Financial News

Elevance Health Reports Second Quarter 2023 Results

  • Second quarter GAAP net income was $7.79 per share, including net negative adjustment items of $1.25 per share. Adjusted net income was $9.04* per share.
  • Operating revenue grew 12.7% year-over-year to $43.4 billion
  • Operating gain grew 12.0% year-over-year to $2.6 billion
  • Medical enrollment increased 938 thousand members year-over-year to 48.0 million members
  • Third quarter 2023 dividend of $1.48 per share declared to shareholders

Elevance Health, Inc. (NYSE: ELV) reported second quarter 2023 results reflecting strong financial performance, including double-digit growth in revenue, operating earnings, and adjusted earnings per share.

“Our solid execution and continued progress of our strategy to become a lifetime trusted health partner resulted in strong second quarter and first half results,” said Gail K. Boudreaux, President and CEO. “Our focused efforts to optimize our mature businesses, invest in high-growth opportunities, and accelerate our growth through Carelon to meet the whole health needs of consumers positions us well for the rest of 2023 and beyond.”

Given the strong performance in the first half of the year and momentum across Elevance Health, we now expect GAAP net income to be greater than $29.09 per share in 2023, and adjusted net income to be greater than $32.85 per share.

*Refer to GAAP reconciliation tables.

CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $7.79 per share in the second quarter, including net negative adjustment items of $1.25 per share. Adjusted net income was $9.04* per share.

*Please refer to the GAAP reconciliation tables.

Membership: Medical membership totaled approximately 48.0 million as of June 30, 2023, an increase of 938 thousand, or 2.0 percent year-over-year, driven primarily by growth in Medicaid, BlueCard, ACA health plan, and Medicare Advantage members, partially offset by attrition in our Employer Group risk-based business.

During the second quarter of 2023, medical membership decreased by 135 thousand driven by attrition in Medicaid due to the resumption of eligibility redeterminations.

Operating Revenue: Operating revenue was $43.4 billion in the second quarter of 2023, an increase of $4.9 billion, or 12.7 percent year-over-year. The increase was primarily driven by premium rate increases in our Health Benefits business and higher premium revenue due to membership growth in Medicaid and Medicare. The increase in operating revenue was further attributable to growth in pharmacy product revenue within CarelonRx driven by growth in external pharmacy members served and the acquisition of BioPlus in the first quarter of 2023.

Benefit Expense Ratio: The benefit expense ratio was 86.4 percent in the second quarter of 2023, a decrease of 70 basis points year-over-year. The decrease was driven by premium rate adjustments to more accurately reflect cost of care.

Medical claims reserves established at December 31, 2022 developed in line with the Company’s expectations as of the second quarter of 2023.

Days in Claims Payable: Days in Claims Payable was 46.5 days as of June 30, 2023, an increase of 0.5 days from March 31, 2023 and a decrease of 1.3 days compared to June 30, 2022. The timing of certain provider pass-through payments and corresponding reserves set in the prior year had the effect of increasing Days in Claims Payable by 1.8 days in the second quarter of 2022. Adjusting for these impacts, Days in Claims Payable would have increased 0.5 days year-over-year.

Operating Expense Ratio: The operating expense ratio was 11.1 percent in the second quarter of 2023, unchanged from 11.1 percent in the second quarter of 2022.

Operating Cash Flow: Operating cash flow was approximately $2.0 billion, or 1.1 times net income in the second quarter of 2023.

Share Repurchase Program: During the second quarter of 2023, the Company repurchased 1.4 million shares of its common stock for $646 million, at a weighted average price of $457.34. Year-to-date, as of the end of the second quarter, the Company repurchased 2.7 million shares of its common stock for $1.3 billion, at a weighted average price of $466.62. As of June 30, 2023, the Company had approximately $5.6 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the second quarter of 2023, the Company paid a quarterly dividend of $1.48 per share, representing a distribution of cash totaling $350 million.

On July 18, 2023, the Audit Committee of the Company's Board of Directors declared a third quarter 2023 dividend to shareholders of $1.48 per share. The third quarter dividend is payable on September 22, 2023, to shareholders of record at the close of business on September 8, 2023.

Investment Portfolio & Capital Position: During the second quarter of 2023, the Company recorded net losses of $121 million. During the second quarter of 2022, the Company recorded net losses of $231 million. These amounts are excluded from adjusted earnings per share.

As of June 30, 2023, the Company’s net unrealized loss position in the investment portfolio was $1.9 billion, consisting primarily of fixed maturity securities. As of June 30, 2023, cash and investments at the parent company totaled approximately $1.0 billion.

REPORTABLE SEGMENTS

Elevance Health has four reportable segments: Health Benefits, the aggregation of our Commercial & Specialty Business and Government Business (comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard businesses, Medicaid, Medicare, and Federal Health Products & Services businesses); CarelonRx (formerly IngenioRx); Carelon Services (formerly known as Diversified Business Group); and Corporate & Other (comprised of businesses that do not individually meet the quantitative thresholds for an operating division as well as corporate expenses not allocated to our other reportable segments).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elevance Health, Inc.

 

 

Reportable Segment Highlights

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

Three Months Ended June 30

 

Six Months Ended June 30

 

 

 

2023

 

2022

 

Change

 

2023

 

2022

 

Change

 

 

 

 

 

(Restated)

 

 

 

 

 

(Restated)

 

 

 

 

Operating Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Benefits

$38,000

 

 

$34,396

 

 

10.5

%

 

$75,280

 

 

$68,423

 

 

10.0

%

 

 

Carelon1

11,907

 

 

10,054

 

 

18.4

%

 

23,243

 

 

19,685

 

 

18.1

%

 

 

Corporate & Other

287

 

 

315

 

 

(8.9

)%

 

538

 

 

588

 

 

(8.5

)%

 

 

Eliminations

(6,817

)

 

(6,283

)

 

8.5

%

 

(13,786

)

 

(12,328

)

 

11.8

%

 

 

Total Operating Revenue2

$43,377

 

 

$38,482

 

 

12.7

%

 

$85,275

 

 

$76,368

 

 

11.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Gain (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Benefits

$2,148

 

 

$1,781

 

 

20.6

%

 

$4,307

 

 

$3,632

 

 

18.6

%

 

 

Carelon1

632

 

 

592

 

 

6.8

%

 

1,353

 

 

1,190

 

 

13.7

%

 

 

Corporate & Other

(152

)

 

(27

)

 

NM3

 

 

(201

)

 

(49

)

 

NM3

 

 

 

Total Operating Gain2

$2,628

 

 

$2,346

 

 

12.0

%

 

$5,459

 

 

$4,773

 

 

14.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Benefits

5.7

%

 

5.2

%

 

50

bp

 

5.7

%

 

5.3

%

 

40

bp

 

 

Carelon1

5.3

%

 

5.9

%

 

(60

) bp

 

5.8

%

 

6.0

%

 

(20

) bp

 

 

Total Operating Margin2

6.1

%

 

6.1

%

 

bp

 

6.4

%

 

6.3

%

 

10

bp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.

Operating Revenue and Operating Gain for Carelon for the three months ended June 30, 2023 included $8,466 and $496 for CarelonRx; $3,441 and $136 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the three months ended June 30, 2022 included $7,071 and $479 for CarelonRx; $2,983 and $113 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the six months ended June 30, 2023 included $16,490 and $1,008 for CarelonRx; $6,753 and $345 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the six months ended June 30, 2022 included $13,754 and $877 for CarelonRx; $5,931 and $313 for Carelon Services, respectively.

2.

See “Basis of Presentation.”

3.

"NM" = calculation not meaningful.

Health Benefits: Operating gain in the Health Benefits segment totaled $2.1 billion in the second quarter of 2023, an increase of $367 million from $1.8 billion in the second quarter of 2022, representing growth of approximately 21%. The increase was primarily driven by premium rate adjustments to more accurately reflect cost of care and membership growth in Medicaid, partially offset by a charge associated with a court ruling impacting health plans in a certain state related to prior years' COVID-19 costs.

Carelon: Operating gain in the Carelon segment was $632 million in the second quarter of 2023, an increase of $40 million from $592 million in the second quarter of 2022. The increase was primarily driven by improved performance in our medical management business and the expansion of our post-acute care services, partially offset by higher medical cost trends and the non-recurrence of an out of period favorable adjustment in the second quarter of 2022 in CarelonRx.

Corporate & Other: The Company reported an operating loss of $152 million in the Corporate & Other segment for the second quarter of 2023, a decrease of $125 million from an operating loss of $27 million in the second quarter of 2022, driven by an increase in unallocated corporate expenses.

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 operating 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 second 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)

800-391-9853 (Domestic Replay)

312-470-0178 (International)

203-369-3269 (International Replay)

The access code for today's conference call is 3972058. There is no access code for the replay. The replay will be available from 11:30 a.m. EDT today, until the end of the day on August 18, 2023. 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 approximately 118 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 and Other Metrics

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change from

Medical Membership (in thousands)

June 30,

2023

 

June 30,

2022

 

March 31,

2023

 

June 30,

2022

 

March 31,

2023

Individual

949

 

803

 

942

 

18.2

%

 

0.7

%

Employer Group Risk-Based

3,765

 

4,020

 

3,798

 

(6.3

)%

 

(0.9

)%

Commercial Risk-Based

4,714

 

4,823

 

4,740

 

(2.3

)%

 

(0.5

)%

BlueCard®

6,737

 

6,445

 

6,607

 

4.5

%

 

2.0

%

Employer Group Fee-Based

20,160

 

20,086

 

20,278

 

0.4

%

 

(0.6

)%

Commercial Fee-Based

26,897

 

26,531

 

26,885

 

1.4

%

 

%

Medicare Advantage

2,059

 

1,946

 

2,053

 

5.8

%

 

0.3

%

Medicare Supplement

926

 

942

 

925

 

(1.7

)%

 

0.1

%

Total Medicare

2,985

 

2,888

 

2,978

 

3.4

%

 

0.2

%

Medicaid

11,759

 

11,181

 

11,889

 

5.2

%

 

(1.1

)%

Federal Employees Health Benefits

1,634

 

1,628

 

1,632

 

0.4

%

 

0.1

%

Total Medical Membership

47,989

 

47,051

 

48,124

 

2.0

%

 

(0.3

)%

Other Membership (in thousands)

 

 

 

 

 

 

 

 

 

Life and Disability Members

4,686

 

4,779

 

4,771

 

(1.9

)%

 

(1.8

)%

Dental Members

6,728

 

6,620

 

6,743

 

1.6

%

 

(0.2

)%

Dental Administration Members

1,694

 

1,589

 

1,697

 

6.6

%

 

(0.2

)%

Vision Members

9,850

 

9,385

 

9,904

 

5.0

%

 

(0.5

)%

Medicare Part D Standalone Members

263

 

276

 

264

 

(4.7

)%

 

(0.4

)%

Other Metrics (in millions)

 

 

 

 

 

 

 

 

 

CarelonRx Quarterly Adjusted Scripts

77.4

 

76.4

 

75.7

 

1.3

%

 

2.2

%

Carelon Services Consumers Served

103.6

 

104.7

 

104.0

 

(1.1

)%

 

(0.4

)%

Elevance Health, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

(In millions, except per share data)

 

Three Months Ended

June 30

 

 

 

 

2023

 

2022

 

Change

 

 

 

 

(Restated)

 

 

Revenues

 

 

 

 

 

 

Premiums

 

$

36,589

 

 

$

33,076

 

 

10.6

%

Product revenue

 

 

4,859

 

 

 

3,568

 

 

36.2

%

Service fees

 

 

1,929

 

 

 

1,838

 

 

5.0

%

Total operating revenue

 

 

43,377

 

 

 

38,482

 

 

12.7

%

Net investment income

 

 

416

 

 

 

381

 

 

9.2

%

Net losses on financial instruments

 

 

(121

)

 

 

(231

)

 

NM

 

Total revenues

 

 

43,672

 

 

 

38,632

 

 

13.0

%

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Benefit expense

 

 

31,604

 

 

 

28,795

 

 

9.8

%

Cost of products sold

 

 

4,327

 

 

 

3,069

 

 

41.0

%

Operating expense

 

 

4,818

 

 

 

4,272

 

 

12.8

%

Interest expense

 

 

261

 

 

 

208

 

 

25.5

%

Amortization of other intangible assets

 

 

221

 

 

 

166

 

 

33.1

%

Total expenses

 

 

41,231

 

 

 

36,510

 

 

12.9

%

 

 

 

 

 

 

 

Income before income tax expense

 

 

2,441

 

 

 

2,122

 

 

15.0

%

 

 

 

 

 

 

 

Income tax expense

 

 

585

 

 

 

488

 

 

19.9

%

 

 

 

 

 

 

 

Net income

 

 

1,856

 

 

 

1,634

 

 

13.6

%

 

 

 

 

 

 

 

Net (income) loss attributable to noncontrolling interests

 

 

(3

)

 

 

3

 

 

NM

 

 

 

 

 

 

 

 

Shareholders' net income

 

$

1,853

 

 

$

1,637

 

 

13.2

%

 

 

 

 

 

 

 

Shareholders' net income per diluted share

 

$

7.79

 

 

$

6.73

 

 

15.8

%

 

 

 

 

 

 

 

Diluted shares

 

 

237.8

 

 

 

243.4

 

 

(2.3

)%

 

 

 

 

 

 

 

Benefit expense as a percentage of premiums

 

 

86.4

%

 

 

87.1

%

 

(70

) bp

Operating expense as a percentage of total operating revenue

 

 

11.1

%

 

 

11.1

%

 

bp

Income before income tax expense as a percentage of total revenue

 

 

5.6

%

 

 

5.5

%

 

10

bp

 

"NM" = calculation not meaningful

Elevance Health, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

(In millions, except per share data)

 

Six Months Ended

June 30

 

 

 

 

2023

 

2022

 

Change

 

 

 

 

(Restated)

 

 

Revenues

 

 

 

 

 

 

Premiums

 

$

72,457

 

 

$

65,861

 

 

10.0

%

Product revenue

 

 

8,881

 

 

 

6,869

 

 

29.3

%

Service fees

 

 

3,937

 

 

 

3,638

 

 

8.2

%

Total operating revenue

 

 

85,275

 

 

 

76,368

 

 

11.7

%

Net investment income

 

 

803

 

 

 

741

 

 

8.4

%

Net losses on financial instruments

 

 

(234

)

 

 

(382

)

 

NM

 

Total revenues

 

 

85,844

 

 

 

76,727

 

 

11.9

%

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Benefit expense

 

 

62,390

 

 

 

57,026

 

 

9.4

%

Cost of products sold

 

 

7,808

 

 

 

5,952

 

 

31.2

%

Operating expense

 

 

9,618

 

 

 

8,617

 

 

11.6

%

Interest expense

 

 

512

 

 

 

409

 

 

25.2

%

Amortization of other intangible assets

 

 

456

 

 

 

295

 

 

54.6

%

 

 

 

 

 

 

 

Total expenses

 

 

80,784

 

 

 

72,299

 

 

11.7

%

 

 

 

 

 

 

 

Income before income tax expense

 

 

5,060

 

 

 

4,428

 

 

14.3

%

 

 

 

 

 

 

 

Income tax expense

 

 

1,200

 

 

 

1,015

 

 

18.2

%

 

 

 

 

 

 

 

Net income

 

 

3,860

 

 

 

3,413

 

 

13.1

%

 

 

 

 

 

 

 

Net (income) loss attributable to noncontrolling interests

 

 

(18

)

 

 

13

 

 

NM

 

 

 

 

 

 

 

 

Shareholders' net income

 

$

3,842

 

 

$

3,426

 

 

12.1

%

 

 

 

 

 

 

 

Shareholders' net income per diluted share

 

$

16.10

 

 

$

14.05

 

 

14.6

%

 

 

 

 

 

 

 

Diluted shares

 

 

238.7

 

 

 

243.9

 

 

(2.1

)%

 

 

 

 

 

 

 

Benefit expense as a percentage of premiums

 

 

86.1

%

 

 

86.6

%

 

(50

) bp

Operating expense as a percentage of total operating revenue

 

 

11.3

%

 

 

11.3

%

 

bp

Income before income tax expense as a percentage of total revenue

 

 

5.9

%

 

 

5.8

%

 

10

bp

 

"NM" = calculation not meaningful

Elevance Health, Inc.

Consolidated Balance Sheets

 

(In millions)

June 30,

2023

 

December 31,

2022

Assets

(Unaudited)

 

(Restated)

Current assets:

 

 

 

Cash and cash equivalents

$

9,991

 

 

$

7,387

 

Fixed maturity securities

 

28,021

 

 

 

25,952

 

Equity securities

 

272

 

 

 

953

 

Premium receivables

 

7,431

 

 

 

7,083

 

Self-funded receivables

 

3,896

 

 

 

4,663

 

Other receivables

 

5,196

 

 

 

4,298

 

Other current assets

 

4,936

 

 

 

5,281

 

Total current assets

 

59,743

 

 

 

55,617

 

 

 

 

 

Long-term investments:

 

 

 

Fixed maturity securities

 

775

 

 

 

752

 

Other invested assets

 

5,993

 

 

 

5,685

 

Property and equipment, net

 

4,547

 

 

 

4,316

 

Goodwill

 

25,274

 

 

 

24,383

 

Other intangible assets

 

10,703

 

 

 

10,315

 

Other noncurrent assets

 

2,133

 

 

 

1,687

 

Total assets

$

109,168

 

 

$

102,755

 

 

 

 

 

Liabilities and equity

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Medical claims payable

$

16,165

 

 

$

15,596

 

Other policyholder liabilities

 

5,954

 

 

 

5,933

 

Unearned income

 

4,458

 

 

 

1,112

 

Accounts payable and accrued expenses

 

5,033

 

 

 

5,607

 

Short-term borrowings

 

265

 

 

 

265

 

Current portion of long-term debt

 

 

 

 

1,500

 

Other current liabilities

 

9,696

 

 

 

9,683

 

Total current liabilities

 

41,571

 

 

 

39,696

 

 

 

 

 

Long-term debt, less current portion

 

24,859

 

 

 

22,349

 

Reserves for future policy benefits

 

797

 

 

 

803

 

Deferred tax liabilities, net

 

1,852

 

 

 

2,015

 

Other noncurrent liabilities

 

1,777

 

 

 

1,562

 

Total liabilities

 

70,856

 

 

 

66,425

 

 

 

 

 

Shareholders’ equity

 

 

 

Common stock

 

2

 

 

 

2

 

Additional paid-in capital

 

8,761

 

 

 

9,084

 

Retained earnings

 

31,608

 

 

 

29,647

 

Accumulated other comprehensive loss

 

(2,166

)

 

 

(2,490

)

Total shareholders’ equity

 

38,205

 

 

 

36,243

 

Noncontrolling interests

 

107

 

 

 

87

 

Total equity

 

38,312

 

 

 

36,330

 

Total liabilities and equity

$

109,168

 

 

$

102,755

 

Elevance Health, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

(In millions)

Six Months Ended June 30

 

2023

 

2022

 

 

 

(Restated)

Operating activities

 

 

 

Net income

$

3,860

 

 

$

3,413

 

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

 

 

 

Net losses on financial instruments

 

234

 

 

 

382

 

Equity in net earnings of other invested assets

 

73

 

 

 

(258

)

Depreciation and amortization

 

895

 

 

 

751

 

Deferred income taxes

 

(393

)

 

 

(181

)

Share-based compensation

 

139

 

 

 

122

 

Changes in operating assets and liabilities:

 

 

 

Receivables, net

 

(299

)

 

 

(662

)

Other invested assets

 

(42

)

 

 

32

 

Other assets

 

(529

)

 

 

(412

)

Policy liabilities

 

583

 

 

 

1,548

 

Unearned income

 

3,346

 

 

 

(182

)

Accounts payable and other liabilities

 

160

 

 

 

632

 

Income taxes

 

391

 

 

 

(159

)

Other, net

 

1

 

 

 

(33

)

Net cash provided by operating activities

 

8,419

 

 

 

4,993

 

 

 

 

 

Investing activities

 

 

 

Purchases of investments

 

(17,648

)

 

 

(13,253

)

Proceeds from sale of investments

 

5,339

 

 

 

7,140

 

Maturities, calls and redemptions from investments

 

10,656

 

 

 

4,347

 

Changes in securities lending collateral

 

145

 

 

 

(620

)

Purchases of subsidiaries, net of cash acquired

 

(1,651

)

 

 

(609

)

Purchases of property and equipment

 

(651

)

 

 

(549

)

Other, net

 

(46

)

 

 

(58

)

Net cash used in investing activities

 

(3,856

)

 

 

(3,602

)

 

 

 

 

Financing activities

 

 

 

Net proceeds from commercial paper borrowings

 

90

 

 

 

250

 

Net proceeds from (repayments of) short-term borrowings

 

(90

)

 

 

(100

)

Net proceeds from (repayments of) long-term borrowings

 

666

 

 

 

357

 

Changes in securities lending payable

 

(145

)

 

 

620

 

Changes in bank overdrafts

 

(500

)

 

 

817

 

Repurchase and retirement of common stock

 

(1,268

)

 

 

(1,169

)

Cash dividends

 

(701

)

 

 

(618

)

Proceeds from issuance of common stock under employee stock plans

 

81

 

 

 

116

 

Taxes paid through withholding of common stock under employee stock plans

 

(99

)

 

 

(88

)

Other, net

 

5

 

 

 

10

 

Net cash (used in) provided by financing activities

 

(1,961

)

 

 

195

 

 

 

 

 

Effect of foreign exchange rates on cash and cash equivalents

 

2

 

 

 

(10

)

 

 

 

 

Change in cash and cash equivalents

 

2,604

 

 

 

1,576

 

Cash and cash equivalents at beginning of period

 

7,387

 

 

 

4,880

 

 

 

 

 

Cash and cash equivalents at end of period

$

9,991

 

 

$

6,456

 

Elevance Health, Inc.

Reconciliation of Medical Claims Payable

 

 

Six Months Ended June 30

 

Years Ended December 31

 

2023

 

2022

 

2022

 

2021

 

2020

(In millions)

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross medical claims payable, beginning of period

$

15,348

 

 

$

13,282

 

 

$

13,282

 

 

$

11,135

 

 

$

8,647

 

Ceded medical claims payable, beginning of period

 

(6

)

 

 

(21

)

 

 

(21

)

 

 

(46

)

 

 

(33

)

Net medical claims payable, beginning of period

 

15,342

 

 

 

13,261

 

 

 

13,261

 

 

 

11,089

 

 

 

8,614

 

 

 

 

 

 

 

 

 

 

 

Business combinations and purchase adjustments

 

 

 

 

133

 

 

 

133

 

 

 

420

 

 

 

339

 

 

 

 

 

 

 

 

 

 

 

Net incurred medical claims:

 

 

 

 

 

 

 

 

 

Current year

 

61,290

 

 

 

55,737

 

 

 

113,414

 

 

 

100,440

 

 

 

85,094

 

Prior years redundancies1

 

(1,112

)

 

 

(972

)

 

 

(869

)

 

 

(1,703

)

 

 

(637

)

Total net incurred medical claims

 

60,178

 

 

 

54,765

 

 

 

112,545

 

 

 

98,737

 

 

 

84,457

 

 

 

 

 

 

 

 

 

 

 

Net payments attributable to:

 

 

 

 

 

 

 

 

 

Current year medical claims

 

48,217

 

 

 

42,882

 

 

 

98,997

 

 

 

88,156

 

 

 

74,629

 

Prior years medical claims

 

11,409

 

 

 

10,401

 

 

 

11,600

 

 

 

8,829

 

 

 

7,692

 

Total net payments

 

59,626

 

 

 

53,283

 

 

 

110,597

 

 

 

96,985

 

 

 

82,321

 

 

 

 

 

 

 

 

 

 

 

Net medical claims payable, end of period

 

15,894

 

 

 

14,876

 

 

 

15,342

 

 

 

13,261

 

 

 

11,089

 

Ceded medical claims payable, end of period

 

8

 

 

 

13

 

 

 

6

 

 

 

21

 

 

 

46

 

Gross medical claims payable, end of period

$

15,902

 

 

$

14,889

 

 

$

15,348

 

 

$

13,282

 

 

$

11,135

 

 

 

 

 

 

 

 

 

 

 

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

 

78.7

%

 

 

76.9

%

 

 

87.3

%

 

 

87.8

%

 

 

87.7

%

 

 

 

 

 

 

 

 

 

 

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

 

7.8

%

 

 

7.9

%

 

 

7.0

%

 

 

18.1

%

 

 

8.0

%

 

 

 

 

 

 

 

 

 

 

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

 

1.0

%

 

 

1.0

%

 

 

0.9

%

 

 

2.0

%

 

 

0.8

%

 

 

 

 

 

 

 

 

 

 

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

June 30

 

 

 

Six Months Ended

June 30

 

 

(In millions, except per share data)

2023

 

2022

 

Change

 

2023

 

2022

 

Change

Shareholders' net income - As reported

$

1,853

 

 

$

1,653

 

 

12.1

%

 

$

3,842

 

 

$

3,458

 

 

11.1

%

Impact of Accounting Standards Update 2018-12 Adoption

 

 

 

 

(16

)

 

 

 

 

 

 

 

(32

)

 

 

Shareholders' net income - Restated

$

1,853

 

 

$

1,637

 

 

13.2

%

 

$

3,842

 

 

$

3,426

 

 

12.1

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Net losses on financial instruments

 

121

 

 

 

231

 

 

 

 

 

234

 

 

 

382

 

 

 

Amortization of other intangible assets

 

221

 

 

 

166

 

 

 

 

 

456

 

 

 

295

 

 

 

Transaction and integration related costs

 

55

 

 

 

14

 

 

 

 

 

81

 

 

 

23

 

 

 

Litigation expenses

 

2

 

 

 

4

 

 

 

 

 

3

 

 

 

5

 

 

 

Tax impact of non-GAAP adjustments

 

(103

)

 

 

(111

)

 

 

 

 

(200

)

 

 

(189

)

 

 

Net adjustment items

 

296

 

 

 

304

 

 

 

 

 

574

 

 

 

516

 

 

 

Adjusted shareholders' net income

$

2,149

 

 

$

1,941

 

 

10.7

%

 

$

4,416

 

 

$

3,942

 

 

12.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' net income per diluted share - As reported

$

7.79

 

 

$

6.79

 

 

14.7

%

 

$

16.10

 

 

$

14.18

 

 

13.5

%

Impact of Accounting Standards Update 2018-12 Adoption

 

 

 

 

(0.06

)

 

 

 

 

 

 

 

(0.13

)

 

 

Shareholders' net income per diluted share - Restated

 

7.79

 

 

 

6.73

 

 

15.8

%

 

 

16.10

 

 

 

14.05

 

 

14.6

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Net losses on financial instruments

 

0.51

 

 

 

0.95

 

 

 

 

 

0.98

 

 

 

1.57

 

 

 

Amortization of other intangible assets

 

0.93

 

 

 

0.68

 

 

 

 

 

1.91

 

 

 

1.21

 

 

 

Transaction and integration related costs

 

0.23

 

 

 

0.06

 

 

 

 

 

0.34

 

 

 

0.09

 

 

 

Litigation expenses

 

0.01

 

 

 

0.02

 

 

 

 

 

0.01

 

 

 

0.02

 

 

 

Tax impact of non-GAAP adjustments

 

(0.43

)

 

 

(0.46

)

 

 

 

 

(0.84

)

 

 

(0.77

)

 

 

Rounding impact

 

 

 

 

(0.01

)

 

 

 

 

 

 

 

(0.01

)

 

 

Net adjustment items

 

1.25

 

 

 

1.24

 

 

 

 

 

2.40

 

 

 

2.11

 

 

 

Adjusted shareholders' net income per diluted share

$

9.04

 

 

$

7.97

 

 

13.4

%

 

$

18.50

 

 

$

16.16

 

 

14.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year 2023 Outlook

 

 

 

 

 

 

Shareholders' net income per diluted share

Greater than $29.09

 

 

 

 

 

 

 

Add / (Subtract):

 

 

 

 

 

 

 

Net losses on financial instruments

$0.98

 

 

 

 

 

 

 

Transaction and integration related costs

$0.34

 

 

 

 

 

 

 

Litigation expenses

$0.01

 

 

 

 

 

 

 

Amortization of other intangible assets

$3.68

 

 

 

 

 

 

 

Tax impact of non-GAAP adjustments

Approximately $(1.25

)

 

 

 

 

 

 

Net adjustment items

$3.76

 

 

 

 

 

 

 

Adjusted shareholders' net income per diluted share

Greater Than $32.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30

 

 

 

Six Months Ended

June 30

 

 

(In millions)

2023

 

2022

 

Change

 

2023

 

2022

 

Change

 

 

 

(Restated)

 

 

 

 

 

(Restated)

 

 

Income before income tax expense

$

2,441

 

 

$

2,122

 

 

15.0

%

 

$

5,060

 

 

$

4,428

 

 

14.3

%

Net investment income

 

(416

)

 

 

(381

)

 

 

 

 

(803

)

 

 

(741

)

 

 

Net losses on financial instruments

 

121

 

 

 

231

 

 

 

 

 

234

 

 

 

382

 

 

 

Interest expense

 

261

 

 

 

208

 

 

 

 

 

512

 

 

 

409

 

 

 

Amortization of other intangible assets

 

221

 

 

 

166

 

 

 

 

 

456

 

 

 

295

 

 

 

Reportable segments operating gain

$

2,628

 

 

$

2,346

 

 

12.0

%

 

$

5,459

 

 

$

4,773

 

 

14.4

%

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 required by law, we do not undertake to update or revise any forward-looking statements to reflect events or circumstances occurring after the date hereof. These risks and uncertainties include, but are not limited to: trends in healthcare costs and utilization rates; reduced enrollment; our ability to secure and implement sufficient premium rates; the impact of large scale medical emergencies, such as public health epidemics and pandemics, including COVID-19, and other catastrophes; the impact of new or changes in existing federal, state and international laws or regulations, including healthcare laws and regulations, or their enforcement or application; the impact of cyber-attacks or other privacy or data security incidents or breaches or our failure to comply with any privacy or security laws or regulations, including any investigations, claims or litigation related thereto; information technology disruptions; changes in economic and market conditions, as well as regulations that may negatively affect our liquidity and investment portfolios; competitive pressures and our ability to adapt to changes in the industry and develop and implement strategic growth opportunities; 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; our ability to contract with providers on cost-effective and competitive terms; failure to effectively maintain and modernize our information systems; risks associated with providing pharmacy, healthcare and other diversified products and services, including medical malpractice or professional liability claims and non-compliance by any party with the pharmacy services agreement between us and CaremarkPCS Health, L.L.C.; risks associated with mergers, acquisitions, joint ventures and strategic alliances; 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 and the risk that increased interest rates or market volatility could impact our access to or further increase the cost of financing; 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; 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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