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

Press Release July 20, 2022
  • Second quarter GAAP net income was $6.79 per share, including net negative adjustment items of $1.25 per share.  Adjusted net income was $8.04* per share.

  • Operating revenue grew 15.6% over the prior year quarter to $38.5 billion.

  • Operating gain grew 13.7% over the prior year quarter to $2.4 billion.

  • Medical enrollment increased 2.7 million members year-over-year and 276 thousand members during the quarter to 47.1 million members.

  • Third quarter 2022 dividend of $1.28 per share declared to shareholders.

Indianapolis, Ind. - July 20, 2022 - Elevance Health, Inc. (NYSE: ELV) reported second quarter 2022 results reflecting strong financial performance, including double-digit growth in revenue, operating earnings, and adjusted earnings per share.

"The disciplined execution of our strategy, and the balance and resilience of our diversified portfolio of businesses has enabled us to deliver another quarter of strong organic growth, and we have raised our outlook for 2022 earnings per share as a result," said Gail K. Boudreaux, President and CEO. "Our recent name change to Elevance Health and the broader rebranding strategy underscores our transformation to a lifetime, trusted health partner and our diversified set of businesses that lend resilience in any business environment.  We are uniquely well-positioned for growth in the future as we remain focused on meeting the needs of our clients and customers."

The Company now expects GAAP net income to be greater than $25.28 per share, including approximately $3.42 per share of net unfavorable items.  The Company now expects full-year adjusted net income to be greater than $28.70 per share, based on stronger than expected results year-to-date.

*Refer to GAAP reconciliation tables.

 

Consolidated Highlights

Earnings Per Share: GAAP net income was $6.79 per share in the second quarter, including net negative adjustment items of $1.25 per share. Adjusted net income was $8.04* per share, up 14.4% from $7.03 in the same period a year ago.

*Please refer to the GAAP reconciliation tables.

Membership: Medical enrollment totaled approximately 47.1 million members as of June 30, 2022, an increase of 2.7 million, or 6.1 percent from the prior year quarter. Government Business enrollment increased by 1.6 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 launch of Healthy Blue in North Carolina, the acquisitions of Paramount Advantage and Integra Managed Care and organic growth in Medicare Advantage. Commercial & Specialty Business enrollment increased by 1.2 million year over year primarily driven by strong sales in both fee-based and risk-based businesses.

During the second quarter of 2022, medical enrollment increased by 276 thousand lives driven by organic growth in Medicaid due to suspension of eligibility recertification, higher BlueCard activity and the acquisition of Integra Managed Care, which added 43 thousand members.

Operating Revenue: Operating revenue was $38.5 billion in the second quarter of 2022, an increase of $5.2 billion, or 15.6 percent, from the prior year quarter. The increase was driven by higher premium revenue due to membership growth in Medicaid, the acquisitions of MMM and Paramount Advantage, as well as premium rate increases to cover overall cost trends and growth in Medicare Advantage and Commercial risk-based membership.  The increase in operating revenue was further attributable to the growth in pharmacy product revenue within IngenioRx, the acquisition of Integra Managed Care and the launch of Healthy Blue in North Carolina.

Benefit Expense Ratio: The benefit expense ratio was 87.0 percent in the second quarter of 2022, an increase of 20 basis points over the prior year quarter. The increase was primarily driven by a shift in mix of business driven by faster growth in Government programs, which have a higher benefit expense ratio, as compared to growth in the Commercial & Specialty risk business, which represented 27% of premium revenue in the second quarter, down from 29% in the prior year quarter. 

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

Days in Claims Payable: Days in Claims Payable was 47.8 days as of June 30, 2022, an increase of 0.9 days from March 31, 2022 and a decrease of 0.3 days compared to June 30, 2021.  The timing of certain provider pass-through payments and corresponding reserves set in the current year had the effect of increasing Days in Claims Payable by 1.8 days, which we expect will reverse in the third quarter, while the timing of the acquisitions of MMM and myNEXUS increased Days in Claims Payable by 1.6 days in the second quarter of 2021.

SG&A Expense Ratio: The SG&A expense ratio was 11.1 percent in the second quarter of 2022, a decrease of 40 basis points from 11.5 percent in the second quarter of 2021. The decrease was primarily driven by operating expense leverage associated with growth in operating revenue, partially offset by increased spend to support growth.

Operating Cash Flow: Operating cash flow was approximately $2.5 billion, or 1.5 times net income in the second quarter of 2022, an increase of $769 million as compared to the prior year quarter. The year-on-year increase was driven by the impact of working capital changes, including the timing of certain provider pass-through payments.

Share Repurchase Program: During the second quarter of 2022, the Company repurchased 1.3 million shares of its common stock for $624 million, at a weighted average price of $489.07. Year-to-date, as of the end of the second quarter, the Company repurchased 2.5 million shares of its common stock for $1.2 billion, at a weighted average price of $471.72.  As of June 30, 2022, the Company had approximately $3.0 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the second quarter of 2022, the Company paid a quarterly dividend of $1.28 per share, representing a distribution of cash totaling $309 million.

On July 19, 2022, the Audit Committee of the Company's Board of Directors declared a third quarter 2022 dividend to shareholders of $1.28 per share. The third quarter dividend is payable on September 23, 2022, to shareholders of record at the close of business on September 9, 2022.

Investment Portfolio & Capital Position: During the second quarter of 2022, the Company recorded net losses of $231 million. During the second quarter of 2021, the Company recorded net gains of $172 million. These amounts are excluded from adjusted earnings per share.

As of June 30, 2022, the Company’s net unrealized loss position in the investment portfolio was $2.0 billion, consisting primarily of fixed maturity securities. As of June 30, 2022 cash and investments at the parent company totaled approximately $948 million.

Reportable Segments

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

Elevance Health, Inc.   

Reportable Segment Highlights   

   
(Unaudited)   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

(In millions)

Three Months Ended June 30

Six Months Ended June 30
   
   
   
2022   
   
2021   
   
Change   
   
2022   
   
2021   
   
Change   

Operating Revenue
   
   
   
   
   
   
   
   
   
   
   
   
   
Commercial & Specialty Business   
   
$10,561   
   
$9,550   
   
10.6 %   
   
$20,830   
   
$19,041   
   
9.4 %   
   
Government Business   
   
23,835   
   
20,066   
   
18.8 %   
   
47,593   
   
39,349   
   
21.0 %   
   
IngenioRx   
   
7,071   
   
6,219   
   
13.7 %   
   
13,754   
   
12,081   
   
13.8 %   
   
Other   
   
3,298   
   
2,517   
   
31.0 %   
   
6,519   
   
4,887   
   
33.4 %   
   
Eliminations   
   
(6,283)   
   
(5,073)   
   
23.9 %   
   
(12,328)   
   
(9,981)   
   
23.5 %   
   
Total Operating Revenue1   
   
$38,482   
   
$33,279   
   
15.6 %   
   
$76,368   
   
$65,377   
   
16.8 %   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

Operating Gain
   
   
   
   
   
   
   
   
   
   
   
   
   
Commercial & Specialty Business   
   
$806   
   
$791   
   
1.9 %   
   
$1,888   
   
$2,059   
   
(8.3) %   
   
Government Business   
   
996   
   
868   
   
14.7 %   
   
1,785   
   
1,346   
   
32.6 %   
   
IngenioRx   
   
479   
   
405   
   
18.3 %   
   
877   
   
812   
   
8.0 %   
   
Other   
   
86   
   
17   
   
405.9 %   
   
264   
   
25   
   
956.0 %   
   
Total Operating Gain1   
   
$2,367   
   
$2,081   
   
13.7 %   
   
$4,814   
   
$4,242   
   
13.5 %   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

Operating Margin
   
   
   
   
   
   
   
   
   
   
   
   
   
Commercial & Specialty Business   
   
7.6 %   
   
8.3 %   
   
(70) bp   
   
9.1 %   
   
10.8 %   
   
(170) bp   
   
Government Business   
   
4.2 %   
   
4.3 %   
   
(10) bp   
   
3.8 %   
   
3.4 %   
   
40 bp   
   
IngenioRx   
   
6.8 %   
   
6.5 %   
   
30 bp   
   
6.4 %   
   
6.7 %   
   
(30) bp   

Total Operating Margin1
   
6.2 %   
   
6.3 %   
   
(10) bp   
   
6.3 %   
   
6.5 %   
   
(20) bp   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
  1. See “Basis of Presentation” on page 6 herein.
  1.  "NM" = calculation not meaningful.

 

Commercial & Specialty Business: Operating gain in the Commercial & Specialty Business segment totaled $806 million in the second quarter of 2022, an increase of $15 million from $791 million in the second quarter of 2021. The increase was primarily driven by the positive contribution from growth in risk- and fee-based membership, partially offset by the net unfavorable effect of COVID.

Government Business: Operating gain in the Government Business segment was $996 million in the second quarter of 2022, an increase of $128 million from $868 million in the second quarter of 2021. The increase was primaily attributable to premium rates in Medicare that better reflect the acuity of our members and membership growth in Medicaid.

IngenioRx: Operating gain was $479 million in the second quarter of 2022, an increase of $74 million from $405 million in the second quarter of 2021. The increase was driven by an in-year out of period favorable adjustment and the impact of higher prescription volume associated with growth in integrated medical and pharmacy members.

Other: The Company reported an operating gain of $86 million in the Other segment for the second quarter of 2022, an increase of $69 million from $17 million in the prior year quarter. The increase was driven by improved performance in Carelon's affiliated and unaffiliated earnings.

Basis of Presentation

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

2.      Operating margin is defined as operating gain divided by operating revenue.

Conference Call and Webcast

Management will host a conference call and webcast today at 8:30 a.m. Eastern Daylight Time (“EDT”) to discuss the company’s 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)

866-430-8797 (Domestic Replay)

312-470-0178 (International)

203-369-0943 (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 August 20, 2022. The call will also be available through a live webcast at www.elevancehealth.com under the “Investors” link. A webcast replay will be available following the call.

Elevance Health Contacts:

 

Investor Relations                            

Media

Stephen Tanal

Leslie Porras

Stephen.Tanal@elevancehealth.com

Leslie.Porras@elevancehealth.com

 

About Elevance Health, Inc.

Elevance Health is a lifetime, trusted health partner fueled by its purpose to improve the health of humanity. The company supports consumers, families, and communities across the entire care journey – connecting them to the care, support, and resources they need to lead healthier lives. Elevance Health’s companies serve more than 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 Summary


(Unaudited and in Thousands)
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Change from   
   
Medical Membership   
   
June   30, 2022   
   
   
   
June   30, 2021   
   
   
   
March   31, 2022   
   
   

June 30, 2021
   
   
   
March   31, 2022   
   
Commercial   & Specialty Business   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Individual   
   
803    
   
   
   
738    
   
   
   
818    
   
   
   
8.8 %   
   
   
   
(1.8) %   
   
Group Risk-Based   
   
4,020    
   
   
   
3,851    
   
   
   
4,028    
   
   
   
4.4 %   
   
   
   
(0.2) %   
   
Commercial Risk-Based   
   
4,823    
   
   
   
4,589    
   
   
   
4,846    
   
   
   
5.1 %   
   
   
   
(0.5) %   
   
BlueCard®   
   
6,445    
   
   
   
6,235    
   
   
   
6,370    
   
   
   
3.4 %   
   
   
   
1.2 %   
   
Group Fee-Based   
   
20,086    
   
   
   
19,372    
   
   
   
20,148    
   
   
   
3.7 %   
   
   
   
(0.3) %   
   
Commercial Fee-Based   
   
26,531    
   
   
   
25,607    
   
   
   
26,518    
   
   
   
3.6 %   
   
   
   
— %   
   
Total Commercial & Specialty   Business   
   
31,354    
   
   
   
30,196    
   
   
   
31,364    
   
   
   
3.8 %   
   
   
   
— %   
   
Government   Business   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Medicare Advantage   
   
1,946    
   
   
   
1,824    
   
   
   
1,921    
   
   
   
6.7 %   
   
   
   
1.3 %   
   
Medicare Supplement   
   
942    
   
   
   
936    
   
   
   
939    
   
   
   
0.6 %   
   
   
   
0.3 %   
   
Total Medicare   
   
2,888    
   
   
   
2,760    
   
   
   
2,860    
   
   
   
4.6 %   
   
   
   
1.0 %   
   
Medicaid   
   
11,181    
   
   
   
9,754    
   
   
   
10,919    
   
   
   
14.6 %   
   
   
   
2.4 %   
   
Federal Employees Health Benefits   
   
1,628    
   
   
   
1,631    
   
   
   
1,632    
   
   
   
(0.2) %   
   
   
   
(0.2) %   
   
Total Government Business   
   
15,697    
   
   
   
14,145    
   
   
   
15,411    
   
   
   
11.0 %   
   
   
   
1.9 %   
   
Total   Medical Membership   
   
47,051    
   
   
   
44,341    
   
   
   
46,775    
   
   
   
6.1 %   
   
   
   
0.6 %   
   
Other Membership   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Life and Disability Members   
   
4,779    
   
   
   
4,732    
   
   
   
4,679    
   
   
   
1.0 %   
   
   
   
2.1 %   
   
Dental Members   
   
6,620    
   
   
   
6,606    
   
   
   
6,649    
   
   
   
0.2 %   
   
   
   
(0.4) %   
   
Dental Administration Members   
   
1,589    
   
   
   
1,497    
   
   
   
1,588    
   
   
   
6.1 %   
   
   
   
0.1 %   
   
Vision Members   
   
9,385    
   
   
   
7,819    
   
   
   
9,211    
   
   
   
20.0 %   
   
   
   
1.9 %   
   
Medicare Part D Standalone Members   
   
276    
   
   
   
433    
   
   
   
279    
   
   
   
(36.3) %   
   
   
   
(1.1) %   

Elevance Health, Inc.

Consolidated Statements of Income

 
   
(Unaudited)   
   
   
   
   
   
   
   
   

(In millions, except per share data)

Three Months Ended June 30
   
   
   
2022   
   
2021   
   
Change   
   
Revenues   
   
   
   
   
   
   
   
Premiums   
   
$ 33,076     
   
$ 28,533     
   
15.9 %   
   
Product revenue   
   
3,568     
   
3,042     
   
17.3 %   
   
Administrative fees and other revenue   
   
1,838     
   
1,704     
   
7.9 %   
   
Total operating revenue   
   
38,482     
   
33,279     
   
15.6 %   
   
Net investment income   
   
381     
   
400     
   
(4.8) %   
   
Net (losses) gains on financial   instruments   
   
(231)     
   
172     
   
(234.3) %   
   
   
   
   
   
   
   
   
   
Total revenues   
   
38,632     
   
33,851     
   
14.1 %   
   
   
   
   
   
   
   
   
   
Expenses   
   
   
   
   
   
   
   
Benefit expense   
   
28,777     
   
24,763     
   
16.2 %   
   
Cost of products sold   
   
3,069     
   
2,614     
   
17.4 %   
   
Selling, general and administrative   expense   
   
4,269     
   
3,821     
   
11.7 %   
   
Interest expense   
   
208     
   
205     
   
1.5 %   
   
Amortization of other intangible   assets   
   
166     
   
90     
   
84.4 %   
   
Loss on extinguishment of debt   
   
—     
   
5     
   
(100.0) %   
   
   
   
   
   
   
   
   
   
Total expenses   
   
36,489     
   
31,498     
   
15.8 %   
   
   
   
   
   
   
   
   
   
Income before income tax expense   
   
2,143     
   
2,353     
   
(8.9) %   
   
   
   
   
   
   
   
   
   
Income tax expense   
   
493     
   
552     
   
(10.7) %   
   
   
   
   
   
   
   
   
   
Net income   
   
1,650     
   
1,801     
   
(8.4) %   
   
   
   
   
   
   
   
   

Net loss/(income) attributable to noncontrolling interests
   
3     

(8)
   
NM   
   
   
   
   
   
   
   
   

Shareholders' net income
   
$ 1,653     
   
$ 1,793     
   
(7.8) %   
   
   
   
   
   
   
   
   
   
Shareholders' net income per diluted   share   
   
$ 6.79     
   
$ 7.25     
   
(6.3) %   
   
   
   
   
   
   
   
   
   
Diluted shares   
   
243.4     
   
247.4     
   
(1.6) %   
   
   
   
   
   
   
   
   
   
Benefit expense as a percentage of   premiums   
   
87.0 %   
   
86.8 %   

20 bp
   
Selling, general   and administrative expense as a percentage of total operating revenue   
   
11.1 %   
   
11.5 %   

(40) bp
   
Income before income tax expense as a percentage   of total revenue   
   
5.5 %   
   
7.0 %   

(150) bp

Elevance Health, Inc.

Consolidated Statements of Income

 
   
(Unaudited)   
   
   
   
   
   
   
   
   

(In millions, except per share data)

Six Months Ended June 30
   
   
   
2022   
   
2021   
   
Change   
   
Revenues   
   
   
   
   
   
   
   
Premiums   
   
$ 65,861     
   
$ 56,209     
   
17.2 %   
   
Product revenue   
   
6,869     
   
5,779     
   
18.9 %   
   
Administrative fees and other revenue   
   
3,638     
   
3,389     
   
7.3 %   
   
Total operating revenue   
   
76,368     
   
65,377     
   
16.8 %   
   
Net investment income   
   
741     
   
691     
   
7.2 %   
   
Net (losses) gains on financial   instruments   
   
(382)     
   
168     
   
(327.4) %   
   
   
   
   
   
   
   
   
   
Total revenues   
   
76,727     
   
66,236     
   
15.8 %   
   
   
   
   
   
   
   
   
   
Expenses   
   
   
   
   
   
   
   
Benefit expense   
   
56,992     
   
48,462     
   
17.6 %   
   
Cost of products sold   
   
5,952     
   
4,927     
   
20.8 %   
   
Selling, general and administrative   expense   
   
8,610     
   
7,746     
   
11.2 %   
   
Interest expense   
   
409     
   
397     
   
3.0 %   
   
Amortization of other intangible   assets   
   
295     
   
170     
   
73.5 %   
   
Loss on extinguishment of debt   
   
—     
   
5     
   
(100.0) %   
   
   
   
   
   
   
   
   
   
Total expenses   
   
72,258     
   
61,707     
   
17.1 %   
   
   
   
   
   
   
   
   
   
Income before income tax expense    
   
4,469     
   
4,529     
   
(1.3) %   
   
   
   
   
   
   
   
   
   
Income tax expense   
   
1,024     
   
1,061     
   
(3.5) %   
   
   
   
   
   
   
   
   
   
Net   income   
   
3,445     
   
3,468     
   
(0.7) %   
   
   
   
   
   
   
   
   
   
Net   loss/(income) attributable to noncontrolling interests   
   
13     
   
(10)     
   
NM   
   
   
   
   
   
   
   
   
   
Shareholders'   net income   
   
$ 3,458     
   
$ 3,458     
   
— %   
   
   
   
   
   
   
   
   
   
Shareholders' net income per diluted   share   
   
$ 14.18     
   
$ 13.95     
   
1.6 %   
   
   
   
   
   
   
   
   
   
Diluted shares   
   
243.9     
   
247.8     
   
(1.6) %   
   
   
   
   
   
   
   
   
   
Benefit expense as a percentage of   premiums   
   
86.5 %   
   
86.2 %   

30 bp
   
Selling, general   and administrative expense as a percentage of total operating revenue   
   
11.3 %   
   
11.8 %   

(50) bp
   
Income before income tax expense as a percentage   of total revenue   
   
5.8 %   
   
6.8 %   

(100) bp

Elevance Health, Inc.

Consolidated Balance Sheets

 
   
(Unaudited)      
   
(In millions)   
   
June 30,
2022   
   
   
   
December 31,
 2021   
Assets    (Unaudited)       
   
   
   
   
Current assets:   
   
   
   
   
   
   
   
Cash and cash equivalents   
   
$ 6,456    
   
   
   
$ 4,880    
   
Fixed maturity securities   
   
25,765    
   
   
   
26,267    
   
Equity securities, current   
   
1,572    
   
   
   
1,881    
   
Premium receivables   
   
6,757    
   
   
   
5,681    
   
Self-funded receivables   
   
3,844    
   
   
   
4,010    
   
Other receivables   
   
3,600    
   
   
   
3,749    
   
Other current assets   
   
5,661    
   
   
   
4,654    
   
Total current assets   
   
53,655    
   
   
   
51,122    
   
   
   
   
   
   
   
   
   
Long-term investments:   
   
   
   
   
   
   
   
Fixed maturity securities   
   
603    
   
   
   
632    
   
Other invested assets   
   
5,398    
   
   
   
5,225    
   
Property and equipment, net   
   
4,090    
   
   
   
3,919    
   
Goodwill   
   
24,367    
   
   
   
24,228    
   
Other intangible assets   
   
10,762    
   
   
   
10,615    
   
Other noncurrent assets   
   
2,002    
   
   
   
1,719    
   
Total assets   
   
$ 100,877    
   
   
   
$ 97,460    
   
   
   
   
   
   
   
   
   
Liabilities and equity   
   
   
   
   
   
   
   
Liabilities  
   
   
   
   
   
   
   
Current liabilities:   
   
   
   
   
   
   
   
Medical claims payable   
   
$ 15,127    
   
   
   
$ 13,518    
   
Other policyholder liabilities   
   
5,577    
   
   
   
5,521    
   
Unearned income   
   
971    
   
   
   
1,153    
   
Accounts payable and accrued   expenses   
   
5,850    
   
   
   
4,970    
   
Short-term borrowings   
   
175    
   
   
   
275    
   
Current portion of long-term   debt   
   
2,248    
   
   
   
1,599    
   
Other current liabilities   
   
9,360    
   
   
   
7,849    
   
Total current liabilities   
   
39,308    
   
   
   
34,885    
   
   
   
   
   
   
   
   
   
Long-term debt, less current portion   
   
21,165    
   
   
   
21,157    
   
Reserves for future policy benefits   
   
822    
   
   
   
802    
   
Deferred tax liabilities, net   
   
2,021    
   
   
   
2,805    
   
Other noncurrent liabilities   
   
1,694    
   
   
   
1,683    
   
Total liabilities   
   
65,010    
   
   
   
61,332    
   
   
   
   
   
   
   
   
   
Shareholders’  equity   
   
   
   
   
   
   
   
Common stock   
   
2    
   
   
   
2    
   
Additional paid-in capital   
   
9,134    
   
   
   
9,148    
   
Retained earnings   
   
28,825    
   
   
   
27,088    
   
Accumulated other comprehensive loss   
   
(2,149)   
   
   
   
(178)   
   
Total shareholders’ equity   
   
35,812    
   
   
   
36,060    
   
Noncontrolling interests   
   
55    
   
   
   
68    
   
Total equity   
   
35,867    
   
   
   
36,128    
   
Total liabilities and equity   
   
$ 100,877    
   
   
   
$ 97,460    

Elevance Health, Inc.

Consolidated Statements of Cash Flows

(Unaudited)
     
   
   
   
   
   

(In millions)
   
Six Months Ended June 30   
   
   
   
2022   
   
   
   
2021   

Operating activities
   
   
   
   
   
   
   
Net income   
   
$3,445   
   
   
   
$3,468   

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

Net losses (gains) on financial instruments
   
382    
   
   
   
(168)   

Equity in net earnings of other invested assets
   
(258)   
   
   
   
(309)   
   
Depreciation and amortization   
   
751    
   
   
   
591    
   
Deferred income taxes   
   
(172)   
   
   
   
(8)   
   
Share-based compensation   
   
122    
   
   
   
133    

Changes in operating assets and liabilities:
   
   
   
   
   
   
   
Receivables, net   
   
(662)   
   
   
   
(1,632)   
   
Other invested assets   
   
32    
   
   
   
(44)   
   
Other assets   
   
(419)   
   
   
   
(247)   
   
Policy liabilities   
   
1,514    
   
   
   
1,912    
   
Unearned income   
   
(182)   
   
   
   
(180)   

Accounts payable and other liabilities
   
632    
   
   
   
560    
   
Income taxes   
   
(159)   
   
   
   
106    
   
Other, net   
   
(33)   
   
   
   
6    

Net cash provided by operating activities
   
4,993    
   
   
   
4,188    
   
   
   
   
   
   
   
   

Investing activities
   
   
   
   
   
   
   
Purchases of investments   
   
(13,253)   
   
   
   
(11,221)   

Proceeds from sale of investments
   
7,140    
   
   
   
6,345    

Maturities, calls and redemptions from investments
   
4,347    
   
   
   
2,246    

Changes in securities lending collateral
   
(620)   
   
   
   
(642)   

Purchases of subsidiaries, net of cash acquired
   
(609)   
   
   
   
(3,442)   

Purchases of property and equipment
   
(549)   
   
   
   
(489)   
   
Other, net   
   
(58)   
   
   
   
(29)   
   
Net cash used in investing activities   
   
(3,602)   
   
   
   
(7,232)   
   
   
   
   
   
   
   
   

Financing activities
   
   
   
   
   
   

Net proceeds from commercial paper borrowings
   
250    
   
   
   
300    

Net proceeds from (repayments of) short-term borrowings
   
(100)   
   
   
   
175    

Net proceeds from long-term borrowings
   
357    
   
   
   
2,510    

Changes in securities lending payable
   
620    
   
   
   
642    
   
Changes in bank overdrafts   
   
817    
   
   
   
364    

Repurchase and retirement of common stock
   
(1,169)   
   
   
   
(927)   
   
Cash dividends   
   
(618)   
   
   
   
(555)   

Proceeds from issuance of common stock under employee stock plans
   
116    
   
   
   
141    

Taxes paid through withholding of common stock under employee stock plans
   
(88)   
   
   
   
(93)   
   
Other, net   
   
10    
   
   
   
11    

Net cash provided by financing activities
   
195    
   
   
   
2,568    
   
   
   
   
   
   
   
   

Effect of foreign exchange rates on cash and cash equivalents
   
(10)   
   
   
   
(7)   
   
   
   
   
   
   
   
   
   
Change in cash and cash equivalents   
   
1,576    
   
   
   
(483)   

Cash and cash equivalents at beginning of period
   
4,880    
   
   
   
5,741    
   
   
   
   
   
   
   
   

Cash and cash equivalents at end of period
   
$6,456   
   
   
   
$5,258   

Elevance Health, Inc.

Reconciliation of Medical Claims Payable

   
   
   
Six Months Ended June 30   
   
   
   
Years Ended December 31   
   
   
   
2022   
   
   
   
2021   
   
   
   
2021   
   
   
   
2020   
   
   
   
2019   
   
(In millions)   
   
(Unaudited)   
   
   
   
(Unaudited)   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Gross medical claims payable,   beginning of period   
   
$ 13,282     
   
   
   
$ 11,135     
   
   
   
$ 11,135     
   
   
   
$ 8,647     
   
   
   
$ 7,266     
   
Ceded medical claims payable,   beginning of period   
   
(21)     
   
   
   
(46)     
   
   
   
(46)     
   
   
   
(33)     
   
   
   
(34)     
   
Net medical claims payable, beginning   of period   
   
13,261     
   
   
   
11,089     
   
   
   
11,089     
   
   
   
8,614     
   
   
   
7,232     
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Business combinations and purchase   adjustments   
   
133     
   
   
   
420     
   
   
   
420     
   
   
   
339     
   
   
   
—     
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Net incurred medical claims:   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Current year   
   
55,737     
   
   
   
48,343     
   
   
   
100,440     
   
   
   
85,094     
   
   
   
78,695     
   
Prior years redundancies(1)   
   
(972)     
   
   
   
(1,772)     
   
   
   
(1,703)     
   
   
   
(637)     
   
   
   
(500)     
   
Total net incurred medical claims   
   
54,765     
   
   
   
46,571     
   
   
   
98,737     
   
   
   
84,457     
   
   
   
78,195     
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Net payments attributable to:   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Current year medical claims   
   
42,882     
   
   
   
37,533     
   
   
   
88,156     
   
   
   
74,629     
   
   
   
70,294     
   
Prior years medical claims   
   
10,401     
   
   
   
7,767     
   
   
   
8,829     
   
   
   
7,692     
   
   
   
6,519     
   
Total net payments   
   
53,283     
   
   
   
45,300     
   
   
   
96,985     
   
   
   
82,321     
   
   
   
76,813     
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Net medical claims payable, end of   period   
   
14,876     
   
   
   
12,780     
   
   
   
13,261     
   
   
   
11,089     
   
   
   
8,614     
   
Ceded medical claims payable, end of period   
   
13     
   
   
   
41     
   
   
   
21     
   
   
   
46     
   
   
   
33     
   
Gross medical claims payable, end of   period   
   
$ 14,889     
   
   
   
$ 12,821     
   
   
   
$ 13,282     
   
   
   
$ 11,135     
   
   
   
$ 8,647     
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Current year medical   claims paid as a percentage of current year net incurred medical claims   
   
76.9 %   
   
   
   
77.6 %   
   
   
   
87.8 %   
   
   
   
87.7 %   
   
   
   
89.3 %   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Prior year redundancies in   the current year as a percentage of prior year net medical claims payable   less prior year redundancies in the current year   
   
7.9 %   
   
   
   
19.0 %   
   
   
   
18.1 %   
   
   
   
8.0 %   
   
   
   
7.4 %   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Prior year redundancies in   the current year as a percentage of prior year net incurred medical claims   
   
1.0 %   
   
   
   
2.1 %   
   
   
   
2.0 %   
   
   
   
0.8 %   
   
   
   
0.7 %   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
(1) Negative   amounts reported for net incurred medical claims related to prior years   result from claims being settled for
    amounts less than originally   estimated.    

Elevance Health, Inc.

GAAP Reconciliation

(Unaudited)

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

   
   

Three Months Ended June 30
   
   
   
   
   
   

Six Months Ended June 30
   
   
   
   
   
(In   millions, except per share data)   
   
2022   
   
   
   
2021   
   
   
   
Change   
   
   
   
2022   
   
   
   
2021   
   
   
   
Change   
   
Shareholders' net income   
   
$ 1,653     
   
   
   
$ 1,793     
   
   
   
(7.8) %   
   
   
   
$ 3,458     
   
   
   
$ 3,458     
   
   
   
— %   
   
Add / (Subtract):   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Net losses (gains) on financial   instruments   
   
231     
   
   
   
(172)   
   
   
   
   
   
   
   
382     
   
   
   
(168)   
   
   
   
   
   
Amortization of other intangible   assets   
   
166     
   
   
   
90     
   
   
   
   
   
   
   
295     
   
   
   
170     
   
   
   
   
   
Loss on extinguishment of debt   
   
—     
   
   
   
5     
   
   
   
   
   
   
   
—     
   
   
   
5     
   
   
   
   
   
Transaction and integration   related costs   
   
14     
   
   
   
12     
   
   
   
   
   
   
   
23     
   
   
   
21     
   
   
   
   
   
Litigation expenses   
   
4     
   
   
   
6     
   
   
   
   
   
   
   
5     
   
   
   
12     
   
   
   
   
   
Tax impact of non-GAAP   adjustments   
   
(111)   
   
   
   
6     
   
   
   
   
   
   
   
(189)   
   
   
   
(19)   
   
   
   
   
   
Net adjustment items   
   
304     
   
   
   
(53)   
   
   
   
   
   
   
   
516     
   
   
   
21     
   
   
   
   
   
Adjusted shareholders' net income   
   
$ 1,957     
   
   
   
$ 1,740     
   
   
   
12.5 %   
   
   
   
$ 3,974     
   
   
   
$ 3,479     
   
   
   
14.2 %   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Shareholders' net income per diluted   share   
   
$ 6.79     
   
   
   
$ 7.25     
   
   
   
(6.3) %   
   
   
   
$ 14.18     
   
   
   
$ 13.95     
   
   
   
1.6 %   
   
Add / (Subtract):   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
Net losses (gains) on financial   instruments   
   
0.95     
   
   
   
(0.70)   
   
   
   
   
   
   
   
1.57     
   
   
   
(0.68)   
   
   
   
   
   
Amortization of other intangible   assets   
   
0.68     
   
   
   
0.36     
   
   
   
   
   
   
   
1.21     
   
   
   
0.69     
   
   
   
   
   
Loss on extinguishment of debt   
   
—     
   
   
   
0.02     
   
   
   
   
   
   
   
—     
   
   
   
0.02     
   
   
   
   
   
Transaction and integration   related costs   
   
0.06     
   
   
   
0.05     
   
   
   
   
   
   
   
0.09     
   
   
   
0.08     
   
   
   
   
   
Litigation expenses   
   
0.02     
   
   
   
0.02     
   
   
   
   
   
   
   
0.02     
   
   
   
0.05     
   
   
   
   
   
Tax impact of non-GAAP   adjustments   
   
(0.46)   
   
   
   
0.02     
   
   
   
   
   
   
   
(0.77)   
   
   
   
(0.08)   
   
   
   
   
   
Rounding impact   
   
—     
   
   
   
0.01     
   
   
   
   
   
   
   
(0.01)   
   
   
   
0.01     
   
   
   
   
   
Net adjustment items   
   
1.25     
   
   
   
(0.22)   
   
   
   
   
   
   
   
2.11     
   
   
   
0.09     
   
   
   
   
   
Adjusted shareholders' net income per   diluted share   
   
$ 8.04     
   
   
   
$ 7.03     
   
   
   
14.4 %   
   
   
   
$ 16.29     
   
   
   
$ 14.04     
   
   
   
16.0 %   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

Full Year 2022 Outlook
   
   
   
   
   
   
   
     
   
   
   
   
   
Shareholders' net income per diluted   share   
   
Greater than   $25.28   
   
   
   
   
   
   
   
     
   
   
   
   
   
Add / (Subtract):   
   
     
   
   
   
   
   
   
   
     
   
   
   
   
   
Net losses on financial   instruments   
   
$1.57     
   
   
   
   
   
   
   
     
   
   
   
   
   
Transaction and integration   related costs   
   
$0.09     
   
   
   
   
   
   
   
     
   
   
   
   
   
Litigation expenses   
   
$0.02     
   
   
   
   
   
   
   
     
   
   
   
   
   
Amortization of other intangible   assets   
   
Approximately   $3.07   
   
   
   
   
   
   
   
     
   
   
   
   
   
Tax impact of non-GAAP   adjustments   
   
Approximately   $(1.33)   
   
   
   
   
   
   
   
     
   
   
   
   
   
Net adjustment items   
   
Approximately   $3.42   
   
   
   
   
   
   
   
     
   
   
   
   
   
Adjusted shareholders' net income per   diluted share   
   
Greater than   $28.70   
   
   
   
   
   
   
   
     
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

Three Months Ended June 30
   
   
   
   
   
   

Six Months Ended June 30
   
   
   
   
   
(In   millions)   
   
2022   
   
   
   
2021   
   
   
   
Change   
   
   
   
2022   
   
   
   
2021   
   
   
   
Change   
   
Income before income tax expense   
   
$ 2,143     
   
   
   
$ 2,353     
   
   
   
(8.9) %   
   
   
   
$ 4,469     
   
   
   
$ 4,529     
   
   
   
(1.3) %   
   
Net investment income   
   
(381)   
   
   
   
(400)   
   
   
   
   
   
   
   
(741)   
   
   
   
(691)   
   
   
   
   
   
Net losses (gains) on financial   instruments   
   
231     
   
   
   
(172)   
   
   
   
   
   
   
   
382     
   
   
   
(168)   
   
   
   
   
   
Interest expense   
   
208     
   
   
   
205     
   
   
   
   
   
   
   
409     
   
   
   
397     
   
   
   
   
   
Amortization of other intangible   assets   
   
166     
   
   
   
90     
   
   
   
   
   
   
   
295     
   
   
   
170     
   
   
   
   
   
Loss on extinguishment of debt   
   
—     
   
   
   
5     
   
   
   
   
   
   
   
—     
   
   
   
5     
   
   
   
   
   
Reportable segments operating gain   
   
$ 2,367     
   
   
   
$ 2,081     
   
   
   
13.7 %   
   
   
   
$ 4,814     
   
   
   
$ 4,242     
   
   
   
13.5 %   

Forward-Looking Statements

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