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Elevance Health Reports Third Quarter 2022 Results, Raises Full Year Outlook

  • Third quarter GAAP net income was $6.68 per share, including net negative adjustment items of $0.85 per share. Adjusted net income was $7.53* per share.
  • Operating revenue grew 11.5% over the prior year quarter to $39.6 billion.
  • Operating gain grew 10.2% over the prior year quarter to $2.3 billion.
  • Medical enrollment increased 2.2 million members year-over-year and 232 thousand members during the quarter to 47.3 million members.
  • Fourth quarter 2022 dividend of $1.28 per share declared to shareholders.

Elevance Health, Inc. (NYSE: ELV) reported third quarter 2022 results reflecting strong financial performance, including double-digit growth in revenue, operating earnings, and adjusted earnings per share.

“Broad based momentum across Elevance Health continued in the third quarter, driven by the focused execution of our strategy and the dedication of our over 100,000 associates,” said Gail K. Boudreaux, President and CEO. “We are united in our purpose to improve the health of humanity, and I am proud of the work our associates are doing to support their colleagues and communities so tragically impacted by the recent hurricanes in Florida and Puerto Rico. It’s in times such as these that our culture shines through.”

As a result of stronger than expected results for the first nine months of the year, the Company now expects GAAP net income to be greater than $25.33 per share, including approximately $3.62 per share of net unfavorable adjustment items. The Company now expects full-year adjusted net income to be greater than $28.95 per share.

*Refer to GAAP reconciliation tables.

CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $6.68 per share in the third quarter, including net negative adjustment items of $0.85 per share. Adjusted net income was $7.53* per share, reflecting growth of 10.9% from $6.79 in the same period a year ago.

*Please refer to the GAAP reconciliation tables.

Membership: Medical membership totaled approximately 47.3 million as of September 30, 2022, an increase of 2.2 million, or 4.9 percent year-over-year. Commercial & Specialty Business membership increased by 1.2 million year-over-year driven by strong sales to fee-based employers. Government Business membership increased by 1.0 million compared to the prior year quarter, driven primarily by growth in the Medicaid business, the acquisitions of Paramount Advantage and Integra Managed Care, and organic growth in Medicare Advantage.

During the third quarter of 2022, medical membership increased by 232 thousand driven by organic growth in Medicaid, which we attribute primarily to the suspension of eligibility recertification, and organic growth in our commercial fee-based membership.

Operating Revenue: Operating revenue was $39.6 billion in the third quarter of 2022, an increase of $4.1 billion, or 11.5 percent year-over-year. The increase was driven by higher premium revenue due to membership growth in Medicaid, including the acquisitions of Integra Managed Care and Paramount Advantage, growth in Medicare Advantage and commercial risk-based membership, as well as premium rate increases to cover overall cost trends. The increase in operating revenue was further attributable to the growth in pharmacy product revenue within IngenioRx related to growth in membership and higher utilization of prescription drugs.

Benefit Expense Ratio: The benefit expense ratio was 87.2 percent in the third quarter of 2022, a decrease of 50 basis points year-over-year. The decrease was primarily driven by the realignment of certain quality improvement costs to match recent regulatory clarifications. Excluding the realignment, our benefit expense ratio would have been approximately flat year-over-year.

Medical claims reserves established at December 31, 2021 developed in line with the Company’s expectations as of the third quarter of 2022.

Days in Claims Payable: Days in Claims Payable was 47.7 days as of September 30, 2022, a decrease of 0.1 days from June 30, 2022 and an increase of 0.9 days compared to September 30, 2021.

SG&A Expense Ratio: The SG&A expense ratio was 11.4 percent in the third quarter of 2022, an increase of 30 basis points from 11.1 percent in the third quarter of 2021. The increase was primarily driven by increased spend to support growth in operations and the realignment of certain quality improvement expenses out of benefit expense and into SG&A expense, partially offset by operating expense leverage associated with growth in operating revenue.

Operating Cash Flow: Operating cash flow was approximately $4.9 billion, or 3.1 times net income in the third quarter of 2022, an increase of $2.4 billion as compared to the prior year quarter. The year-on-year increase was driven by the timing of CMS payments received in the current quarter, partially offset by the BCBSA litigation settlement payment that occurred in the third quarter of 2022.

Share Repurchase Program: During the third quarter of 2022, the Company repurchased 1.2 million shares of its common stock for $579 million, at a weighted average price of $476.70. Year-to-date, as of the end of the third quarter, the Company repurchased 3.7 million shares of its common stock for $1.7 billion, at a weighted average price of $473.36. As of September 30, 2022, the Company had approximately $2.4 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the third quarter of 2022, the Company paid a quarterly dividend of $1.28 per share, representing a distribution of cash totaling $306 million.

On October 18, 2022, the Audit Committee of the Company's Board of Directors declared a fourth quarter 2022 dividend to shareholders of $1.28 per share. The fourth quarter dividend is payable on December 21, 2022, to shareholders of record at the close of business on December 5, 2022.

Investment Portfolio & Capital Position: During the third quarter of 2022, the Company recorded net losses of $57 million. During the third quarter of 2021, the Company recorded net losses of $61 million. These amounts are excluded from adjusted earnings per share.

As of September 30, 2022, the Company’s net unrealized loss position in the investment portfolio was $2.8 billion, consisting primarily of fixed maturity securities. As of September 30, 2022, cash and investments at the parent company totaled approximately $1.0 billion.

REPORTABLE SEGMENTS

Elevance Health has four reportable segments: Commercial & Specialty Business (comprised of Individual, Group risk-based, Group fee-based, and BlueCard businesses); Government Business (comprised of the Medicaid, Medicare, and Federal Health Products & Services businesses); IngenioRx; and Other (comprised of the Carelon companies, formerly known as our Diversified Business Group, and corporate expenses not allocated to our other reportable segments).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elevance Health, Inc.

 

 

Reportable Segment Highlights

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

Three Months Ended September 30

 

Nine Months Ended September 30

 

 

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

 

 

Operating Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

$

10,494

 

 

$

9,863

 

 

6.4

%

 

$

31,324

 

 

$

28,904

 

 

8.4

%

 

 

Government Business

 

24,571

 

 

 

21,658

 

 

13.4

%

 

 

72,164

 

 

 

61,007

 

 

18.3

%

 

 

IngenioRx

 

7,249

 

 

 

6,549

 

 

10.7

%

 

 

21,003

 

 

 

18,630

 

 

12.7

%

 

 

Other

 

3,365

 

 

 

2,670

 

 

26.0

%

 

 

9,884

 

 

 

7,557

 

 

30.8

%

 

 

Eliminations

 

(6,054

)

 

 

(5,192

)

 

16.6

%

 

 

(18,382

)

 

 

(15,173

)

 

21.1

%

 

 

Total Operating Revenue1

$

39,625

 

 

$

35,548

 

 

11.5

%

 

$

115,993

 

 

$

100,925

 

 

14.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Gain

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

$

785

 

 

$

620

 

 

26.6

%

 

$

2,673

 

 

$

2,679

 

 

(0.2

) %

 

 

Government Business

 

868

 

 

 

967

 

 

(10.2

) %

 

 

2,653

 

 

 

2,313

 

 

14.7

%

 

 

IngenioRx

 

516

 

 

 

445

 

 

16.0

%

 

 

1,393

 

 

 

1,257

 

 

10.8

%

 

 

Other

 

101

 

 

 

27

 

 

274.1

%

 

 

365

 

 

 

52

 

 

601.9

%

 

 

Total Operating Gain1

$

2,270

 

 

$

2,059

 

 

10.2

%

 

$

7,084

 

 

$

6,301

 

 

12.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

 

7.5

%

 

 

6.3

%

 

120 bp

 

 

8.5

%

 

 

9.3

%

 

(80) bp

 

 

Government Business

 

3.5

%

 

 

4.5

%

 

(100) bp

 

 

3.7

%

 

 

3.8

%

 

(10) bp

 

 

IngenioRx

 

7.1

%

 

 

6.8

%

 

30 bp

 

 

6.6

%

 

 

6.7

%

 

(10) bp

 

 

Total Operating Margin1

 

5.7

%

 

 

5.8

%

 

(10) bp

 

 

6.1

%

 

 

6.2

%

 

(10) bp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. See “Basis of Presentation.”

Commercial & Specialty Business: Operating gain in the Commercial & Specialty Business segment totaled $785 million in the third quarter of 2022, an increase of $165 million from $620 million in the third quarter of 2021. The increase was primarily driven by improved medical underwriting performance in our commercial risk-based business partially offset by an increase in operating expenses in support of growth.

Government Business: Operating gain in the Government Business segment was $868 million in the third quarter of 2022, a decrease of $99 million from $967 million in the third quarter of 2021. The decrease was primarily driven by higher operating costs in support of growth of our government health benefits business partially offset by increased gross profit in the period.

IngenioRx: Operating gain was $516 million in the third quarter of 2022, an increase of $71 million from $445 million in the third quarter of 2021. The increase was driven by out of period fee-based revenue and higher prescription volumes associated with growth in integrated medical and pharmacy members.

Other: The Company reported an operating gain of $101 million in the Other segment for the third quarter of 2022, an increase of $74 million from $27 million in the prior year quarter. The increase was driven by growth in Carelon's affiliated and unaffiliated earnings.

Basis of Presentation

  1. Operating revenue and operating gain/loss are the key measures used by management to evaluate performance in each of its reporting segments, allocate resources, set incentive compensation targets and to forecast future operating performance. Operating gain/loss is calculated as total operating revenue less benefit expense, cost of products sold and selling, general and administrative expense. It does not include net investment income, net gains/losses on financial instruments, interest expense, amortization of other intangible assets, gains/losses on extinguishment of debt or income taxes, as these items are managed in a corporate shared service environment and are not the responsibility of operating segment management. Refer to the GAAP reconciliation tables.
  2. Operating margin is defined as operating gain divided by operating revenue.

Conference Call and Webcast

Management will host a conference call and webcast today at 8:30 a.m. Eastern Daylight Time (“EDT”) to discuss the company’s third quarter results and outlook. The conference call should be accessed at least 15 minutes prior to the start of the call with the following numbers:

888-947-9963 (Domestic)

   

800-813-5525 (Domestic Replay)

312-470-0178 (International)

   

203-369-3346 (International Replay)

The access code for today's conference call is 3972058. The replay will be available from 11:30 a.m. EDT today, until the end of the day on November 18, 2022. The call will also be available through a live webcast at www.elevancehealth.com under the “Investors” link. A webcast replay will be available following the call.

About Elevance Health, Inc.

Elevance Health is a lifetime, trusted health partner fueled by its purpose to improve the health of humanity. The company supports consumers, families, and communities across the entire care journey – connecting them to the care, support, and resources they need to lead healthier lives. Elevance Health’s companies serve more than 119 million people through a diverse portfolio of industry-leading medical, digital, pharmacy, behavioral, clinical, and complex care solutions. For more information, please visit www.elevancehealth.com or follow us @ElevanceHealth on Twitter and Elevance Health on LinkedIn.

Elevance Health, Inc.

Membership Summary

(Unaudited and in Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change from

Medical Membership

September 30,

2022

 

September 30,

2021

 

June 30,

2022

 

September 30,

2021

 

June 30,

2022

Commercial & Specialty Business

 

 

 

 

 

 

 

 

 

Individual

800

 

769

 

803

 

4.0

%

 

(0.4

) %

Group Risk-Based

3,988

 

3,946

 

4,020

 

1.1

%

 

(0.8

) %

Commercial Risk-Based

4,788

 

4,715

 

4,823

 

1.5

%

 

(0.7

) %

BlueCard®

6,453

 

6,166

 

6,445

 

4.7

%

 

0.1

%

Group Fee-Based

20,184

 

19,370

 

20,086

 

4.2

%

 

0.5

%

Commercial Fee-Based

26,637

 

25,536

 

26,531

 

4.3

%

 

0.4

%

Total Commercial & Specialty Business

31,425

 

30,251

 

31,354

 

3.9

%

 

0.2

%

Government Business

 

 

 

 

 

 

 

 

 

Medicare Advantage

1,969

 

1,853

 

1,946

 

6.3

%

 

1.2

%

Medicare Supplement

945

 

947

 

942

 

(0.2

) %

 

0.3

%

Total Medicare

2,914

 

2,800

 

2,888

 

4.1

%

 

0.9

%

Medicaid

11,319

 

10,391

 

11,181

 

8.9

%

 

1.2

%

Federal Employees Health Benefits

1,625

 

1,629

 

1,628

 

(0.2

) %

 

(0.2

) %

Total Government Business

15,858

 

14,820

 

15,697

 

7.0

%

 

1.0

%

Total Medical Membership

47,283

 

45,071

 

47,051

 

4.9

%

 

0.5

%

Other Membership

 

 

 

 

 

 

 

 

 

Life and Disability Members

4,796

 

4,695

 

4,779

 

2.2

%

 

0.4

%

Dental Members

6,655

 

6,637

 

6,620

 

0.3

%

 

0.5

%

Dental Administration Members

1,577

 

1,486

 

1,589

 

6.1

%

 

(0.8

) %

Vision Members

9,628

 

7,974

 

9,385

 

20.7

%

 

2.6

%

Medicare Part D Standalone Members

274

 

438

 

276

 

(37.4

) %

 

(0.7

) %

Elevance Health, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

(In millions, except per share data)

 

Three Months Ended

September 30

 

 

 

 

2022

 

2021

 

Change

Revenues

 

 

 

 

 

 

Premiums

 

$

33,722

 

 

$

30,395

 

 

10.9

%

Product revenue

 

 

3,972

 

 

 

3,353

 

 

18.5

%

Administrative fees and other revenue

 

 

1,931

 

 

 

1,800

 

 

7.3

%

Total operating revenue

 

 

39,625

 

 

 

35,548

 

 

11.5

%

Net investment income

 

 

371

 

 

 

335

 

 

10.7

%

Net losses on financial instruments

 

 

(57

)

 

 

(61

)

 

6.6

%

 

 

 

 

 

 

 

Total revenues

 

 

39,939

 

 

 

35,822

 

 

11.5

%

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Benefit expense

 

 

29,404

 

 

 

26,645

 

 

10.4

%

Cost of products sold

 

 

3,437

 

 

 

2,898

 

 

18.6

%

Selling, general and administrative expense

 

 

4,514

 

 

 

3,946

 

 

14.4

%

Interest expense

 

 

213

 

 

 

201

 

 

6.0

%

Amortization of other intangible assets

 

 

225

 

 

 

136

 

 

65.4

%

 

 

 

 

 

 

 

Total expenses

 

 

37,793

 

 

 

33,826

 

 

11.7

%

 

 

 

 

 

 

 

Income before income tax expense

 

 

2,146

 

 

 

1,996

 

 

7.5

%

 

 

 

 

 

 

 

Income tax expense

 

 

533

 

 

 

494

 

 

7.9

%

 

 

 

 

 

 

 

Net income

 

 

1,613

 

 

 

1,502

 

 

7.4

%

 

 

 

 

 

 

 

Net loss attributable to noncontrolling interests

 

 

5

 

 

 

7

 

 

NM

 

 

 

 

 

 

 

 

Shareholders' net income

 

$

1,618

 

 

$

1,509

 

 

7.2

%

 

 

 

 

 

 

 

Shareholders' net income per diluted share

 

$

6.68

 

 

$

6.13

 

 

9.0

%

 

 

 

 

 

 

 

Diluted shares

 

 

242.2

 

 

 

246.0

 

 

(1.5

) %

 

 

 

 

 

 

 

Benefit expense as a percentage of premiums

 

 

87.2

%

 

 

87.7

%

 

(50) bp

Selling, general and administrative expense as a percentage of total operating revenue

 

 

11.4

%

 

 

11.1

%

 

30 bp

Income before income tax expense as a percentage of total revenue

 

 

5.4

%

 

 

5.6

%

 

(20) bp

"NM" = calculation not meaningful

Elevance Health, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

(In millions, except per share data)

 

Nine Months Ended

September 30

 

 

 

 

2022

 

2021

 

Change

Revenues

 

 

 

 

 

 

Premiums

 

$

99,583

 

 

$

86,604

 

 

15.0

%

Product revenue

 

 

10,841

 

 

 

9,132

 

 

18.7

%

Administrative fees and other revenue

 

 

5,569

 

 

 

5,189

 

 

7.3

%

Total operating revenue

 

 

115,993

 

 

 

100,925

 

 

14.9

%

Net investment income

 

 

1,112

 

 

 

1,026

 

 

8.4

%

Net (losses) gains on financial instruments

 

 

(439

)

 

 

107

 

 

(510.3

) %

 

 

 

 

 

 

 

Total revenues

 

 

116,666

 

 

 

102,058

 

 

14.3

%

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Benefit expense

 

 

86,396

 

 

 

75,107

 

 

15.0

%

Cost of products sold

 

 

9,389

 

 

 

7,825

 

 

20.0

%

Selling, general and administrative expense

 

 

13,124

 

 

 

11,692

 

 

12.2

%

Interest expense

 

 

622

 

 

 

598

 

 

4.0

%

Amortization of other intangible assets

 

 

520

 

 

 

306

 

 

69.9

%

Loss on extinguishment of debt

 

 

 

 

 

5

 

 

(100.0

) %

 

 

 

 

 

 

 

Total expenses

 

 

110,051

 

 

 

95,533

 

 

15.2

%

 

 

 

 

 

 

 

Income before income tax expense

 

 

6,615

 

 

 

6,525

 

 

1.4

%

 

 

 

 

 

 

 

Income tax expense

 

 

1,557

 

 

 

1,555

 

 

0.1

%

 

 

 

 

 

 

 

Net income

 

 

5,058

 

 

 

4,970

 

 

1.8

%

 

 

 

 

 

 

 

Net loss/(income) attributable to noncontrolling interests

 

 

18

 

 

 

(3

)

 

NM

 

 

 

 

 

 

 

 

Shareholders' net income

 

$

5,076

 

 

$

4,967

 

 

2.2

%

 

 

 

 

 

 

 

Shareholders' net income per diluted share

 

$

20.86

 

 

$

20.09

 

 

3.8

%

 

 

 

 

 

 

 

Diluted shares

 

 

243.3

 

 

 

247.2

 

 

(1.6

) %

 

 

 

 

 

 

 

Benefit expense as a percentage of premiums

 

 

86.8

%

 

 

86.7

%

 

10 bp

Selling, general and administrative expense as a percentage of total operating revenue

 

 

11.3

%

 

 

11.6

%

 

(30) bp

Income before income tax expense as a percentage of total revenue

 

 

5.7

%

 

 

6.4

%

 

(70) bp

"NM" = calculation not meaningful

Elevance Health, Inc.

Consolidated Balance Sheets

 

(In millions)

September 30,

2022

 

December 31,

2021

Assets

(Unaudited)

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

8,872

 

 

$

4,880

 

Fixed maturity securities

 

25,526

 

 

 

26,267

 

Equity securities

 

1,503

 

 

 

1,881

 

Premium receivables

 

6,682

 

 

 

5,681

 

Self-funded receivables

 

3,873

 

 

 

4,010

 

Other receivables

 

3,651

 

 

 

3,749

 

Other current assets

 

5,496

 

 

 

4,654

 

Total current assets

 

55,603

 

 

 

51,122

 

 

 

 

 

Long-term investments:

 

 

 

Fixed maturity securities

 

622

 

 

 

632

 

Other invested assets

 

5,516

 

 

 

5,225

 

Property and equipment, net

 

4,197

 

 

 

3,919

 

Goodwill

 

24,381

 

 

 

24,228

 

Other intangible assets

 

10,536

 

 

 

10,615

 

Other noncurrent assets

 

2,171

 

 

 

1,719

 

Total assets

$

103,026

 

 

$

97,460

 

 

 

 

 

Liabilities and equity

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Medical claims payable

$

15,242

 

 

$

13,518

 

Other policyholder liabilities

 

5,482

 

 

 

5,521

 

Unearned income

 

3,702

 

 

 

1,153

 

Accounts payable and accrued expenses

 

4,963

 

 

 

4,970

 

Short-term borrowings

 

265

 

 

 

275

 

Current portion of long-term debt

 

2,249

 

 

 

1,599

 

Other current liabilities

 

9,384

 

 

 

7,849

 

Total current liabilities

 

41,287

 

 

 

34,885

 

 

 

 

 

Long-term debt, less current portion

 

21,258

 

 

 

21,157

 

Reserves for future policy benefits

 

825

 

 

 

802

 

Deferred tax liabilities, net

 

1,825

 

 

 

2,805

 

Other noncurrent liabilities

 

1,788

 

 

 

1,683

 

Total liabilities

 

66,983

 

 

 

61,332

 

 

 

 

 

Shareholders’ equity

 

 

 

Common stock

 

2

 

 

 

2

 

Additional paid-in capital

 

9,169

 

 

 

9,148

 

Retained earnings

 

29,604

 

 

 

27,088

 

Accumulated other comprehensive loss

 

(2,784

)

 

 

(178

)

Total shareholders’ equity

 

35,991

 

 

 

36,060

 

Noncontrolling interests

 

52

 

 

 

68

 

Total equity

 

36,043

 

 

 

36,128

 

Total liabilities and equity

$

103,026

 

 

$

97,460

 

Elevance Health, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

(In millions)

Nine Months Ended September 30

 

2022

 

2021

Operating activities

 

 

 

Net income

$

5,058

 

 

$

4,970

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Net losses (gains) on financial instruments

 

439

 

 

 

(107

)

Equity in net earnings of other invested assets

 

(304

)

 

 

(437

)

Depreciation and amortization

 

1,202

 

 

 

942

 

Deferred income taxes

 

(170

)

 

 

114

 

Share-based compensation

 

191

 

 

 

196

 

Changes in operating assets and liabilities:

 

 

 

Receivables, net

 

(678

)

 

 

(1,751

)

Other invested assets

 

46

 

 

 

(56

)

Other assets

 

(474

)

 

 

(470

)

Policy liabilities

 

1,537

 

 

 

2,328

 

Unearned income

 

2,548

 

 

 

(308

)

Accounts payable and other liabilities

 

598

 

 

 

1,093

 

Income taxes

 

(41

)

 

 

168

 

Other, net

 

(35

)

 

 

10

 

Net cash provided by operating activities

 

9,917

 

 

 

6,692

 

 

 

 

 

Investing activities

 

 

 

Purchases of investments

 

(19,612

)

 

 

(15,130

)

Proceeds from sale of investments

 

9,402

 

 

 

8,339

 

Maturities, calls and redemptions from investments

 

7,606

 

 

 

3,388

 

Changes in securities lending collateral

 

(677

)

 

 

(1,030

)

Purchases of subsidiaries, net of cash acquired

 

(623

)

 

 

(3,442

)

Purchases of property and equipment

 

(854

)

 

 

(747

)

Other, net

 

(91

)

 

 

(50

)

Net cash used in investing activities

 

(4,849

)

 

 

(8,672

)

 

 

 

 

Financing activities

 

 

 

Net proceeds from commercial paper borrowings

 

375

 

 

 

(150

)

Net proceeds from (repayments of) short-term borrowings

 

(10

)

 

 

175

 

Net proceeds from long-term borrowings

 

304

 

 

 

2,508

 

Changes in securities lending payable

 

685

 

 

 

1,030

 

Changes in bank overdrafts

 

181

 

 

 

316

 

Repurchase and retirement of common stock

 

(1,748

)

 

 

(1,378

)

Cash dividends

 

(924

)

 

 

(831

)

Proceeds from issuance of common stock under employee stock plans

 

152

 

 

 

161

 

Taxes paid through withholding of common stock under employee stock plans

 

(91

)

 

 

(101

)

Other, net

 

16

 

 

 

8

 

Net cash (used in) provided by financing activities

 

(1,060

)

 

 

1,738

 

 

 

 

 

Effect of foreign exchange rates on cash and cash equivalents

 

(16

)

 

 

(9

)

 

 

 

 

Change in cash and cash equivalents

 

3,992

 

 

 

(251

)

Cash and cash equivalents at beginning of period

 

4,880

 

 

 

5,741

 

 

 

 

 

Cash and cash equivalents at end of period

$

8,872

 

 

$

5,490

 

Elevance Health, Inc.

Reconciliation of Medical Claims Payable

 

 

Nine Months Ended

September 30

 

Years Ended December 31

 

2022

 

2021

 

2021

 

2020

 

2019

(In millions)

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross medical claims payable, beginning of period

$

13,282

 

 

$

11,135

 

 

$

11,135

 

 

$

8,647

 

 

$

7,266

 

Ceded medical claims payable, beginning of period

 

(21

)

 

 

(46

)

 

 

(46

)

 

 

(33

)

 

 

(34

)

Net medical claims payable, beginning of period

 

13,261

 

 

 

11,089

 

 

 

11,089

 

 

 

8,614

 

 

 

7,232

 

 

 

 

 

 

 

 

 

 

 

Business combinations and purchase adjustments

 

133

 

 

 

420

 

 

 

420

 

 

 

339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net incurred medical claims:

 

 

 

 

 

 

 

 

 

Current year

 

84,177

 

 

 

74,097

 

 

 

100,440

 

 

 

85,094

 

 

 

78,695

 

Prior years redundancies(1)

 

(901

)

 

 

(1,822

)

 

 

(1,703

)

 

 

(637

)

 

 

(500

)

Total net incurred medical claims

 

83,276

 

 

 

72,275

 

 

 

98,737

 

 

 

84,457

 

 

 

78,195

 

 

 

 

 

 

 

 

 

 

 

Net payments attributable to:

 

 

 

 

 

 

 

 

 

Current year medical claims

 

70,453

 

 

 

62,123

 

 

 

88,156

 

 

 

74,629

 

 

 

70,294

 

Prior years medical claims

 

11,219

 

 

 

8,400

 

 

 

8,829

 

 

 

7,692

 

 

 

6,519

 

Total net payments

 

81,672

 

 

 

70,523

 

 

 

96,985

 

 

 

82,321

 

 

 

76,813

 

 

 

 

 

 

 

 

 

 

 

Net medical claims payable, end of period

 

14,998

 

 

 

13,261

 

 

 

13,261

 

 

 

11,089

 

 

 

8,614

 

Ceded medical claims payable, end of period

 

3

 

 

 

38

 

 

 

21

 

 

 

46

 

 

 

33

 

Gross medical claims payable, end of period

$

15,001

 

 

$

13,299

 

 

$

13,282

 

 

$

11,135

 

 

$

8,647

 

 

 

 

 

 

 

 

 

 

 

Current year medical claims paid as a percentage of current year net incurred medical claims

 

83.7

%

 

 

83.8

%

 

 

87.8

%

 

 

87.7

%

 

 

89.3

%

 

 

 

 

 

 

 

 

 

 

Prior year redundancies in the current year as a percentage of prior year net medical claims payable less prior year redundancies in the current year

 

7.3

%

 

 

19.7

%

 

 

18.1

%

 

 

8.0

%

 

 

7.4

%

 

 

 

 

 

 

 

 

 

 

Prior year redundancies in the current year as a percentage of prior year net incurred medical claims

 

0.9

%

 

 

2.2

%

 

 

2.0

%

 

 

0.8

%

 

 

0.7

%

 

 

 

 

 

 

 

 

 

 

(1) Negative amounts reported for net incurred medical claims related to prior years result from claims being settled for amounts less than originally estimated.

Elevance Health, Inc.

GAAP Reconciliation

(Unaudited)

Elevance Health, Inc. has referenced “Adjusted Net Income” and “Adjusted Net Income Per Share,” which are non-GAAP measures, in this document. These non-GAAP measures are not intended to be alternatives to any measure calculated in accordance with GAAP. In addition to these non-GAAP measures, references are made to the measures “Operating Revenue” and “Operating Gain.” Each of these measures is provided to further aid investors in understanding and analyzing the company’s core operating results and comparing Elevance Health, Inc.’s financial results. A reconciliation of Operating Revenue to Total Revenue is set forth in the Consolidated Statements of Income herein. A reconciliation of the non-GAAP measures to the most directly comparable measures calculated in accordance with GAAP, together with a reconciliation of reportable segments operating gain to income before income tax expense, is reported below. Prior amounts may be grouped differently to conform to current presentation.

 

Three Months Ended

September 30

 

 

 

Nine Months Ended

September 30

 

 

(In millions, except per share data)

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Shareholders' net income

$

1,618

 

 

$

1,509

 

 

7.2

%

 

$

5,076

 

 

$

4,967

 

 

2.2

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Net losses (gains) on financial instruments

 

57

 

 

 

61

 

 

 

 

 

439

 

 

 

(107

)

 

 

Amortization of other intangible assets

 

225

 

 

 

136

 

 

 

 

 

520

 

 

 

306

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

BCBSA litigation settlement

 

(24

)

 

 

 

 

 

 

 

(24

)

 

 

 

 

 

Transaction and integration related costs

 

13

 

 

 

14

 

 

 

 

 

36

 

 

 

35

 

 

 

Litigation expenses

 

6

 

 

 

3

 

 

 

 

 

11

 

 

 

15

 

 

 

Tax impact of non-GAAP adjustments

 

(72

)

 

 

(52

)

 

 

 

 

(261

)

 

 

(71

)

 

 

Net adjustment items

 

205

 

 

 

162

 

 

 

 

 

721

 

 

 

183

 

 

 

Adjusted shareholders' net income

$

1,823

 

 

$

1,671

 

 

9.1

%

 

$

5,797

 

 

$

5,150

 

 

12.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' net income per diluted share

$

6.68

 

 

$

6.13

 

 

9.0

%

 

$

20.86

 

 

$

20.09

 

 

3.8

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Net losses (gains) on financial instruments

 

0.24

 

 

 

0.25

 

 

 

 

 

1.80

 

 

 

(0.43

)

 

 

Amortization of other intangible assets

 

0.93

 

 

 

0.55

 

 

 

 

 

2.14

 

 

 

1.24

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

 

0.02

 

 

 

BCBSA litigation settlement

 

(0.10

)

 

 

 

 

 

 

 

(0.10

)

 

 

 

 

 

Transaction and integration related costs

 

0.05

 

 

 

0.06

 

 

 

 

 

0.15

 

 

 

0.14

 

 

 

Litigation expenses

 

0.02

 

 

 

0.01

 

 

 

 

 

0.05

 

 

 

0.06

 

 

 

Tax impact of non-GAAP adjustments

 

(0.30

)

 

 

(0.21

)

 

 

 

 

(1.07

)

 

 

(0.29

)

 

 

Rounding impact

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net adjustment items

 

0.85

 

 

 

0.66

 

 

 

 

 

2.97

 

 

 

0.74

 

 

 

Adjusted shareholders' net income per diluted share

$

7.53

 

 

$

6.79

 

 

10.9

%

 

$

23.83

 

 

$

20.83

 

 

14.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year 2022 Outlook

 

 

 

 

 

 

Shareholders' net income per diluted share

Greater than $25.33

 

 

 

 

 

 

Add / (Subtract):

 

 

 

 

 

 

 

Net losses on financial instruments

$

1.80

 

 

 

 

 

 

 

BCBSA litigation settlement

($

0.10

)

 

 

 

 

 

 

 

 

Transaction and integration related costs

$

0.15

 

 

 

 

 

 

 

Litigation expenses

$

0.05

 

 

 

 

 

 

 

Amortization of other intangible assets

Approximately $3.06

 

 

 

 

 

 

Tax impact of non-GAAP adjustments

Approximately $(1.34)

 

 

 

 

 

 

Net adjustment items

Approximately $3.62

 

 

 

 

 

 

Adjusted shareholders' net income per diluted share

Greater than $28.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30

 

 

 

Nine Months Ended

September 30

 

 

(In millions)

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Income before income tax expense

$

2,146

 

 

$

1,996

 

 

7.5

%

 

$

6,615

 

 

$

6,525

 

 

1.4

%

Net investment income

 

(371

)

 

 

(335

)

 

 

 

 

(1,112

)

 

 

(1,026

)

 

 

Net losses (gains) on financial instruments

 

57

 

 

 

61

 

 

 

 

 

439

 

 

 

(107

)

 

 

Interest expense

 

213

 

 

 

201

 

 

 

 

 

622

 

 

 

598

 

 

 

Amortization of other intangible assets

 

225

 

 

 

136

 

 

 

 

 

520

 

 

 

306

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

Reportable segments operating gain

$

2,270

 

 

$

2,059

 

 

10.2

%

 

$

7,084

 

 

$

6,301

 

 

12.4

%

Forward-Looking Statements

This document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our views about future events and financial performance and are generally not historical facts. Words such as “expect,” “feel,” “believe,” “will,” “may,” “should,” “anticipate,” “intend,” “estimate,” “project,” “forecast,” “plan” and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to: financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking statements. You are cautioned not to place undue reliance on these forward- looking statements that speak only as of the date hereof. You are also urged to carefully review and consider the various risks and other disclosures discussed in our reports filed with the U.S. Securities and Exchange Commission from time to time, which attempt to advise interested parties of the factors that affect our business. Except to the extent otherwise required by federal securities laws, we do not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof. These risks and uncertainties include, but are not limited to: the impact of large scale medical emergencies, such as public health epidemics and pandemics, including COVID-19, and catastrophes; trends in healthcare costs and utilization rates; our ability to secure sufficient premium rates, including regulatory approval for and implementation of such rates; the impact of federal, state and international law and regulation, including changes in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended; changes in economic and market conditions, as well as regulations that may negatively affect our liquidity and investment portfolios; our ability to contract with providers on cost-effective and competitive terms; competitive pressures and our ability to adapt to changes in the industry and develop and implement strategic growth opportunities; reduced enrollment; the impact of a cyber-attack or other cyber security breach resulting in unauthorized disclosure of member or employee sensitive or confidential information, including the impact and outcome of any investigations, inquiries, claims and litigation related thereto; risks and uncertainties regarding Medicare and Medicaid programs, including those related to non-compliance with the complex regulations imposed thereon; our ability to maintain and achieve improvement in Centers for Medicare and Medicaid Services Star ratings and other quality scores and funding risks with respect to revenue received from participation therein; a negative change in our healthcare product mix; costs and other liabilities associated with litigation, government investigations, audits or reviews; risks and uncertainties related to our pharmacy benefit management (“PBM”) business, including non-compliance by any party with the PBM services agreement between us and CaremarkPCS Health, L.L.C.; medical malpractice or professional liability claims or other risks related to healthcare and PBM services provided by our subsidiaries; general risks associated with mergers, acquisitions, joint ventures and strategic alliances; changes in tax laws; possible impairment of the value of our intangible assets if future results do not adequately support goodwill and other intangible assets; possible restrictions in the payment of dividends from our subsidiaries and increases in required minimum levels of capital; our ability to repurchase shares of our common stock and pay dividends on our common stock due to the adequacy of our cash flow and earnings and other considerations; the potential negative effect from our substantial amount of outstanding indebtedness; a downgrade in our financial strength ratings; the effects of any negative publicity related to the health benefits industry in general or us in particular; failure to effectively maintain and modernize our information systems; events that may negatively affect our licenses with the Blue Cross and Blue Shield Association; intense competition to attract and retain employees; risks associated with our international operations; and various laws and provisions in our governing documents that may prevent or discourage takeovers and business combinations.

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