10-QPeriod: Q1 FY2007

Elevance Health, Inc. Quarterly Report for Q1 Ended Mar 31, 2007

Filed April 25, 2007For Securities:ELV

Summary

Elevance Health, Inc. (ELV), formerly WellPoint, Inc., reported strong financial performance for the first quarter ended March 31, 2007. Total revenues increased by 9% year-over-year to $15.1 billion, driven by a 9% rise in premiums, largely due to premium rate increases and membership growth in various segments. Net income saw a solid 7% increase to $783.1 million, translating to a diluted Earnings Per Share (EPS) of $1.26, up 16% from the prior year's quarter. The company demonstrated robust operational cash flow, generating $2.0 billion, which was 2.5 times its net income. This financial strength allowed for continued investment in the business and significant shareholder returns, with $634.9 million repurchased under its stock repurchase program during the quarter. The company also reported an increase in total medical membership by 2% to 34.9 million, highlighting growth in key areas like BlueCard and National Accounts.

Key Highlights

  • 1Total revenues increased 9% to $15.1 billion for the quarter ended March 31, 2007.
  • 2Net income grew 7% to $783.1 million, with diluted EPS rising 16% to $1.26.
  • 3Operating cash flow was strong at $2.0 billion, demonstrating significant cash generation capabilities.
  • 4Total medical membership increased by 2% to 34.9 million, indicating steady business expansion.
  • 5The company repurchased $634.9 million of its common stock during the quarter, underscoring its commitment to shareholder returns.
  • 6Premium revenue saw a 9% increase, driven by rate adjustments and membership growth across various business lines.
  • 7Investment income increased by 16% to $246.6 million due to higher invested assets and interest rates.

Frequently Asked Questions

The primary driver for the revenue increase was a 9% rise in premiums, attributed to premium rate increases in Local Group and Senior business, growth in State-Sponsored business due to new state additions, increased reimbursement in the FEP program, and expansion in Medicare Advantage business.

Total medical membership increased by approximately 717,000, or 2%, to 34.9 million members. This growth was primarily driven by increases in BlueCard, National Accounts, and State-Sponsored business, partially offset by declines in Local Group and Individual membership.

The company actively returns capital to shareholders through its stock repurchase program. During the first quarter of 2007, it repurchased and retired approximately 8.2 million shares for $634.9 million. The Board of Directors also authorized an increase to the repurchase program, indicating a continued focus on this strategy.

Net investment income increased by 16% to $246.6 million, primarily due to growth in invested assets from reinvestment of operational cash flow and higher interest rates. This contributed positively to the company's overall revenue.