01—Abstract
Summary
Summary of the 10-K filed February 19, 2009. Cited figures are marked; the original filing is the authoritative source.
Elevance Health, Inc. (ELV), formerly WellPoint, Inc., reported robust performance in its 2008 Annual Report, demonstrating growth in total operating revenue to $61.6 billiona, a 2% increase year-over-year, driven by premium rate adjustments across its medical lines and growth in its Medicare Advantage business.
Despite increased medical costs impacting net income, which decreased by 26% to $2.5 billionb, the company maintained a strong liquidity position and continued its share repurchase program. The company highlighted its significant market presence, serving 35 million members nationwide, and its diversified product offerings across commercial, consumer, and other segments. Strategic focus remains on organic growth, targeted acquisitions, and enhancing value-based care initiatives.
The company's operational results were influenced by several key factors, including a 4%c increase in benefit expenses primarily due to higher medical costs, and a 4% rise in selling, general, and administrative expenses, largely attributed to increased compensation and severance costs. However, these were partially offset by premium increases and growth in self-funded membership. The report also details the company's ongoing efforts in care management, technology integration, and quality initiatives, underscoring its commitment to improving healthcare value and member outcomes.
The company's substantial investments in intangible assets, representing 46%d of total assets, reflect its acquisitive growth strategy. Looking ahead, Elevance Health is positioned to navigate the evolving healthcare landscape by focusing on operational efficiency, strategic growth, and adapting to regulatory changes.
The company's financial health remains solid, supported by a strong balance sheet and consistent operational cash flow, enabling continued investment in its business and return of capital to shareholders through its stock repurchase program. Investors should note the company's significant presence in both government-sponsored programs (Medicare and Medicaid) and commercial markets, offering a diversified revenue base.
02—Key points
Key Highlights
- Total operating revenue grew by 2% to $61.6 billion in 2008, driven by premium rate increases and Medicare Advantage growth.
- Net income decreased by 26% to $2.5 billion, impacted by higher medical costs and investment impairments.
- Medical membership reached 35 million, with growth in National and BlueCard segments partially offset by declines in State-Sponsored and Individual segments.
- The company repurchased approximately 56.4 million shares for $3.3 billion during 2008.
- Benefit expenses increased by 4% due to higher medical costs, leading to a higher benefit expense ratio of 83.6%.
- Selling, general, and administrative expenses increased by 4%, with a slight increase in the expense ratio to 14.6%.
- The company maintains a strong liquidity position with $17.4 billion in cash, cash equivalents, and investments as of December 31, 2008.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Elevance Health, Inc. kept $0.04.
- Revenue$61.25B100.0%
- Cost of revenue−$468.5M0.8%
- Gross profit$60.78B99.2%
- Operating costs−$56.43B92.1%
- Operating income$4.35B7.1%
- Interest, other & tax−$1.86B3.0%
- Net income$2.49B4.1%
Where FY2008 revenue went
$61.25B- Other operating costs: $47.94B, 78% of revenue
- SG&A: $8.50B, 14% of revenue
- Net income: $2.49B, 4.1% of revenue
- Cost of revenue: $468.5M, 0.8% of revenue
- Interest, other & tax: $1.86B, 3.0% of revenue
Kept 4.1% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 19, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $61.25B$61.17B | +0.1% |
| Cost of Revenue | $468.50M$432.70M | +8.3% |
| Gross Profit | $60.78B$60.74B | +0.1% |
| SG&A Expenses | $8.50B$8.70B | −2.3% |
| Operating Income | $4.35B— | — |
| Interest Expense | $469.80M$447.90M | +4.9% |
| Net Income | $2.49B$3.35B | −25.5% |
| EPS (Basic) | $4.79$5.64 | −15.1% |
| EPS (Diluted) | $4.76$5.56 | −14.4% |
| Shares Outstanding (Basic) | 519.80M— | — |
| Shares Outstanding (Diluted) | 523.00M— | — |
05—Questions
Frequently Asked Questions
What was Elevance Health's (WellPoint's) financial performance in 2008?
In 2008, Elevance Health (WellPoint) reported total operating revenue of $61.6 billion, a 2% increase from 2007. Net income was $2.5 billion, a decrease of 26% from the prior year, primarily due to higher medical costs and significant investment impairments. The company served 35 million members and actively managed its capital through a $3.3 billion share repurchase program.
What were the primary drivers of the change in net income in 2008?
The decrease in net income was primarily driven by higher medical costs, which increased benefit expenses by 4%. Additionally, the company recorded significant other-than-temporary impairments on its investment securities, totaling $1.2 billion, and a $141.4 million impairment of intangible assets. These factors outweighed the revenue growth and cost management efforts.
How did membership numbers change in 2008?
Total medical membership increased slightly by 1% to 35 million members. Growth was observed in the National and BlueCard segments, while the State-Sponsored and Individual segments experienced declines. The company's strategy continues to focus on expanding its member base through organic growth and strategic acquisitions.
What is the company's outlook for growth and strategy?
Elevance Health aims to continue expanding through organic growth, strategic acquisitions, and capital transactions. Key strategic priorities include simplifying the connection between health, care, and value, enhancing care management programs like '360º Health', and leveraging technology to improve member and provider experiences. The company also emphasizes its commitment to improving health outcomes and advocating for responsible healthcare reform.
06—Continue