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Elevance Health Reports Third Quarter 2023 Results

  • Third quarter GAAP net income was $5.45 per share, including net negative adjustment items of $3.54 per share. Adjusted net income was $8.99* per share.
  • Operating gain, excluding adjustment items, grew 12.6% year-over-year to $2.5 billion.
  • Operating cash flow was $2.6 billion.

Elevance Health, Inc. (NYSE: ELV) reported third quarter 2023 results reflecting strong financial performance across the enterprise.

“Elevance Health delivered another quarter of solid performance reflecting the strength and balance of our diversified portfolio of businesses, our continued investments in innovation and growth, and our relentless focus on affordability, simplicity, and customer experience,” said Gail K. Boudreaux, President and CEO. “With affordability a paramount concern for all payors and a more uncertain forward-looking operating environment, we took action during the third quarter that will enhance our ability to act nimbly and operate efficiently. Along with the earnings power of our Health Benefits and Carelon businesses, we are well-positioned to meet our commitments to all of our stakeholders while continuing to advance our whole health strategy.”

As a result of outperformance year-to-date, the Company now expects GAAP net income to be greater than $26.40 per share in 2023, and adjusted net income to be greater than $33.00 per share.

*Refer to GAAP reconciliation tables.

CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $5.45 per share in the third quarter, including net negative adjustment items of $3.54 per share. Adjusted net income was $8.99* per share.

*Please refer to the GAAP reconciliation tables.

Membership: Medical membership totaled approximately 47.3 million as of September 30, 2023, an increase of 42 thousand, or 0.1 percent year-over-year, driven primarily by growth in BlueCard, Affordable Care Act health plans, and Medicare Advantage membership, partially offset by attrition in Medicaid due to the resumption of eligibility redeterminations and a new entrant into one of our state Medicaid programs in the third quarter, as well as declines in our Employer Group risk-based business.

During the third quarter of 2023, medical membership decreased by 664 thousand driven by attrition in Medicaid due to the aforementioned dynamics.

Operating Revenue: Operating revenue was $42.5 billion in the third quarter of 2023, an increase of $2.9 billion, or 7.2 percent year-over-year. The increase was primarily driven by higher premium revenue in our Health Benefits business and growth in pharmacy product revenue in CarelonRx due to 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 86.8 percent in the third quarter, an improvement of 40 basis points year-over-year. The improvement was driven by premium rate adjustments in recognition of medical cost trend.

Medical claims reserves established at December 31, 2022 developed within the range of the Company’s expectations as of the third quarter of 2023.

Days in Claims Payable: Days in Claims Payable was 48.6 days as of September 30, 2023, an increase of 2.1 days from June 30, 2023 and an increase of 0.9 days compared to September 30, 2022.

Operating Expense Ratio: The operating expense ratio was 12.9% in the third quarter of 2023, an increase of 150 basis points from 11.4% in the third quarter of 2022. The increase was due to a business optimization charge recognized in the quarter.

In the third quarter, we completed a strategic review of our operations, assets, and investments to enhance operating efficiency, refine the focus of our investments in innovation and optimize our physical footprint. This resulted in a net charge of $697 million, comprised of the write-off of certain information technology assets and contract exit costs, a reduction in staff including the relocation of certain job functions, and the impairment of assets associated with the closure or partial closure of data centers and offices.

Operating Cash Flow: Operating cash flow was approximately $2.6 billion, or 2.0 times net income in the third quarter of 2023, a decrease of $2.3 billion as compared to the prior year quarter. The year-on-year decrease was driven by the receipt of an additional month of CMS payments in the third quarter of 2022.

Share Repurchase Program: During the third quarter of 2023, the Company repurchased 1.1 million shares of its common stock for $480 million, at a weighted average price of $451.68. Year-to-date, as of the end of the third quarter, the Company repurchased 3.8 million shares of its common stock for $1.7 billion, at a weighted average price of $462.42. As of September 30, 2023, the Company had approximately $5.1 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the third quarter of 2023, the Company paid a quarterly dividend of $1.48 per share, representing a distribution of cash totaling $348 million.

On October 17, 2023, the Audit Committee of the Company's Board of Directors declared a fourth quarter 2023 dividend to shareholders of $1.48 per share. The fourth quarter dividend is payable on December 21, 2023, to shareholders of record at the close of business on December 6, 2023.

Investment Portfolio & Capital Position: During the third quarter of 2023, the Company recorded net losses of $124 million. During the third quarter of 2022, the Company recorded net losses of $57 million. These amounts are excluded from adjusted earnings per share.

As of September 30, 2023, the Company’s net unrealized loss position in the investment portfolio was $2.4 billion, consisting primarily of fixed maturity securities. As of September 30, 2023, cash and investments at the parent company totaled approximately $1.7 billion.

REPORTABLE SEGMENTS

Elevance Health has four reportable segments: Health Benefits (comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard, Medicaid, Medicare, and Federal Health Products & Services businesses); CarelonRx; Carelon Services; 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 September 30

 

Nine Months Ended September 30

 

 

 

2023

 

 

 

2022

 

 

Change

 

 

2023

 

 

 

2022

 

 

Change

 

 

 

 

(Restated)

 

 

 

 

 

(Restated)

 

 

 

Operating Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Health Benefits

$

36,744

 

 

$

35,065

 

 

4.8

%

 

$

112,024

 

 

$

103,488

 

 

8.2

%

 

Carelon1

 

11,892

 

 

 

10,403

 

 

14.3

%

 

 

35,135

 

 

 

30,088

 

 

16.8

%

 

Corporate & Other

 

242

 

 

 

211

 

 

14.7

%

 

 

780

 

 

 

799

 

 

(2.4

)%

 

Eliminations

 

(6,398

)

 

 

(6,054

)

 

5.7

%

 

 

(20,184

)

 

 

(18,382

)

 

9.8

%

 

Total Operating Revenue2

$

42,480

 

 

$

39,625

 

 

7.2

%

 

$

127,755

 

 

$

115,993

 

 

10.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Gain (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

Health Benefits

$

1,847

 

 

$

1,634

 

 

13.0

%

 

$

6,154

 

 

$

5,266

 

 

16.9

%

 

Carelon1

 

650

 

 

 

641

 

 

1.4

%

 

 

2,003

 

 

 

1,831

 

 

9.4

%

 

Corporate & Other2

 

(741

)

 

 

(24

)

 

NM4

 

 

(942

)

 

 

(73

)

 

NM4

 

Total Operating Gain3

$

1,756

 

 

$

2,251

 

 

(22.0

)%

 

$

7,215

 

 

$

7,024

 

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

Health Benefits

 

5.0

%

 

 

4.7

%

 

30 bp

 

 

5.5

%

 

 

5.1

%

 

40 bp

 

Carelon1

 

5.5

%

 

 

6.2

%

 

(70) bp

 

 

5.7

%

 

 

6.1

%

 

(40) bp

 

Total Operating Margin2

 

4.1

%

 

 

5.7

%

 

(160) bp

 

 

5.6

%

 

 

6.1

%

 

(50) bp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.

Operating Revenue and Operating Gain for Carelon for the three months ended September 30, 2023 included $8,518 and $477 for CarelonRx; $3,374 and $173 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the three months ended September 30, 2022 included $7,249 and $516 for CarelonRx; $3,154 and $125 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the nine months ended September 30, 2023 included $25,008 and $1,485 for CarelonRx; $10,127 and $518 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the nine months ended September 30, 2022 included $21,003 and $1,393 for CarelonRx; $9,085 and $438 for Carelon Services, respectively.

2.

Operating gain for Corporate & Other for the three and nine months ended September 30, 2023 included a business optimization charge of $697.

3.

See “Basis of Presentation.”

4.

"NM" = calculation not meaningful.

Health Benefits: Operating gain in the Health Benefits segment totaled $1.8 billion in the third quarter of 2023, an increase of $213 million from $1.6 billion in the third quarter of 2022, representing growth of 13.0%. The increase was primarily driven by premium rate adjustments to cover medical cost trend on higher levels of post-pandemic care.

Carelon: Operating gain in the Carelon segment was $650 million in the third quarter of 2023, an increase of $9 million from $641 million in the third quarter of 2022. The increase was primarily driven by the continued expansion of our post-acute care services business, the acquisition of BioPlus in the first quarter of 2023, and improved performance in our Behavioral Health business, partially offset by the non-recurrence of out of period fee-based revenue recognized in the third quarter of 2022 in CarelonRx.

Corporate & Other: The Company reported an operating loss of $741 million in the Corporate & Other segment for the third quarter of 2023, a decrease of $717 million from an operating loss of $24 million in the third quarter of 2022, driven by business optimization charges.

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 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)

866-405-7293 (Domestic Replay)

312-470-0178 (International)

203-369-0605 (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 November 17, 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 117 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)

September 30,

2023

 

September 30,

2022

 

June 30,

2023

 

September 30,

2022

 

June 30,

2023

Individual

999

 

800

 

949

 

24.9

%

 

5.3

%

Employer Group Risk-Based

3,754

 

3,988

 

3,765

 

(5.9

)%

 

(0.3

)%

Commercial Risk-Based

4,753

 

4,788

 

4,714

 

(0.7

)%

 

0.8

%

BlueCard®

6,756

 

6,453

 

6,737

 

4.7

%

 

0.3

%

Employer Group Fee-Based

20,166

 

20,184

 

20,160

 

(0.1

)%

 

%

Commercial Fee-Based

26,922

 

26,637

 

26,897

 

1.1

%

 

0.1

%

Medicare Advantage

2,064

 

1,969

 

2,059

 

4.8

%

 

0.2

%

Medicare Supplement

928

 

945

 

926

 

(1.8

)%

 

0.2

%

Total Medicare

2,992

 

2,914

 

2,985

 

2.7

%

 

0.2

%

Medicaid

11,018

 

11,319

 

11,759

 

(2.7

)%

 

(6.3

)%

Federal Employees Health Benefits

1,640

 

1,625

 

1,634

 

0.9

%

 

0.4

%

Total Medical Membership

47,325

 

47,283

 

47,989

 

0.1

%

 

(1.4

)%

Other Membership (in thousands)

 

 

 

 

 

 

 

 

 

Life and Disability Members

4,611

 

4,796

 

4,686

 

(3.9

)%

 

(1.6

)%

Dental Members

6,775

 

6,655

 

6,728

 

1.8

%

 

0.7

%

Dental Administration Members

1,708

 

1,577

 

1,694

 

8.3

%

 

0.8

%

Vision Members

9,861

 

9,628

 

9,850

 

2.4

%

 

0.1

%

Medicare Part D Standalone Members

261

 

274

 

263

 

(4.7

)%

 

(0.8

)%

Other Metrics (in millions)

 

 

 

 

 

 

 

 

 

CarelonRx Quarterly Adjusted Scripts

77.3

 

76.9

 

77.4

 

0.5

%

 

(0.1

)%

Carelon Services Consumers Served

104.8

 

105.3

 

103.6

 

(0.5

)%

 

1.2

%

Elevance Health, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

(In millions, except per share data)

 

Three Months Ended

September 30

 

 

 

 

 

2023

 

 

 

2022

 

 

Change

 

 

 

 

(Restated)

 

 

Revenues

 

 

 

 

 

 

Premiums

 

$

35,259

 

 

$

33,722

 

 

4.6

%

Product revenue

 

 

5,177

 

 

 

3,972

 

 

30.3

%

Service fees

 

 

2,044

 

 

 

1,931

 

 

5.9

%

Total operating revenue

 

 

42,480

 

 

 

39,625

 

 

7.2

%

Net investment income

 

 

493

 

 

 

371

 

 

32.9

%

Net losses on financial instruments

 

 

(124

)

 

 

(57

)

 

NM

 

Total revenues

 

 

42,849

 

 

 

39,939

 

 

7.3

%

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Benefit expense

 

 

30,606

 

 

 

29,421

 

 

4.0

%

Cost of products sold

 

 

4,648

 

 

 

3,437

 

 

35.2

%

Operating expense

 

 

5,470

 

 

 

4,516

 

 

21.1

%

Interest expense

 

 

259

 

 

 

213

 

 

21.6

%

Amortization of other intangible assets

 

 

212

 

 

 

225

 

 

(5.8

)%

Total expenses

 

 

41,195

 

 

 

37,812

 

 

8.9

%

 

 

 

 

 

 

 

Income before income tax expense

 

 

1,654

 

 

 

2,127

 

 

(22.2

)%

 

 

 

 

 

 

 

Income tax expense

 

 

354

 

 

 

529

 

 

(33.1

)%

 

 

 

 

 

 

 

Net income

 

 

1,300

 

 

 

1,598

 

 

(18.6

)%

 

 

 

 

 

 

 

Net (income) loss attributable to noncontrolling interests

 

 

(11

)

 

 

5

 

 

NM

 

 

 

 

 

 

 

 

Shareholders' net income

 

$

1,289

 

 

$

1,603

 

 

(19.6

)%

 

 

 

 

 

 

 

Shareholders' net income per diluted share

 

$

5.45

 

 

$

6.62

 

 

(17.7

)%

 

 

 

 

 

 

 

Diluted shares

 

 

236.5

 

 

 

242.2

 

 

(2.4

)%

 

 

 

 

 

 

 

Benefit expense as a percentage of premiums

 

 

86.8

%

 

 

87.2

%

 

(40) bp

Operating expense as a percentage of total operating revenue

 

 

12.9

%

 

 

11.4

%

 

150 bp

Income before income tax expense as a percentage of total revenue

 

 

3.9

%

 

 

5.3

%

 

(140) bp

"NM" = calculation not meaningful

Elevance Health, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

(In millions, except per share data)

 

Nine Months Ended

September 30

 

 

 

 

 

2023

 

 

 

2022

 

 

Change

 

 

 

 

(Restated)

 

 

Revenues

 

 

 

 

 

 

Premiums

 

$

107,716

 

 

$

99,583

 

 

8.2

%

Product revenue

 

 

14,058

 

 

 

10,841

 

 

29.7

%

Service fees

 

 

5,981

 

 

 

5,569

 

 

7.4

%

Total operating revenue

 

 

127,755

 

 

 

115,993

 

 

10.1

%

Net investment income

 

 

1,296

 

 

 

1,112

 

 

16.5

%

Net losses on financial instruments

 

 

(358

)

 

 

(439

)

 

NM

 

Total revenues

 

 

128,693

 

 

 

116,666

 

 

10.3

%

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Benefit expense

 

 

92,996

 

 

 

86,447

 

 

7.6

%

Cost of products sold

 

 

12,456

 

 

 

9,389

 

 

32.7

%

Operating expense

 

 

15,088

 

 

 

13,133

 

 

14.9

%

Interest expense

 

 

771

 

 

 

622

 

 

24.0

%

Amortization of other intangible assets

 

 

668

 

 

 

520

 

 

28.5

%

 

 

 

 

 

 

 

Total expenses

 

 

121,979

 

 

 

110,111

 

 

10.8

%

 

 

 

 

 

 

 

Income before income tax expense

 

 

6,714

 

 

 

6,555

 

 

2.4

%

 

 

 

 

 

 

 

Income tax expense

 

 

1,554

 

 

 

1,544

 

 

0.6

%

 

 

 

 

 

 

 

Net income

 

 

5,160

 

 

 

5,011

 

 

3.0

%

 

 

 

 

 

 

 

Net (income) loss attributable to noncontrolling interests

 

 

(29

)

 

 

18

 

 

NM

 

 

 

 

 

 

 

 

Shareholders' net income

 

$

5,131

 

 

$

5,029

 

 

2.0

%

 

 

 

 

 

 

 

Shareholders' net income per diluted share

 

$

21.56

 

 

$

20.67

 

 

4.3

%

 

 

 

 

 

 

 

Diluted shares

 

 

238.0

 

 

 

243.3

 

 

(2.2

)%

 

 

 

 

 

 

 

Benefit expense as a percentage of premiums

 

 

86.3

%

 

 

86.8

%

 

(50) bp

Operating expense as a percentage of total operating revenue

 

 

11.8

%

 

 

11.3

%

 

50 bp

Income before income tax expense as a percentage of total revenue

 

 

5.2

%

 

 

5.6

%

 

(40) bp

"NM" = calculation not meaningful

Elevance Health, Inc.

Consolidated Balance Sheets

 

(In millions)

September 30,

2023

 

December 31,

2022

Assets

(Unaudited)

 

(Restated)

Current assets:

 

 

 

Cash and cash equivalents

$

10,919

 

 

$

7,387

 

Fixed maturity securities

 

27,811

 

 

 

25,952

 

Equity securities

 

165

 

 

 

953

 

Premium receivables

 

7,883

 

 

 

7,083

 

Self-funded receivables

 

3,756

 

 

 

4,663

 

Other receivables

 

5,293

 

 

 

4,298

 

Other current assets

 

5,358

 

 

 

5,281

 

Total current assets

 

61,185

 

 

 

55,617

 

 

 

 

 

Long-term investments:

 

 

 

Fixed maturity securities

 

816

 

 

 

752

 

Other invested assets

 

6,118

 

 

 

5,685

 

Property and equipment, net

 

4,248

 

 

 

4,316

 

Goodwill

 

25,291

 

 

 

24,383

 

Other intangible assets

 

10,491

 

 

 

10,315

 

Other noncurrent assets

 

2,329

 

 

 

1,687

 

Total assets

$

110,478

 

 

$

102,755

 

 

 

 

 

Liabilities and equity

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Medical claims payable

$

16,176

 

 

$

15,596

 

Other policyholder liabilities

 

5,681

 

 

 

5,933

 

Unearned income

 

4,332

 

 

 

1,112

 

Accounts payable and accrued expenses

 

5,983

 

 

 

5,607

 

Short-term borrowings

 

 

 

 

265

 

Current portion of long-term debt

 

799

 

 

 

1,500

 

Other current liabilities

 

10,366

 

 

 

9,683

 

Total current liabilities

 

43,337

 

 

 

39,696

 

 

 

 

 

Long-term debt, less current portion

 

24,045

 

 

 

22,349

 

Reserves for future policy benefits

 

807

 

 

 

803

 

Deferred tax liabilities, net

 

1,779

 

 

 

2,015

 

Other noncurrent liabilities

 

1,971

 

 

 

1,562

 

Total liabilities

 

71,939

 

 

 

66,425

 

 

 

 

 

Shareholders’ equity

 

 

 

Common stock

 

2

 

 

 

2

 

Additional paid-in capital

 

8,830

 

 

 

9,084

 

Retained earnings

 

32,103

 

 

 

29,647

 

Accumulated other comprehensive loss

 

(2,512

)

 

 

(2,490

)

Total shareholders’ equity

 

38,423

 

 

 

36,243

 

Noncontrolling interests

 

116

 

 

 

87

 

Total equity

 

38,539

 

 

 

36,330

 

Total liabilities and equity

$

110,478

 

 

$

102,755

 

Elevance Health, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

(In millions)

Nine Months Ended September 30

 

 

2023

 

 

 

2022

 

 

 

 

(Restated)

Operating activities

 

 

 

Net income

$

5,160

 

 

$

5,011

 

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

 

 

 

Net losses on financial instruments

 

358

 

 

 

439

 

Equity in net earnings of other invested assets

 

70

 

 

 

(304

)

Depreciation and amortization

 

1,321

 

 

 

1,202

 

Deferred income taxes

 

(361

)

 

 

(183

)

Impairment of property and equipment

 

446

 

 

 

 

Share-based compensation

 

217

 

 

 

191

 

Changes in operating assets and liabilities:

 

 

 

Receivables, net

 

(727

)

 

 

(678

)

Other invested assets

 

(46

)

 

 

46

 

Other assets

 

(936

)

 

 

(465

)

Policy liabilities

 

333

 

 

 

1,588

 

Unearned income

 

3,220

 

 

 

2,548

 

Accounts payable and other liabilities

 

1,717

 

 

 

598

 

Income taxes

 

257

 

 

 

(41

)

Other, net

 

3

 

 

 

(35

)

Net cash provided by operating activities

 

11,032

��

 

 

9,917

 

 

 

 

 

Investing activities

 

 

 

Purchases of investments

 

(24,337

)

 

 

(19,612

)

Proceeds from sale of investments

 

7,830

 

 

 

9,402

 

Maturities, calls and redemptions from investments

 

14,531

 

 

 

7,606

 

Changes in securities lending collateral

 

55

 

 

 

(677

)

Purchases of subsidiaries, net of cash acquired

 

(1,570

)

 

 

(623

)

Purchases of property and equipment

 

(970

)

 

 

(854

)

Other, net

 

(82

)

 

 

(91

)

Net cash used in investing activities

 

(4,543

)

 

 

(4,849

)

 

 

 

 

Financing activities

 

 

 

Net proceeds from commercial paper borrowings

 

 

 

 

375

 

Net proceeds from (repayments of) short-term borrowings

 

(265

)

 

 

(10

)

Net proceeds from (repayments of) long-term borrowings

 

666

 

 

 

304

 

Changes in securities lending payable

 

(54

)

 

 

685

 

Changes in bank overdrafts

 

(523

)

 

 

181

 

Repurchase and retirement of common stock

 

(1,748

)

 

 

(1,748

)

Cash dividends

 

(1,049

)

 

 

(924

)

Proceeds from issuance of common stock under employee stock plans

 

112

 

 

 

152

 

Taxes paid through withholding of common stock under employee stock plans

 

(99

)

 

 

(91

)

Other, net

 

5

 

 

 

16

 

Net cash used in financing activities

 

(2,955

)

 

 

(1,060

)

 

 

 

 

Effect of foreign exchange rates on cash and cash equivalents

 

(2

)

 

 

(16

)

 

 

 

 

Change in cash and cash equivalents

 

3,532

 

 

 

3,992

 

Cash and cash equivalents at beginning of period

 

7,387

 

 

 

4,880

 

 

 

 

 

Cash and cash equivalents at end of period

$

10,919

 

 

$

8,872

 

Elevance Health, Inc.

Reconciliation of Medical Claims Payable

 

 

Nine Months Ended September 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

 

91,058

 

 

 

84,177

 

 

 

113,414

 

 

 

100,440

 

 

 

85,094

 

Prior years redundancies1

 

(1,342

)

 

 

(901

)

 

 

(869

)

 

 

(1,703

)

 

 

(637

)

Total net incurred medical claims

 

89,716

 

 

 

83,276

 

 

 

112,545

 

 

 

98,737

 

 

 

84,457

 

 

 

 

 

 

 

 

 

 

 

Net payments attributable to:

 

 

 

 

 

 

 

 

 

Current year medical claims

 

77,048

 

 

 

70,453

 

 

 

98,997

 

 

 

88,156

 

 

 

74,629

 

Prior years medical claims

 

12,097

 

 

 

11,219

 

 

 

11,600

 

 

 

8,829

 

 

 

7,692

 

Total net payments

 

89,145

 

 

 

81,672

 

 

 

110,597

 

 

 

96,985

 

 

 

82,321

 

 

 

 

 

 

 

 

 

 

 

Net medical claims payable, end of period

 

15,913

 

 

 

14,998

 

 

 

15,342

 

 

 

13,261

 

 

 

11,089

 

Ceded medical claims payable, end of period

 

4

 

 

 

3

 

 

 

6

 

 

 

21

 

 

 

46

 

Gross medical claims payable, end of period

$

15,917

 

 

$

15,001

 

 

$

15,348

 

 

$

13,282

 

 

$

11,135

 

 

 

 

 

 

 

 

 

 

 

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

 

84.6

%

 

 

83.7

%

 

 

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

 

9.6

%

 

 

7.3

%

 

 

7.0

%

 

 

18.1

%

 

 

8.0

%

 

 

 

 

 

 

 

 

 

 

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

 

1.2

%

 

 

0.9

%

 

 

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. Net adjustment items per share may not sum due to rounding.

 

Three Months Ended

September 30

 

 

 

Nine Months Ended

September 30

 

 

(In millions, except per share data)

 

2023

 

 

 

2022

 

 

Change

 

 

2023

 

 

 

2022

 

 

Change

Shareholders' net income - As reported

$

1,289

 

 

$

1,618

 

 

(20.3

)%

 

$

5,131

 

 

$

5,076

 

 

1.1

%

Impact of Accounting Standards Update 2018-12 Adoption

 

 

 

 

(15

)

 

 

 

 

 

 

 

(47

)

 

 

Shareholders' net income - Restated

$

1,289

 

 

$

1,603

 

 

(19.6

)%

 

$

5,131

 

 

$

5,029

 

 

2.0

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Net losses on financial instruments

 

124

 

 

 

57

 

 

 

 

 

358

 

 

 

439

 

 

 

Amortization of other intangible assets

 

212

 

 

 

225

 

 

 

 

 

668

 

 

 

520

 

 

 

Business optimization charges

 

697

 

 

 

 

 

 

 

 

697

 

 

 

 

 

 

BCBSA litigation settlement

 

 

 

 

(24

)

 

 

 

 

 

 

 

(24

)

 

 

Transaction and integration related costs

 

73

 

 

 

13

 

 

 

 

 

154

 

 

 

36

 

 

 

Litigation expenses

 

2

 

 

 

6

 

 

 

 

 

5

 

 

 

11

 

 

 

Tax impact of non-GAAP adjustments

 

(270

)

 

 

(72

)

 

 

 

 

(470

)

 

 

(261

)

 

 

Net adjustment items

 

838

 

 

 

205

 

 

 

 

 

1,412

 

 

 

721

 

 

 

Adjusted shareholders' net income

$

2,127

 

 

$

1,808

 

 

17.6

%

 

$

6,543

 

 

$

5,750

 

 

13.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' net income per diluted share - As reported

$

5.45

 

 

$

6.68

 

 

(18.4

)%

 

$

21.56

 

 

$

20.86

 

 

3.4

%

Impact of Accounting Standards Update 2018-12 Adoption

 

 

 

 

(0.06

)

 

 

 

 

 

 

 

(0.19

)

 

 

Shareholders' net income per diluted share - Restated

 

5.45

 

 

 

6.62

 

 

(17.7

)%

 

 

21.56

 

 

 

20.67

 

 

4.3

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Net losses on financial instruments

 

0.52

 

 

 

0.24

 

 

 

 

 

1.50

 

 

 

1.80

 

 

 

Amortization of other intangible assets

 

0.90

 

 

 

0.93

 

 

 

 

 

2.81

 

 

 

2.14

 

 

 

Business optimization charges

 

2.95

 

 

 

 

 

 

 

 

2.93

 

 

 

 

 

 

BCBSA litigation settlement

 

 

 

 

(0.10

)

 

 

 

 

 

 

 

(0.10

)

 

 

Transaction and integration related costs

 

0.31

 

 

 

0.05

 

 

 

 

 

0.65

 

 

 

0.15

 

 

 

Litigation expenses

 

0.01

 

 

 

0.02

 

 

 

 

 

0.02

 

 

 

0.05

 

 

 

Tax impact of non-GAAP adjustments

 

(1.14

)

 

 

(0.30

)

 

 

 

 

(1.97

)

 

 

(1.07

)

 

 

Net adjustment items

 

3.54

 

 

 

0.84

 

 

 

 

 

5.93

 

 

 

2.96

 

 

 

Adjusted shareholders' net income per diluted share

$

8.99

 

 

$

7.46

 

 

20.5

%

 

$

27.49

 

 

$

23.63

 

 

16.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year 2023 Outlook

 

 

 

 

 

 

Shareholders' net income per diluted share

Greater than $26.40

 

 

 

 

 

 

Add / (Subtract):

 

 

 

 

 

 

 

Net losses on financial instruments

$

1.50

 

 

 

 

 

 

 

Business optimization charges

$

2.93

 

 

 

 

 

 

 

 

 

Transaction and integration related costs

$

0.65

 

 

 

 

 

 

 

Litigation expenses

$

0.02

 

 

 

 

 

 

 

Amortization of other intangible assets

$

3.69

 

 

 

 

 

 

 

Tax impact of non-GAAP adjustments

Approximately $(2.19)

 

 

 

 

 

 

Net adjustment items

$

6.60

 

 

 

 

 

 

 

Adjusted shareholders' net income per diluted share

Greater Than $33.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30

 

 

 

Nine Months Ended

September 30

 

 

(In millions)

 

2023

 

 

 

2022

 

 

Change

 

 

2023

 

 

 

2022

 

 

Change

 

 

 

(Restated)

 

 

 

 

 

(Restated)

 

 

Income before income tax expense

$

1,654

 

 

$

2,127

 

 

(22.2

)%

 

$

6,714

 

 

$

6,555

 

 

2.4

%

Net investment income

 

(493

)

 

 

(371

)

 

 

 

 

(1,296

)

 

 

(1,112

)

 

 

Net losses on financial instruments

 

124

 

 

 

57

 

 

 

 

 

358

 

 

 

439

 

 

 

Interest expense

 

259

 

 

 

213

 

 

 

 

 

771

 

 

 

622

 

 

 

Amortization of other intangible assets

 

212

 

 

 

225

 

 

 

 

 

668

 

 

 

520

 

 

 

Reportable segments operating gain

$

1,756

 

 

$

2,251

 

 

(22.0

)%

 

$

7,215

 

 

$

7,024

 

 

2.7

%

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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