Anthem Inc. ANTM reported first-quarter 2016 adjusted income of $3.46 per share, beating the Zacks Consensus Estimate by 3.6%. The bottom line also increased 10.2% year over year.The outperformance came on the back of solid membership that drove premiums higher.Operating revenues of $20.3 billion surpassed the Zacks Consensus Estimate of $19.8 billion and increased 7.7% year over year.Anthem’s premium revenues increased 7.8% to $19 billion and administrative fees rose 6.8% to $1.3 billion, while other revenues plunged 31.2% to $9.5 million, all on a year-over-year basis.Total expenses increased 8.5% year over year in the reported quarter to $19 billion due to higher benefit expenses, and a rise in total selling, general and administrative expenses and interest expenses.Medical enrollment at Anthem grew 2.8% year over year to 39.6 million as of Mar 31, 2016, primarily on higher enrolment in the Government business as well as Commercial and Specialty Business.Anthem posted a benefit expense ratio (benefit expenses as a percentage of premium revenues) of 81.8% in the reported quarter. This reflects deterioration of 160 basis points year over year.Segment ResultsCommercial & Specialty Business: This segment covers the Local Group, National Accounts, Individual and Specialty businesses. Operating revenues increased 1.5% year over year to $9.5 billion in the reported quarter.Operating gains in the segment improved 2.1% year over year to $1.3 billion, mainly due to a lower SG&A expense ratio attributable to lower administrative costs resulting from expense efficiency initiatives and growth in self-funded enrollment.Government Business: This segment consists of the Medicaid and Medicare business lines, and National Government Services. Operating revenues soared 13.9% year over year to $10.8 billion in the quarter under review.Operating gains in the segment increased 0.2% year over year to $325 million on improved medical cost performance in the Medicare business and higher enrollment in the Medicaid business.Financial UpdateAs of Mar 31, 2016, Anthem had cash and cash equivalents of $1.7 billion, lower than $2.1 billion as of Dec 31, 2015.Long-term debt of Anthem decreased to $14.9 billion as of Mar 31, 2016 from $15.3 billion as of Dec 31, 2015. Shareholder equity was $23.5 billion as of Mar 31, 2016, higher than $23.0 billion at year-end 2015.Operating cash flow was $1.3 billion, down from $1.7 billion in the year-ago quarter.Share RepurchaseAnthem did not repurchase any shares of its common stock during the quarter due to the pending acquisition of Cigna. However, it has $4.2 billion worth remaining under the authorization.Dividend UpdateIn the reported quarter, Anthem’s board of directors declared and paid a quarterly dividend of 65 cents per share. This resulted in cash distribution of $170.7 million.Business UpdateThe company is in the process of acquiring Cigna. Corp. CI – slated to close in the second half of the year. Already tagged as a top player in the health insurance industry, the acquisition will bolster its position among the other players and help it to avail of greater scale and diversification benefits.Guidance for 2016Anthem expects adjusted net income of greater than $10.80 per share. Including extraordinary items, net income for 2016 is expected to be more than $9.65 per share.Medical membership is expected in the range of 39.3–39.5 million, up from 38.8–39 billion guided earlier. Operating revenue is projected at $81–82 billion, up from $80–$81 billion guided previously.Anthem continues to expect operating cash flow in excess of $3 billion in 2016.Zacks Rank and Other HMOsAnthem currently carries a Zacks Rank #2 (Buy). Another player, UnitedHealth Group Inc. UNH, reported first-quarter earnings ahead of the Zacks Consensus Estimate. Molina Healthcare, Inc. MOH is slated to report first-quarter earnings on Apr 28. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CIGNA CORP (CI): Free Stock Analysis Report MOLINA HLTHCR (MOH): Free Stock Analysis Report UNITEDHEALTH GP (UNH): Free Stock Analysis Report ANTHEM INC (ANTM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research