Anthem Inc.'s third-quarter net income dropped to $222 million, or 87 cents per share, from $1.18 billion, or $4.55 per share, from the prior year.

The company's GAAP net income includes net negative adjustment items of $3.33 per share. Adjusted net income for the period declined year over year to $1.07 billion, or $4.20 per share, from $1.27 billion, or $4.87 per share.

The S&P Capital IQ consensus normalized EPS estimate for the quarter was $4.18.

The commercial and specialty business booked a $234 million operating loss, versus a $924 million operating gain in the third quarter of 2019. The decrease was primarily attributable to the Blue Cross Blue Shield Association litigation settlement accrual and "business optimization" charges.

Total operating revenue grew 15.9% on a yearly basis to $30.65 billion from $26.44 billion, driven by higher premium revenue due to growth in Medicaid and Medicare. The increase was further attributable to pharmacy product revenue related to the launch of IngenioRx and the return of the health insurance tax in 2020, partially offset by a decrease in premiums in the commercial and specialty business related to enrollment declines as a result of the economic environment.

As of Sept. 30, total medical membership was 42.6 million, compared to 42.5 million three months earlier and about 41 million as of Sept. 30, 2019. The increase from June was driven by the government business, which grew by 453,000 people during the quarter, attributable to Medicaid, reflecting organic growth as a result of the temporary suspension of eligibility recertification efforts in Anthem's markets, and Medicare Advantage.

The benefit expense ratio was 86.8% in the third quarter, compared to 87.2% in the prior-year quarter. The decrease was a result of deferred healthcare utilization due to the COVID-19 pandemic and the return of the health insurance tax in 2020. The decrease was partially offset by costs associated with actions taken to support members in response to the pandemic and COVID-19 related care, as well as retroactive rate adjustments in the Medicaid business.

Days in claims payable was 41.1 days as of Sept. 30, a decrease of 4.9 days from June 30, and an increase of 1.3 days compared to a year ago.

During the third quarter, the company repurchased 2.9 million common shares for $759 million, or a weighted average price of $265.73. Year-to-date, the company has repurchased 5.0 million shares for $1.3 billion, or a weighted average price of $269.15.

For full year 2020, GAAP net income is expected to be greater than $17.87 per share, including approximately $4.43 per share of net unfavorable items. Excluding these items, adjusted net income is expected to be greater than $22.30 per share. The company is not providing other financial guidance metrics for 2020 due to uncertainty around the COVID-19 pandemic and its impact.

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