01—Abstract
Summary
Summary of the 10-K filed February 20, 2019. Cited figures are marked; the original filing is the authoritative source.
Elevance Health, Inc. (formerly Anthem, Inc.) reported solid performance for the year ended December 31, 2018, with total revenues reaching $92.1 billiona.
The company demonstrated growth in its Government Business segment, largely driven by acquisitions and favorable Medicare and Medicaid membership trends. However, the Commercial & Specialty Business segment experienced a revenue decrease, primarily due to the company's strategic reduction in participation within the Individual ACA-compliant marketplaces. Financially, net income was $3.75 billionb, a slight decrease from the previous year, impacted by higher income tax expenses and net realized losses on investments.
Despite this, the company maintained a strong balance sheet and liquidity position. Key operational highlights include the strategic acquisition of America's 1st Choice to bolster its Medicare Advantage offerings and the ongoing development of IngenioRx as a new pharmacy benefits manager. The company also continues to navigate the evolving regulatory landscape, particularly concerning the Affordable Care Act (ACA).
02—Key points
Key Highlights
- Total revenues increased by 2.3% to $92.1 billion in 2018, primarily driven by growth in the Government Business segment.
- Net income decreased by 2.4% to $3.75 billion in 2018, attributed to higher income tax expenses and net realized investment losses.
- Total medical membership remained stable at approximately 40 million, with a shift from the Individual market to Medicare and Medicaid due to strategic market adjustments.
- The company completed the acquisition of America's 1st Choice, strengthening its Medicare Advantage business.
- Elevance Health is establishing IngenioRx as its new Pharmacy Benefits Manager (PBM) and has entered into an agreement with CVS Health, while also terminating its PBM agreement with Express Scripts.
- The company faces ongoing regulatory scrutiny and changes related to the Affordable Care Act (ACA), which continues to influence market dynamics and business strategy.
- Shareholders received $3.00 per share in dividends in 2018, and the company repurchased approximately $1.7 billion of its common stock.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Elevance Health, Inc. kept $0.04.
- Revenue$92.11B100.0%
- Cost of revenue$-00.0%
- Gross profit$92.11B100.0%
- Operating costs−$86.68B94.1%
- Operating income$5.43B5.9%
- Interest, other & tax−$1.68B1.8%
- Net income$3.75B4.1%
Where FY2018 revenue went
$92.11B- Other operating costs: $72.66B, 79% of revenue
- SG&A: $14.02B, 15% of revenue
- Net income: $3.75B, 4.1% of revenue
- Cost of revenue: $0, 0.0% of revenue
- Interest, other & tax: $1.68B, 1.8% of revenue
Kept 4.1% as net incomeNet income $3.75B · 4.1%Cost of revenue $0 · 0.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 20, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $92.11B$90.04B | +2.3% |
| Cost of Revenue | $0$0 | — |
| Gross Profit | $92.11B$90.04B | +2.3% |
| SG&A Expenses | $14.02B$12.65B | +10.8% |
| Operating Income | $5.43B$4.17B | +30.0% |
| Interest Expense | $753.00M$739.00M | +1.9% |
| Net Income | $3.75B$3.84B | −2.4% |
| EPS (Basic) | $14.53$14.70 | −1.2% |
| EPS (Diluted) | $14.19$14.35 | −1.1% |
| Shares Outstanding (Basic) | 258.10M261.50M | −1.3% |
| Shares Outstanding (Diluted) | 264.20M267.80M | −1.3% |
05—Questions
Frequently Asked Questions
What was the company's overall financial performance in 2018?
In 2018, Elevance Health reported total revenues of $92.1 billion, a 2.3% increase from 2017. Net income was $3.75 billion, a slight decrease of 2.4% from the prior year, primarily due to increased income tax expenses and net realized investment losses. The company's Government Business segment saw revenue growth, while the Commercial & Specialty Business segment experienced a decrease due to reduced participation in the Individual ACA market.
What are the key strategic initiatives highlighted in the report?
Key strategic initiatives include the acquisition of America's 1st Choice to expand its Medicare Advantage business, the development of its own pharmacy benefits manager, IngenioRx, in partnership with CVS Health, and a strategic reduction in its participation in the Individual ACA-compliant market. The company also focuses on managing healthcare costs through medical management programs and provider collaboration.
How did the company's membership change in 2018?
Total medical membership remained relatively stable at approximately 40 million. There was a notable decrease in the Individual segment (down 58.8%) due to strategic market exits, partially offset by increases in Medicare (up 18.0%) and Medicaid (up 3.4%), driven by acquisitions and organic growth in government programs.
What are the main risks and challenges the company faces?
The company faces significant risks including the inability to accurately predict and manage healthcare costs, intense competition, regulatory changes related to the ACA, potential cybersecurity threats and data breaches, and litigation risks, particularly concerning the PBM services with Express Scripts and the terminated Cigna merger agreement. Changes in government funding and reimbursement rates for Medicare and Medicaid also pose risks.
06—Continue