10-KPeriod: FY2013

Elevance Health, Inc. Annual Report, Year Ended Dec 31, 2013

Filed February 20, 2014For Securities:ELV

Summary

Elevance Health, Inc. (formerly WellPoint, Inc.) reported strong revenue growth in 2013, driven primarily by its Government Business segment, largely due to the acquisition of Amerigroup. However, net income saw a slight decrease compared to the previous year, impacted by the divestiture of its 1-800 CONTACTS business, preparation costs for the Affordable Care Act (ACA), and debt extinguishment losses. The company experienced a slight decline in total medical membership, with notable decreases in Medicare and Individual segments, partially offset by growth in Medicaid. Management highlighted strategic repositioning in certain Medicare Advantage plans and continued focus on integrating acquisitions, managing healthcare costs, and enhancing digital member interactions. The company continued its capital return strategy through dividends and share repurchases.

Financial Highlights

51 data points
Beta

Revenue

$71.02B

Net Income

$2.49B

3.5% Net Margin

EPS (Diluted)

$8.20

Total Assets

$59.57B

Cash & Equivalents

$1.58B

Free Cash Flow

$2.41B

Financial Statements
Beta
Revenue$71.02B
SG&A Expenses$9.95B
Operating Income$4.00B
Interest Expense$602.70M
Net Income$2.49B
EPS (Basic)$8.34
EPS (Diluted)$8.20
Shares Outstanding (Basic)298.50M
Shares Outstanding (Diluted)303.80M

Key Highlights

  • 1Total operating revenue increased by 16.0% to $70.2 billion in 2013, primarily driven by the acquisition of Amerigroup and growth in the Government Business segment.
  • 2Net income decreased by 6.2% to $2.5 billion in 2013, impacted by a loss on the sale of the 1-800 CONTACTS business and costs associated with the upcoming implementation of the Affordable Care Act (ACA).
  • 3Total medical membership slightly decreased by 1.3% to 35.7 million members, with declines in Medicare and Individual segments offset by growth in Medicaid.
  • 4The company repurchased $1.6 billion of its common stock in 2013 and increased its quarterly dividend by 16.7% for 2014, indicating a commitment to returning capital to shareholders.
  • 5The company is actively managing healthcare costs through various medical management programs and value-based payment initiatives.
  • 6Elevance Health's financial position remained strong, with consolidated cash, cash equivalents, and investments totaling $22.4 billion at year-end 2013.
  • 7The company is navigating the significant changes brought about by the Affordable Care Act, which is expected to present both opportunities and challenges for its business.

Frequently Asked Questions

Revenue growth was primarily driven by the acquisition of Amerigroup in December 2012, which significantly boosted the Government Business segment's performance. Growth in the Federal Employee Program (FEP) and CareMore subsidiary also contributed.

The decrease in net income was primarily due to a loss on the disposal of the 1-800 CONTACTS business, costs incurred in preparation for the implementation of the Affordable Care Act (ACA), realized losses on the extinguishment of debt, and increased interest expenses related to the Amerigroup acquisition.

Total medical membership saw a slight decrease of 1.3% to 35.7 million members. This was mainly due to declines in Medicare, Medicaid (in certain states), and National Accounts, partially offset by growth in Medicaid (overall) and BlueCard® membership.

The company is actively preparing for and analyzing the impacts of the ACA, which is expected to bring significant changes to the health insurance market. While acknowledging new risks and uncertainties, management views the ACA as a source of potential growth opportunities and is adapting its products, pricing, and administrative strategies accordingly.