthem’s total revenue, provides Medicare Advantage, Medicare Part D, supplemental, special needs, and dual-eligibility plans, as well as Medicaid and Children’s Health Insurance Programs (CHIP) coverage. The segment’s National Government Services unit acts as a Medicare contractor in some regions. The segment also includes services related to the Federal Employee Program.
The Commercial and Specialty Business segment, accounting for about 40% of sales, provides BCBS and non-BCBS health plans for employer groups and individuals; managed care services such as claims processing and underwriting for self-funded groups; and specialty products including dental, vision, life, and disability coverage.
Through several of its subsidiaries, Anthem also performs claims processing, fraud prevention, benefits management, and other administrative tasks for government-run Medicare plans, other insurance firms, and employer groups.
Altogether, the company serves around 73 million customers.
Geographic Reach
Anthem is headquartered in Indianapolis, Indiana, and its subsidiaries are licensed to conduct insurance operations in all 50 states. It serves BCBS customers in more than a dozen states including California, New York, and Virginia and serves non-BCBS customers in more than 25 other states under UniCare, Amerigroup, Simply Healthcare, and other brand names.
The firm has its largest concentration of customers in California, Florida, Georgia, Indiana, New York, Ohio, Texas, and Virginia.
Sales and Marketing
Anthem markets most of its products through a network of independent agents and brokers. The exception is the company’s national account and large, employer-focused products, which are sold by an in-house sales force, customer-hired consultants, and independent brokers.
The company uses print, broadcast, and other modes of advertising to promote itself. Advertising expenses totaled $385 million, $338 million, and $246 million for 2018, 2017, and 2016, respectively.
Altogether, the company serves more than 78 million people, including 40 million health plan members.
Financial Performance
Anthem has steadily grown its revenue over the past five years, increasing sales by a total of 25% between 2014 and 2018. Net income fluctuated in the $2.5 billion to $4 billion range but showed an overall increase of 46% in the five-year period.
Revenue increased 2% to some $92.1 billion in 2018 on higher insurance premiums and administrative fees, as well as a rise in net investment income. Insurance premium growth was concentrated in the Government Business segment; premiums in the Commercial and Specialty Business segment declined, primarily due to lower participation in ACA individual plan marketplaces.
Net income declined 2% in 2018, falling below $3.8 billion, due to higher income tax expenses.
The company ended 2018 with $3.9 billion in cash, up $325 million from 2017. Operating activities contributed $3.8 billion, while investing activities used $1.3 billion (mostly acquisitions and property and equipment purchases), and financing activities used $2.2 billion via debt payments, stock repurchases, and dividend payments.
Strategy
Anthem grows through acquisitions and organic measures, including launching new plans and adding new members in existing markets.
Increasing coverage in the Medicare market is a significant part of Anthem’s growth strategy: The company anticipates more than 1 million Baby Boomers will become eligible for Medicare every year through 2030 in all of Anthem’s Blue-branded states, and it is beefing up its Medicare offerings and expanding into new service territories to prepare for the change, including via several acquisitions.
The company scaled back on its individual health exchange plans following the termination of the federal cost-sharing reduction subsidy in 2017. However, in 2019 Anthem took cautious steps to expand its exchange offerings in select service territories as the market stabilized.
Like all health insurers, Anthem is working to stay ahead of health care reform efforts to lower medical costs in the US. The company is developing new plans that put more responsibility on consumers; the plans depend on an insurer’s ability to negotiate lower prices with providers and include quality and cost optimization measures such as care management, provider credentialing, service pre-authorization, and wellness reward programs. Anthem has also formed a new PBM unit, IngenioRx, that will work with CVS to improve prescription benefits management processes, and it has launched new care management programs for chronically ill patients.
The company is involved in litigation related to its 2017 termination of its merger agreement with rival insure Cigna.
Mergers and Acquisitions
In 2019, Anthem acquired behavioral health organization Beacon Health Options as part of its strategy to diversify into health services. The firm aims to provide integrated and personalized care delivery models for people with complex and chronic conditions.
In 2018, Anthem purchased Medicare Advantage firm America’s 1st Choice, which operates under the Freedom Health and Optimum brands in Florida and the America’s 1st Choice brand in South Carolina.
In mid-2018, the company acquired Aspire Health, which provides community-based, non-hospice palliative care to patients suffering from serious illnesses. This deal underscores the firm’s efforts to transform its care delivery model to improve results.
Company Background
Anthem traces its roots back to the formation of Blue Cross of Indiana and Blue Shield of Indiana in 1944 and 1946. The company changed its name to WellPoint after merging with WellPoint Health Networks in 2004; WellPoint Health Networks was formed by Blue Cross of California in 1992. The company changed its name from WellPoint back to Anthem in 2014.
In 2017 a federal judge blocked the planned $48 billion merger between Anthem and rival Cigna. The combined health insurance behemoth would have served some 53 million customers and generated sales of about $115 billion. The merger was blocked just weeks after a similar planned merger between Aetna and Humana was halted.
Recent acquisitions have included HealthSun (Medicare Advantage in Florida, 2017) and Simply Healthcare (2015).
HISTORY
Anthem’s earliest predecessor, prepaid hospital plan Blue Cross of Indiana, was founded in 1944. Unlike other Blues, Blue Cross of Indiana never received tax advantages or mandated discounts, so it competed as a private insurer. Within two years it had 100,000 members; by 1970 there were nearly 2 million.
Blue Shield of Indiana, another Anthem precursor, also grew rapidly after its 1946 formation as a mutual insurance company to cover doctors’ services. The two organizations shared expenses and jointly managed the state’s Medicare and Medicaid programs.
The 1970s and early 1980s were difficult as Indiana’s economy stagnated and health insurance competition increased. In 1982 the joint operation restructured, adding new management and service policies to improve its performance.
Following the 1982 merger of the national Blue Cross and Blue Shield organizations, the Indiana Blues merged in 1985 as Associated Insurance Companies. The next year the company moved outside Indiana, began diversifying to help insulate itself from such industry changes as the shift to managed care, and renamed itself Associated Group to reflect a broader focus.
By 1990 Associated Group had more than 25 operating units with nationwide offerings, including health insurance, HMO services, life insurance, insurance brokerage, financial services, and software and services for the insurance industry.
The group grew throughout the mid-1990s, buying health insurer Southeastern Mutual Insurance (including Kentucky Blue Cross and Blue Shield) in 1992, diversified insurer Federal Kemper (a Kemper Corporation subsidiary) in 1993, and Seattle-based property/casualty brokerage Pettit-Morry in 1994. That year it entered the health care delivery market with the creation of American Health Network.
In 1995 the company merged with Ohio Blues licensee Community Mutual and took the Anthem name. Merger-related charges caused a loss that year.
Anthem bounced back the next year thanks to cost-cutting and customers switching to its more profitable managed care plans. Anthem divested its individual life insurance and annuity business and its Anthem Financial subsidiaries. Its 1996 deal to buy Blue Cross and Blue Shield of New Jersey fell apart in 1997 because of New Jersey Blue’s charitable status. Anthem did manage to buy Blue Cross and Blue Shield of Connecticut that year.
Anthem in 1997 sold four property/casualty insurance subsidiaries to Vesta Insurance Group. It bought the remainder of its Acordia property/casualty unit (workers’ compensation), then sold Acordia’s brokerage operations. That year Anthem was involved in court battles regarding the Blue mergers in Kentucky, as well as in Connecticut, where litigants feared a rise in their premiums. Expenses related to merging Blues organizations contributed to a loss that year.
Anthem shed the rest of its noncore operations in 1998, selling subsidiary Anthem Health and Life Insurance Company to Canadian insurer Great-West Life Assurance. Its proposed purchase of Blue Cross and Blue Shield of Maine (which it acquired in 2000) and merger with the Blues in Rhode Island were met with outcries similar to those that dogged earlier pairings.
Larry Glasscock was appointed president and CEO of the company in 1999. Under Glasscock’s leadership, Anthem aggressively expanded through mergers and acquisitions. It bought Blues plans in Colorado, Nevada, and New Hampshire in 1999 and finalized the acquisition of Maine’s Blue plan in 2000.
In 2001 it became a publicly traded company and sold its military insurance business to Humana. In the next couple of years, it snapped up Virginia-based Trigon Healthcare and a Wisconsin Blue plan.
And in 2004 Anthem made its biggest leap yet, merging with WellPoint Health Networks in a deal that made it the nation’s largest health insurer. After the merger — which added Blue plans in California, Georgia, Missouri, and Wisconsin — Anthem changed its name to WellPoint. The company changed its name back to Anthem in 2014.
