Earnings Roundup: Anthem shares slide as it faces Medicaid challenge

FILE - This combo of file photos shows signage for health insurers Cigna Corp., and Anthem Inc. Anthem is finally ending its soured, $48 billion bid to buy rival Cigna, but the nation's second-largest health insurer isn't giving up a fight over whether Cigna deserves a termination fee for the scrapped deal. Anthem says Cigna sabotaged the merger agreement and caused "massive damages" for Anthem, which provides Blue Cross-Blue Shield coverage in several states. (AP Photo/File)

Norfolk Southern boosts profit on weaker sales

Norfolk Southern Corp.'s earnings chugged ahead 2% even though the railroad hauled 4% less freight in the second quarter because it was able to raise its shipping rates.

The Norfolk, Virginia-based company said it earned net income of $722 million, or $2.70 per share. That's up from $710 million, or $2.50 per share, a year ago.

The results fell short of the $2.77 per share that seven analysts surveyed by Zacks Investment Research predicted.

The railroad posted revenue of $2.93 billion in the period, which met Street forecasts.

"It was a disappointing earnings quarter," Edward Jones analyst Jeff Windau said. "But they are just getting started with their reforms,"

Norfolk Southern said it implemented a package of reforms earlier this month that are designed to help it operate the railroad on a tighter schedule and move more freight with fewer people. Norfolk Southern operates about 20,000 miles of track in 22 states and the District of Columbia.

Anthem shares slide as it faces Medicaid challenge

Anthem beat second quarter expectations and raised its 2019 forecast again, but shares of the health insurer slid Wednesday after it outlined challenges in its growing Medicaid business.

The Blue Cross Blue Shield insurer said it has added nearly 700,000 Medicaid customers over the past year, but expenses were coming in higher than expected in a handful of states. Chief Financial Officer John Gallina told analysts the issue was "very manageable," and he expected the business's profitability to improve in the second half of the year.

Jefferies analyst David Windley said in a research note that higher Medicaid costs were a "pressure point" in a company performance that narrowly beat expectations.

Medicaid is the state and federally funded program that covers the poor. States pay insurers to manage their coverage, and that business is part of a growing government operation for Anthem that now brings in more than 60% of company revenue.

Anthem Inc. covers more than 40 million people mostly through private insurance plans in several states, including big markets like California and New York.

Overall, second-quarter net income climbed 8% to $1.14 billion, and adjusted earnings per share totaled $4.64. Operating revenue, which excludes investment gains, climbed 11% to $25.18 billion.

Ford profits fall as shakeup grows

Ford's net profit tumbled 86% in the second quarter due largely to restructuring costs in Europe and South America, and the company said more shake-ups are coming.

Chief Financial Officer Tim Stone said Wednesday that the company booked charges of $1.2 billion during the quarter as it moved to close factories in Europe and South America. And, despite the factory closings and cutting 7,000 white-collar jobs globally, Ford says it isn't done overhauling its operations.

Stone said Ford is in the early stages and expects up to $1.8 billion more in charges later this year as part of an $11 billion overhaul during the next several years. He wouldn't give further details on what remains, saying management hasn't decided on ideas to further redesign Ford.

"We're already starting to see some early benefits," he said. "A lot of work to do."

Ford's net income for the April-through-June period dropped to $148 million, or 4 cents per share. Without the charges the company made 28 cents per share. Revenue was flat at $38.9 billion.

UPS profit rises by 13%

The demand for next day delivery helped to fuel a profit jump of 13% at UPS during the second quarter.

Both profits and revenues topped Wall Street expectations, sending shares up more than 8% Wednesday.

UPS earned $1.69 billion, boosted by a 30% increase in next-day air shipments. The Atlanta company's revenue rose 3% to $18.05 billion.

Excluding certain charges, mostly for voluntary early retirements, it would have earned $1.96 per share. That was 3 cents better than analysts expected, according to a survey by Zacks Investment Research.

Online retailers are promoting quick deliveries to their customers, putting more pressure on UPS and FedEx Corp. for next-day deliveries.

UPS executives said they are adding planes and building more capacity in their sorting centers to meet the demand.

Caterpillar hit by energy decline

Caterpillar is posting weak profits and revenue for the second quarter as the energy sector cools.

The construction equipment company on Wednesday reported earnings of $1.62 billion, or $2.83 per share. A year earlier it earned $1.71 billion, or $2.82 per share.

The performance is well short of the $3.12 Wall Street was looking for, according to Zacks Investment Research.

The dependence of Caterpillar's customers on heavy equipment and machinery makes the company vulnerable to the volatility of the energy sector. In the past three months, crude prices have fallen nearly 14% while natural gas is down more than 10%. Crude prices are down 17% over the past year, with natural gas is down almost 18%.

The company's revenue rose to $14.43 billion from $14.01 billion, but was just shy of analyst projections. Caterpillar said its revenue increase was mostly due to higher prices and increased sales volume driven by improved equipment demand.

Caterpillar still expects full-year earnings between $12.06 and $13.06 per share. The company said it currently anticipates being at the lower end of that range. Analysts polled by FactSet predict earnings of $12.26 per share.