Anthem Reports Fourth Quarter and Full Year 2021 Results

Press Release January 26, 2022
  • Fourth quarter GAAP net income was $4.63 per share, including net negative adjustment items of $0.51 per share.  Adjusted net income was $5.14* per share.
  • Full year GAAP net income was $24.73 per share, including net negative adjustment items of $1.25 per share.  Adjusted net income was $25.98* per share.
  • Fourth quarter operating revenue grew by 14.2% over the prior year quarter to $36.0 billion.  Full year operating revenue grew 13.4% year-over-year to $136.9 billion.
  • Medical enrollment increased by 2.4 million members year-over-year and 303 thousand members in the fourth quarter to 45.4 million members.
  • Full year 2022 GAAP net income is expected to be greater than $26.75 per share.  Adjusted net income is expected to be greater than $28.25* per share.
  • Quarterly dividend increased by greater than 13% to $1.28 per share.

INDIANAPOLIS--(BUSINESS WIRE)--Jan. 26, 2022-- Anthem, Inc. (NYSE: ANTM) reported fourth quarter and full year 2021 results reflecting strong financial performance, including double-digit top and bottom line growth.

"2021 was another year of strong growth for Anthem as we continued our transformation from a health benefits company to a lifetime trusted partner in health," said Gail K. Boudreaux, President and CEO. "We begin 2022 with ongoing momentum across all our businesses, and we're confident in our ability to deliver earnings growth consistent with our long-term targeted range as we innovate for consumers and advance our digital platform for health. Anthem is uniquely positioned to achieve our purpose of improving the Health of Humanity thanks to our 98,000 dedicated employees and their unwavering commitment to the customers and communities we serve."

*Refer to GAAP reconciliation tables.

CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $4.63 per share in the fourth quarter, including net negative adjustment items of $0.51 per share. Adjusted net income was $5.14* per share. Full year GAAP net income was $24.73 per share, including net negative adjustment items of $1.25 per share. Adjusted net income was $25.98* per share. Adjusted net income per share for 2021 grew by 15.6% compared to 2020.

*Please refer to the GAAP reconciliation tables.

Membership: Medical enrollment totaled approximately 45.4 million members as of December 31, 2021, an increase of 2.4 million, or 5.7 percent from the prior year quarter. Government Business enrollment increased by 2.2 million lives compared to the prior year quarter, primarily driven by organic growth in the Medicaid business, aided by the suspension of eligibility recertification efforts in our markets, the acquisition of MMM, the launch of HealthyBlue in North Carolina, and organic growth in our Medicare Advantage business. Commercial & Specialty Business enrollment increased by 249 thousand year over year primarily driven by strong risk-based membership growth, partially offset by in-group attrition in the group fee-based business.

During the fourth quarter of 2021, medical enrollment increased sequentially by 303 thousand driven by organic growth in the Medicaid business, and growth in Commercial risk-based and fee-based membership.

Operating Revenue: Operating revenue was $36.0 billion in the fourth quarter of 2021, an increase of $4.5 billion, or 14.2 percent, from the prior year quarter and 15.9 percent after adjusting for the repeal of the health insurance tax in 2021. Operating revenue for 2021 was $136.9 billion, representing 13.4 percent growth over 2020, and 15.0 percent growth after adjusting for the repeal of the health insurance tax in 2021. The increase for both the quarter and the full year was driven by higher premium revenue due to growth in Medicaid, Medicare and Commercial risk-based membership, and growth in pharmacy product revenue within IngenioRx, partially offset by the repeal of the health insurance tax.

Benefit Expense Ratio: The benefit expense ratio was 89.5 percent in the fourth quarter of 2021, an increase of 60 basis points versus the prior year quarter and a decrease of 90 basis points after adjusting for the repeal of the health insurance tax in 2021. Excluding the impact of the repeal of the health insurance tax, the decrease was primarily driven by the timing of Medicaid rate actions and reduced costs associated with COVID-related care. The benefit expense ratio was 87.5 percent for the full year of 2021, an increase of 290 basis points year-over-year and an increase of 140 basis points after adjusting for the repeal of the health insurance tax in 2021. Excluding the impact of the repeal of the health insurance tax, the increase was primarily driven by a smaller reduction in non-COVID healthcare utilization as compared to the prior year and an increase in costs associated with COVID-related care.

Medical claims reserves established at December 31, 2020 developed better than the Company’s expectations as of December 31, 2021, with the majority offset by rebates, risk-corridors and other related mechanisms.

Days in Claims Payable: Days in Claims Payable was 45.2 days as of December 31, 2021, a decrease of 1.6 days from September 30, 2021 and an increase of 1.8 days as compared to December 31, 2020.

SG&A Expense Ratio: The SG&A expense ratio was 11.7 percent in the fourth quarter of 2021, a decrease of 200 basis points from 13.7 percent in the fourth quarter of 2020. The decrease was primarily driven by growth in operating revenue and the repeal of the health insurance tax in 2021, partially offset by increased spend to support growth and business optimization charges taken in the fourth quarter of 2021. For the full year of 2021, the SG&A expense ratio was 11.6 percent, a decrease of 280 basis points from 14.4 percent in 2020. The decrease was primarily driven by growth in operating revenue, the repeal of the health insurance tax in 2021, and the absence of charges in 2021 for the BCBSA litigation accrual recognized in 2020 and reduced business optimization charges in 2021, partially offset by increased spend to support growth.

Operating Cash Flow: Operating cash flow was $1.7 billion, or 1.5 times net income in the fourth quarter of 2021, a decrease of $2.1 billion as compared to the prior year quarter. The year-on-year decrease was primarily driven by an increase in medical claims payable in the fourth quarter of 2020 compared with a slight decrease in the fourth quarter of 2021, and an increase in receivables. For the full year 2021, operating cash flow was $8.4 billion, or 1.4 times net income.

Share Repurchase Program: During the fourth quarter of 2021, the Company repurchased 1.3 million shares of its common stock for $522 million, at a weighted average price of $417.92. As of December 31, 2021, the Company had approximately $4.2 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the fourth quarter of 2021, the Company paid a quarterly dividend of $1.13 per share, representing a distribution of cash totaling $274 million.

On January 25, 2022, the Audit Committee of the Company's Board of Directors declared a first quarter 2022 dividend to shareholders of $1.28 per share, an increase of over 13 percent from the quarterly dividend payment in the fourth quarter. On an annualized basis, the new quarterly dividend equates to $5.12 per share. The first quarter dividend is payable on March 25, 2022, to shareholders of record at the close of business on March 10, 2022.

Investment Portfolio & Capital Position: During the fourth quarter of 2021, the Company recorded net gains of $211 million. During the fourth quarter of 2020, the Company recorded net gains of $5 million. These amounts are excluded from adjusted earnings per share.

As of December 31, 2021, the Company’s net unrealized gain position in the investment portfolio was $648 million, consisting primarily of fixed maturity securities. As of December 31, 2021 cash and investments at the parent company totaled approximately $1.2 billion.

REPORTABLE SEGMENTS

Anthem, Inc. 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 Diversified Business Group and corporate expenses not allocated to our other reportable segments).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anthem, Inc.

 

 

Reportable Segment Highlights

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

Three Months Ended December 31

 

Twelve Months Ended December 31

 

 

 

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

Operating Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

$9,905

 

$9,223

 

7.4 %

 

$38,809

 

$36,699

 

5.7 %

 

 

Government Business

21,912

 

18,763

 

16.8 %

 

82,919

 

71,572

 

15.9 %

 

 

IngenioRx

6,801

 

5,863

 

16.0 %

 

25,431

 

21,911

 

16.1 %

 

 

Other

2,693

 

1,780

 

51.3 %

 

10,250

 

6,057

 

69.2 %

 

 

Eliminations

(5,293)

 

(4,096)

 

29.2 %

 

(20,466)

 

(15,431)

 

32.6 %

 

 

Total Operating Revenue1

$36,018

 

$31,533

 

14.2 %

 

$136,943

 

$120,808

 

13.4 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Gain (Loss)3

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

$74

 

$123

 

(39.8) %

 

$2,753

 

$2,681

 

2.7 %

 

 

Government Business

748

 

169

 

342.6 %

 

3,061

 

2,444

 

25.2 %

 

 

IngenioRx

427

 

363

 

17.6 %

 

1,684

 

1,361

 

23.7 %

 

 

Other

(61)

 

(50)

 

NM2

 

(9)

 

(126)

 

NM2

 

 

Total Operating Gain1

$1,188

 

$605

 

96.4 %

 

$7,489

 

$6,360

 

17.8 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

0.7 %

 

1.3 %

 

(60) bp

 

7.1 %

 

7.3 %

 

(20) bp

 

 

Government Business

3.4 %

 

0.9 %

 

250 bp

 

3.7 %

 

3.4 %

 

30 bp

 

 

IngenioRx

6.3 %

 

6.2 %

 

10 bp

 

6.6 %

 

6.2 %

 

40 bp

 

 

Total Operating Margin1

3.3 %

 

1.9 %

 

140 bp

 

5.5 %

 

5.3 %

 

20 bp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.

See “Basis of Presentation.”

2.

"NM" = calculation not meaningful.

3.

Operating gain for the three and twelve months ended December 31, 2021 included $187 of charges related to business optimization plans; including $106 for Commercial & Specialty Business; $47 for the Government Business; $2 for IngenioRx; and $32 for the Other segment. Operating gain for the three months ended December 31, 2020 included $46 of charges related to business optimization; including $12 for Commercial & Specialty Business; $22 for the Government Business; $1 for IngenioRx; and $11 for the Other segment. Operating gain for the twelve months ended December 31, 2020 included $653 of charges related to business optimization; including $311 for Commercial & Specialty Business; $205 for the Government Business; $4 for IngenioRx; and $133 for the Other segment. Operating gain for the three months ended December 31, 2020 included a ($46) benefit related to the adjustment of a prior accrual for the BCBSA litigation settlement; including ($42) for Commercial and Specialty Business; and ($4) for the Government Business Division. Operating Gain for the twelve months ended December 31, 2020 included a $548 charge related to the BCBSA litigation settlement accrual; $524 for Commercial & Specialty Business; and $24 for the Government Business.

Commercial & Specialty Business: Operating gain in the Commercial & Specialty Business segment totaled $74 million in the fourth quarter of 2021, a decrease of $49 million from $123 million in the fourth quarter of 2020. The decrease was driven by higher business optimization expenses in the fourth quarter of 2021, and the impact of the BCBSA litigation settlement accrual adjustment in the fourth quarter of 2020. Absent these items, which are excluded from our adjusted earnings, operating gain increased $87 million due to reduced net costs associated with COVID.

Government Business: Operating gain in the Government Business segment was $748 million in the fourth quarter of 2021, an increase of $579 million from $169 million in the fourth quarter of 2020. The increase was primarily attributable to the timing of Medicaid rate actions and membership growth in the Medicaid and Medicare businesses, including growth resulting from the acquisition of MMM.

IngenioRx: Operating gain was $427 million in the fourth quarter of 2021, an increase of $64 million, or 17.6 percent, from $363 million in the fourth quarter of 2020. The increase was driven by growth in members served by IngenioRx.

Other: The Company reported an operating loss of $61 million in the Other segment for the fourth quarter of 2021, compared with an operating loss of $50 million in the prior year quarter.

OUTLOOK

Full Year 2022:

  • GAAP net income is expected to be greater than $26.75 per share, including approximately $1.50 per share of net unfavorable items. Excluding these items, adjusted net income is expected to be greater than $28.25* per share.
  • Medical membership is expected to be in the range of 45.6 - 46.2 million. Risk-based membership is expected to be in the range of 19.5 - 19.9 million. Fee-based membership is expected to be in the range of 26.1 - 26.3 million.
  • Operating revenue is expected to be approximately $152 billion, including premium revenue of approximately $130 billion.
  • Benefit expense ratio is expected to be in the range of 88.0% plus or minus 50 basis points.
  • SG&A ratio is expected to be 10.8% plus or minus 50 basis points.
  • Operating cash flow is expected to be greater than $6.9 billion.
  • Investment income is expected to be $1.1 billion.
  • Interest expense is expected to be $840 million.
  • Effective tax rate is expected to be between 22.0 - 24.0%.
  • Share count is expected to be between 243 - 244 million.

* Refer to the GAAP reconciliation tables.

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 Standard Time (“EST”) to discuss the company’s fourth 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)

800-570-8796 (Domestic Replay)

312-470-0178 (International)

203-369-3293 (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 February 25, 2022. The call will also be available through a live webcast at www.antheminc.com under the “Investors” link. A webcast replay will be available following the call.

About Anthem, Inc.

Anthem is a leading health company dedicated to improving lives and communities, and making healthcare simpler. Through its affiliated companies, Anthem serves more than 118 million people, including more than 45 million within its family of health plans. Delivering health beyond healthcare, Anthem is expanding from being a partner in health benefits to a lifetime, trusted health partner. For more information, please visit www.antheminc.com or follow @AnthemInc on Twitter.

Anthem, Inc.

Membership Summary

(Unaudited and in Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change from

Medical Membership

December 31, 2021

 

December 31, 2020

 

September 30, 2021

 

December 31,2020

 

September 30, 2021

Commercial & Specialty Business

 

 

 

 

 

 

 

 

 

Individual

759

 

680

 

769

 

11.6 %

 

(1.3) %

Group Risk-Based

4,006

 

3,799

 

3,946

 

5.4 %

 

1.5 %

Commercial Risk-Based

4,765

 

4,479

 

4,715

 

6.4 %

 

1.1 %

BlueCard®

6,178

 

6,059

 

6,166

 

2.0 %

 

0.2 %

Group Fee-Based

19,395

 

19,551

 

19,370

 

(0.8) %

 

0.1 %

Commercial Fee-Based

25,573

 

25,610

 

25,536

 

(0.1) %

 

0.1 %

Total Commercial & Specialty Business

30,338

 

30,089

 

30,251

 

0.8 %

 

0.3 %

Government Business

 

 

 

 

 

 

 

 

 

Medicare Advantage

1,859

 

1,428

 

1,853

 

30.2 %

 

0.3 %

Medicare Supplement

952

 

933

 

947

 

2.0 %

 

0.5 %

Total Medicare

2,811

 

2,361

 

2,800

 

19.1 %

 

0.4 %

Medicaid

10,600

 

8,852

 

10,391

 

19.7 %

 

2.0 %

Federal Employees Health Benefits

1,625

 

1,623

 

1,629

 

0.1 %

 

(0.2) %

Total Government Business

15,036

 

12,836

 

14,820

 

17.1 %

 

1.5 %

Total Medical Membership

45,374

 

42,925

 

45,071

 

5.7 %

 

0.7 %

Other Membership

 

 

 

 

 

 

 

 

 

Life and Disability Members

4,782

 

5,064

 

4,695

 

(5.6) %

 

1.9 %

Dental Members

6,674

 

6,385

 

6,637

 

4.5 %

 

0.6 %

Dental Administration Members

1,491

 

1,316

 

1,486

 

13.3 %

 

0.3 %

Vision Members

8,031

 

7,536

 

7,974

 

6.6 %

 

0.7 %

Medicare Part D Standalone Members

438

 

413

 

438

 

6.1 %

 

— %

Anthem, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

(In millions, except per share data)

 

Three Months Ended

December 31

 

 

 

 

2021

 

2020

 

Change

Revenues

 

 

 

 

 

 

Premiums

 

$ 30,769

 

$ 27,108

 

13.5 %

Product revenue

 

3,525

 

2,899

 

21.6 %

Administrative fees and other revenue

 

1,724

 

1,526

 

13.0 %

Total operating revenue

 

36,018

 

31,533

 

14.2 %

Net investment income

 

352

 

286

 

23.1 %

Net gains on financial instruments

 

211

 

5

 

NM

Total revenues

 

36,581

 

31,824

 

14.9 %

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Benefit expense

 

27,538

 

24,088

 

14.3 %

Cost of products sold

 

3,070

 

2,522

 

21.7 %

Selling, general and administrative expense

 

4,222

 

4,318

 

(2.2) %

Interest expense

 

200

 

191

 

4.7 %

Amortization of other intangible assets

 

135

 

92

 

46.7 %

Loss on extinguishment of debt

 

16

 

2

 

NM

Total expenses

 

35,181

 

31,213

 

12.7 %

 

 

 

 

 

 

 

Income before income tax expense

 

1,400

 

611

 

129.1 %

 

 

 

 

 

 

 

Income tax expense

 

275

 

60

 

358.3 %

 

 

 

 

 

 

 

Net income

 

1,125

 

551

 

104.2 %

 

 

 

 

 

 

 

Net loss attributable to noncontrolling interests

 

12

 

 

NM

 

 

 

 

 

 

 

Shareholders' net income

 

$ 1,137

 

$ 551

 

106.4 %

 

 

 

 

 

 

 

Shareholders' net income per diluted share

 

$ 4.63

 

$ 2.19

 

111.4 %

 

 

 

 

 

 

 

Diluted shares

 

245.5

 

251.1

 

(2.2) %

 

 

 

 

 

 

 

Benefit expense as a percentage of premiums

 

89.5 %

 

88.9 %

 

60 bp

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

 

11.7 %

 

13.7 %

 

(200) bp

Income before income tax expense as a percentage of total revenue

 

3.8 %

 

1.9 %

 

190 bp

             

"NM" = calculation not meaningful

           

Anthem, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

(In millions, except per share data)

 

Twelve Months Ended

December 31

 

 

 

 

2021

 

2020

 

Change

Revenues

 

 

 

 

 

 

Premiums

 

$ 117,373

 

$ 104,109

 

12.7 %

Product revenue

 

12,657

 

10,384

 

21.9 %

Administrative fees and other revenue

 

6,913

 

6,315

 

9.5 %

Total operating revenue

 

136,943

 

120,808

 

13.4 %

Net investment income

 

1,378

 

877

 

57.1 %

Net gains on financial instruments

 

318

 

182

 

74.7 %

Total revenues

 

138,639

 

121,867

 

13.8 %

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Benefit expense

 

102,645

 

88,045

 

16.6 %

Cost of products sold

 

10,895

 

8,953

 

21.7 %

Selling, general and administrative expense

 

15,914

 

17,450

 

(8.8) %

Interest expense

 

798

 

784

 

1.8 %

Amortization of other intangible assets

 

441

 

361

 

22.2 %

Loss on extinguishment of debt

 

21

 

36

 

(41.7) %

Total expenses

 

130,714

 

115,629

 

13.0 %

 

 

 

 

 

 

 

Income before income tax expense

 

7,925

 

6,238

 

27.0 %

 

 

 

 

 

 

 

Income tax expense

 

1,830

 

1,666

 

9.8 %

 

 

 

 

 

 

 

Net income

 

6,095

 

4,572

 

33.3 %

 

 

 

 

 

 

 

Net loss attributable to noncontrolling interests

 

9

 

 

NM

 

 

 

 

 

 

 

Shareholders' net income

 

$ 6,104

 

$ 4,572

 

33.5 %

 

 

 

 

 

 

 

Shareholders' net income per diluted share

 

$ 24.73

 

$ 17.98

 

37.5 %

 

 

 

 

 

 

 

Diluted shares

 

246.8

 

254.3

 

(2.9) %

 

 

 

 

 

 

 

Benefit expense as a percentage of premiums

 

87.5 %

 

84.6 %

 

290 bp

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

 

11.6 %

 

14.4 %

 

(280) bp

Income before income tax expense as a percentage of total revenue

 

5.7 %

 

5.1 %

 

60 bp

             

"NM" = calculation not meaningful

           

Anthem, Inc.

Consolidated Balance Sheets

 

(In millions)

December 31,
2021

 

December 31,
2020

Assets

(Unaudited)

 

 

Current assets:

 

 

 

Cash and cash equivalents

$ 4,880

 

$ 5,741

Fixed maturity securities

26,267

 

23,433

Equity securities, current

1,881

 

1,559

Premium receivables

5,681

 

5,279

Self-funded receivables

4,010

 

2,849

Other receivables

3,749

 

2,830

Other current assets

4,603

 

4,060

Total current assets

51,071

 

45,751

 

 

 

 

Long-term investments:

 

 

 

Fixed maturity securities

632

 

562

Other invested assets

5,225

 

4,285

Property and equipment, net

3,919

 

3,483

Goodwill

24,228

 

21,691

Other intangible assets

10,615

 

9,405

Other noncurrent assets

1,617

 

1,438

Total assets

$ 97,307

 

$ 86,615

 

 

 

 

Liabilities and equity

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Medical claims payable

$ 13,518

 

$ 11,359

Other policyholder liabilities

5,521

 

4,590

Unearned income

1,153

 

1,259

Accounts payable and accrued expenses

4,970

 

5,493

Short-term borrowings

275

 

Current portion of long-term debt

1,599

 

700

Other current liabilities

7,849

 

6,052

Total current liabilities

34,885

 

29,453

 

 

 

 

Long-term debt, less current portion

21,157

 

19,335

Reserves for future policy benefits

802

 

794

Deferred tax liabilities, net

2,652

 

2,019

Other noncurrent liabilities

1,683

 

1,815

Total liabilities

61,179

 

53,416

 

 

 

 

Shareholders’ equity

 

 

 

Common stock

2

 

3

Additional paid-in capital

9,148

 

9,244

Retained earnings

27,088

 

23,802

Accumulated other comprehensive (loss) income

(178)

 

150

Total shareholders’ equity

36,060

 

33,199

Noncontrolling interests

68

 

Total equity

36,128

 

33,199

Total liabilities and equity

$ 97,307

 

$ 86,615

Anthem, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

(In millions)

Twelve Months Ended

December 31

 

2021

 

2020

Operating activities

 

 

 

Net income

$6,095

 

$4,572

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

 

 

 

Net gains on financial instruments

(318)

 

(182)

Depreciation and amortization

1,302

 

1,154

Deferred income taxes

173

 

(540)

Impairment of property and equipment

73

 

198

Share-based compensation

255

 

283

Changes in operating assets and liabilities:

 

 

 

Receivables, net

(2,138)

 

(256)

Other invested assets

(70)

 

(32)

Other assets

190

 

(283)

Policy liabilities

2,597

 

3,528

Unearned income

(113)

 

202

Accounts payable and other liabilities

719

 

1,978

Income taxes

140

 

72

Other, net

(541)

 

(6)

Net cash provided by operating activities

8,364

 

10,688

 

 

 

 

Investing activities

 

 

 

Purchases of investments

(18,669)

 

(19,492)

Proceeds from sale of investments

10,269

 

11,318

Maturities, calls and redemptions from investments

4,344

 

4,741

Changes in securities lending collateral

(956)

 

(849)

Purchases of subsidiaries, net of cash acquired

(3,476)

 

(1,976)

Purchases of property and equipment

(1,087)

 

(1,021)

Other, net

(63)

 

(45)

Net cash used in investing activities

(9,638)

 

(7,324)

 

 

 

 

Financing activities

 

 

 

Net proceeds from (repayments of) commercial paper borrowings

50

 

(150)

Net proceeds from (repayments of) short-term borrowings

275

 

(700)

Net proceeds from long-term borrowings

2,394

 

552

Changes in securities lending payable

956

 

849

Repurchase and retirement of common stock

(1,900)

 

(2,700)

Cash dividends

(1,104)

 

(954)

Proceeds from issuance of common stock under employee stock plans

203

 

176

Taxes paid through withholding of common stock under employee stock plans

(102)

 

(128)

Other, net

(349)

 

488

Net cash provided by (used in) financing activities

423

 

(2,567)

 

 

 

 

Effect of foreign exchange rates on cash and cash equivalents

(10)

 

7

 

 

 

 

Change in cash and cash equivalents

(861)

 

804

Cash and cash equivalents at beginning of period

5,741

 

4,937

 

 

 

 

Cash and cash equivalents at end of period

$4,880

 

$5,741

Anthem, Inc.

Reconciliation of Medical Claims Payable

 

 

Years Ended December 31

 

2021

 

2020

 

2019

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Gross medical claims payable, beginning of year

$ 11,135

 

$ 8,647

 

$ 7,266

Ceded medical claims payable, beginning of year

(46)

 

(33)

 

(34)

Net medical claims payable, beginning of year

11,089

 

8,614

 

7,232

 

 

 

 

 

 

Business combinations and purchase adjustments

420

 

339

 

 

 

 

 

 

 

Net incurred medical claims:

 

 

 

 

 

Current year

100,440

 

85,094

 

78,695

Prior years redundancies(1)

(1,703)

 

(637)

 

(500)

Total net incurred medical claims

98,737

 

84,457

 

78,195

 

 

 

 

 

 

Net payments attributable to:

 

 

 

 

 

Current year medical claims

88,156

 

74,629

 

70,294

Prior years medical claims

8,829

 

7,692

 

6,519

Total net payments

96,985

 

82,321

 

76,813

 

 

 

 

 

 

Net medical claims payable, end of year

13,261

 

11,089

 

8,614

Ceded medical claims payable, end of year

21

 

46

 

33

Gross medical claims payable, end of year*

$ 13,282

 

$ 11,135

 

$ 8,647

 

 

 

 

 

 

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

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

18.1 %

 

8.0 %

 

7.4 %

 

 

 

 

 

 

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

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.

* Excludes insurance lines other than short duration.

 

 

 

 

 

Anthem, Inc.
GAAP Reconciliation
(Unaudited)

Anthem, 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 Anthem, 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

December 31

 

 

 

Twelve Months Ended December 31

 

 

(In millions, except per share data)

2021

 

2020

 

Change

 

2021

 

2020

 

Change

Shareholders' net income

$ 1,137

 

$ 551

 

106.4 %

 

$ 6,104

 

$ 4,572

 

33.5 %

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Net gains on financial instruments

(211)

 

(5)

 

 

 

(318)

 

(182)

 

 

Amortization of other intangible assets

135

 

92

 

 

 

441

 

361

 

 

Loss on extinguishment of debt

16

 

2

 

 

 

21

 

36

 

 

Business optimization charges

187

 

46

 

 

 

187

 

653

 

 

BCBSA litigation settlement

 

(46)

 

 

 

 

548

 

 

Transaction and integration related costs

19

 

22

 

 

 

54

 

49

 

 

Litigation expenses

27

 

6

 

 

 

42

 

40

 

 

Tax impact of non-GAAP adjustments

(49)

 

(31)

 

 

 

(120)

 

(360)

 

 

Net adjustment items

124

 

86

 

 

 

307

 

1,145

 

 

Adjusted shareholders' net income

$ 1,261

 

$ 637

 

98.0 %

 

$ 6,411

 

$ 5,717

 

12.1 %

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' net income per diluted share

$ 4.63

 

$ 2.19

 

111.4 %

 

$ 24.73

 

$ 17.98

 

37.5 %

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Net gains on financial instruments

(0.86)

 

(0.02)

 

 

 

(1.29)

 

(0.72)

 

 

Amortization of other intangible assets

0.55

 

0.37

 

 

 

1.79

 

1.42

 

 

Loss on extinguishment of debt

0.07

 

0.01

 

 

 

0.09

 

0.14

 

 

Business optimization charges

0.76

 

0.18

 

 

 

0.76

 

2.57

 

 

BCBSA litigation settlement

 

(0.18)

 

 

 

 

2.15

 

 

Transaction and integration related costs

0.08

 

0.09

 

 

 

0.22

 

0.19

 

 

Litigation expenses

0.11

 

0.02

 

 

 

0.17

 

0.16

 

 

Tax impact of non-GAAP adjustments

(0.20)

 

(0.12)

 

 

 

(0.49)

 

(1.42)

 

 

Rounding impact

 

 

 

 

 

0.01

 

 

Net adjustment items

0.51

 

0.35

 

 

 

1.25

 

4.50

 

 

Adjusted shareholders' net income per diluted share

$ 5.14

 

$ 2.54

 

102.4 %

 

$ 25.98

 

$ 22.48

 

15.6 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year 2022 Outlook

 

 

Shareholders' net income per diluted share

 

 

 

 

Greater than $26.75

 

 

Add / (Subtract):

 

 

 

 

 

 

 

Amortization of other intangible assets

 

 

 

 

Approximately $2.15

 

 

Tax impact of non-GAAP adjustments

 

 

 

 

Approximately $(0.65)

 

 

Net adjustment items

 

 

 

 

Approximately $1.50

 

 

Adjusted shareholders' net income per diluted share

 

 

 

 

Greater than $28.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31

 

 

 

Twelve Months Ended December 31

 

 

(In millions)

2021

 

2020

 

Change

 

2021

 

2020

 

Change

Reportable segments operating gain

$ 1,188

 

$ 605

 

96.4 %

 

$ 7,489

 

$ 6,360

 

17.8 %

Net investment income

352

 

286

 

 

 

1,378

 

877

 

 

Net gains on financial instruments

211

 

5

 

 

 

318

 

182

 

 

Interest expense

(200)

 

(191)

 

 

 

(798)

 

(784)

 

 

Amortization of other intangible assets

(135)

 

(92)

 

 

 

(441)

 

(361)

 

 

Loss on extinguishment of debt

(16)

 

(2)

 

 

 

(21)

 

(36)

 

 

Income before income tax expense

$ 1,400

 

$ 611

 

129.1 %

 

$ 7,925

 

$ 6,238

 

27.0 %

Anthem, Inc.

Financial Guidance Summary

(Unaudited)

 

 

 

 

 

 

 

 

 

Full Year 2021 Actual

 

Full Year 2022 Outlook

 

Approximate Change

Year-End Medical Enrollment

 

 

 

 

 

 

Fee-Based

 

25,586

 

26,100 - 26,300

 

514k -714k

Risk-Based

 

19,788

 

19,500 - 19,900

 

(288k)-112k

Total

 

45,374

 

45,600 - 46,200

 

226k - 826k

 

 

 

 

 

 

 

Operating Revenue

 

$136.9 billion

 

$152 billion

 

Approximately $15.1 billion or 11.0%

 

 

 

 

 

 

 

Premium Revenue

 

$117.4 billion

 

$130 billion

 

Approximately $12.6 billion or 10.7%

 

 

 

 

 

 

 

Benefit Expense Ratio

 

87.5%

 

88.0% +/- 50 bps

 

50 bps +/- 50 bps

 

 

 

 

 

 

 

SG&A Expense Ratio

 

11.6%

 

10.8% +/- 50 bps

 

(80) bps +/- 50 bps

 

 

 

 

 

 

 

Operating Gain

 

$7.5 billion

 

Greater than $8.4 billion

 

Greater than $900 million or 12.0%

 

 

 

 

 

 

 

Other Pre-Tax Items:

 

 

 

 

 

 

Net Investment income

 

$1,378 million

 

$1,100 million

 

($278) million

Interest Expense

 

($798) million

 

($840) million

 

($42) million

Amortization of Intangible Assets

 

($441) million

 

($522) million

 

($81) million

Net Pre-Tax Expense

 

$139 million

 

($262) million

 

($401) million

 

 

 

 

 

 

 

Effective Tax Rate

 

23.1%

 

22.0% - 24.0%

 

(1.1%) - 0.9%

 

 

 

 

 

 

 

GAAP EPS

 

$24.73

 

Greater than $26.75

 

8.2% or better

 

 

 

 

 

 

 

Adjusted EPS

 

$25.98

 

Greater than $28.25

 

8.8% or better

 

 

 

 

 

 

 

Diluted Shares

 

246.8 million

 

243 - 244 million

 

(1.5%) - (1.1%)

 

 

 

 

 

 

 

Operating Cash Flow

 

$8.4 billion

 

Greater than $6.9 billion

 

($1.5) billion or better

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 ongoing 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.

View source version on businesswire.comhttps://www.businesswire.com/news/home/20220125006247/en/

Anthem Contacts:
Investor Relations
Stephen Tanal
Stephen.Tanal@anthem.com

Media
Michelle Vanstory
Michelle.Vanstory@anthem.com

Source: Anthem, Inc.

 

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