Earnings

Health insurer Anthem said Wednesday it was bringing forward the launch of its in-house pharmacy benefits management business to the second quarter of 2019 as it forecast a higher-than-expected profit for the year.

The health insurer’s shares rose 6.2 percent to $289.50 before the bell after reporting quarterly profit that beat estimates.

In its quarterly results statement, Anthem said it had given notice for an early termination of its contract with Express Scripts that was set to expire on Dec. 31, 2019, due to the pharmacy benefit manager’s recent acquisition by Cigna.

While rivals Aetna and Cigna made multibillion-dollar deals to manage patient prescriptions and bolster profits, Anthem had been planning to hold off until 2020 with its plan to take pharmacy benefits business IngenioRx in-house.

The company will remain one of a handful of major players in the U.S. health insurance space, but Wednesday’s move may be evidence of a possible shift in management thinking after the biggest shakeup in the sector in years.

“This will allow us to go to market with better economics earlier, and also accelerate our whole person health strategy, which is proven to reduce total cost of care,” Chief Executive Gail Boudreau said.

Anthem said its agreement with Express Scripts would now terminate on March 1, and the twelve-month transition period to migrate the business would begin the next day.

Separately, Cigna said in a regulatory filing it was aware of Anthem’s early termination right and plans to exclude revenue and earnings from Anthem’s contract with Express Scripts when providing its forecast for 2019 on February 1.

“While there is some impact to free cash flow generation over the next two years, this outcome has been contemplated … and as such, our capital deployment strategy and timetable for deleveraging remain on track,” Cigna said.

Excluding items, Anthem posted a quarterly profit of $2.44 per share, beating the average analyst estimate of $2.20 per share, according to IBES data from Refinitiv.

Anthem forecast 2019 adjusted earnings per share of over $19, ahead of Wall Street estimates of $17.61. The forecast reflects a benefit from the accelerated launch of IngenioRx, which is expected to result in gross annual savings of over $4 billion, the company said.

Operating revenue in the quarter rose 3.8 percent to $23.30 billion, missing estimates of $23.35 billion.

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