01—Abstract
Summary
Summary of the 10-K filed February 24, 2015. Cited figures are marked; the original filing is the authoritative source.
Elevance Health, Inc. (formerly WellPoint, Inc.) reported strong performance for the fiscal year ended December 31, 2014.
The company experienced a 4.0% increase in total operating revenue, reaching $73.0 billiona, driven primarily by growth in its Government Business segment, particularly Medicaid and Medicare programs, and to a lesser extent, its Commercial and Specialty Business. Net income saw a 3.2% increase to $2.6 billion, with diluted earnings per share (EPS) rising by 9.6% to $8.99. This growth was supported by an effective share repurchase program, which reduced the number of outstanding shares and boosted EPS.
The company also demonstrated solid operating cash flow, indicating strong financial health. Key strategic initiatives for 2014 included expanding its government business, notably through the acquisition of Simply Healthcare Holdings, Inc., which further solidified its position in the Medicaid and Medicare markets in Florida.
Elevance Health also continued to navigate the evolving healthcare landscape, including the implementation of the Affordable Care Act (ACA), focusing on product innovation and expanding its network collaborations. The company's robust financial position, coupled with strategic growth initiatives and effective management of healthcare costs, positions it well for continued performance in the competitive health insurance market.
02—Key points
Key Highlights
- Total operating revenue grew 4.0% to $73.0 billion in 2014.
- Net income increased 3.2% to $2.6 billion, with diluted EPS up 9.6% to $8.99.
- Medical membership increased by 5.2% to 37.5 million members by year-end 2014.
- The company completed the acquisition of Simply Healthcare Holdings, Inc., strengthening its Government Business segment.
- Selling, general, and administrative expenses increased significantly (18.0%) primarily due to new fees associated with Health Care Reform, including the HIP Fee.
- Elevance Health continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.
- The company reported a significant cyber attack in February 2015, impacting IT systems and potentially exposing member and employee information, with ongoing investigation and remediation efforts.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 24, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $73.87B$71.02B | +4.0% |
| SG&A Expenses | $11.75B$9.95B | +18.0% |
| Operating Income | $4.42B$4.00B | +10.4% |
| Interest Expense | $600.70M$602.70M | −0.3% |
| Net Income | $2.57B$2.49B | +3.2% |
| EPS (Basic) | $9.31$8.34 | +11.6% |
| EPS (Diluted) | $8.99$8.20 | +9.6% |
| Shares Outstanding (Basic) | 275.90M298.50M | −7.6% |
| Shares Outstanding (Diluted) | 285.90M303.80M | −5.9% |
05—Questions
Frequently Asked Questions
What was Elevance Health's (Anthem's) revenue and net income performance in 2014?
In 2014, Elevance Health reported total operating revenue of $73.0 billion, a 4.0% increase from 2013. Net income was $2.6 billion, representing a 3.2% increase year-over-year. Diluted EPS also saw a healthy increase of 9.6% to $8.99.
What were the key drivers of revenue growth for Elevance Health in 2014?
Revenue growth was primarily driven by an increase in premium revenue in the Government Business segment, benefiting from higher rates and membership growth in Medicaid and Medicare programs. Growth in administrative fees from the Commercial and Specialty Business segment also contributed, supported by membership gains, particularly in self-funded accounts.
Did Elevance Health make any significant acquisitions or divestitures in 2014?
Yes, Elevance Health completed the acquisition of Simply Healthcare Holdings, Inc. in February 2015 (announced in December 2014), which is expected to bolster its Government Business segment. The company also divested its 1-800 CONTACTS business and related assets in January 2014.
What impact did Health Care Reform (ACA) have on Elevance Health's 2014 results?
Health Care Reform continued to be a significant factor, presenting both opportunities and challenges. While it contributed to membership growth, particularly in the Individual and Medicaid segments, it also introduced new fees, such as the Health Insurance Provider (HIP) Fee, which significantly increased selling, general, and administrative expenses. The company actively managed product design and pricing to align with ACA requirements.
What is the significance of the cyber attack reported in February 2015?
In February 2015, Elevance Health disclosed a significant external cyber attack that compromised IT systems and potentially exposed personal information of members and employees. While the full impact is still being assessed, the company incurred remediation expenses and is cooperating with law enforcement. This event poses a risk to reputation and could lead to litigation and regulatory scrutiny.
06—Continue