What drove the significant increase in net income and EPS?

The substantial increase in net income and EPS was primarily driven by lower benefit expenses, a significant reduction in other-than-temporary impairment losses on investments, and increased realized investment gains. Additionally, a robust share repurchase program reduced the number of outstanding shares, thereby boosting EPS.

Why did total operating revenue decrease compared to the prior year?

Total operating revenue saw a decrease primarily due to declines in fully-insured membership within the Local Group business, influenced by current economic conditions. Additionally, the transition of certain UniCare members to another provider and the prior year sale of the company's prescription benefits management (PBM) business contributed to the revenue decline.

What is the company's outlook regarding the healthcare reform legislation?

Elevance Health acknowledges the significant changes brought about by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010. Management is closely monitoring the evolving details of the legislation and its potential impacts on future operations, business model, and results of operations. Certain provisions are expected to significantly alter the health insurance sector.

How is the company managing its investment portfolio in the current market?

The company classifies its investment securities as available-for-sale and reports them at fair value. They conduct quarterly reviews for other-than-temporary declines in value using both qualitative and quantitative factors. While other-than-temporary impairment losses decreased substantially in Q1 2010 compared to Q1 2009, management acknowledges the continuing risk of further declines due to market conditions and judgment involved.

ELV 10-Q Quarterly Report Q1 FY2010 — Revenue, Net Income, EPS

Summary

Elevance Health, Inc. (formerly WellPoint, Inc.) reported solid financial results for the first quarter ended March 31, 2010. The company demonstrated significant year-over-year growth in net income, increasing by 51% to $876.8 million, which translated to a 69% increase in diluted earnings per share (EPS) to $1.96. This improvement was driven by lower benefit expenses, reduced investment impairment charges, and increased realized investment gains, despite a modest 3% decrease in total operating revenue to $14.9 billion, largely attributable to economic pressures affecting fully-insured membership and the divestiture of the PBM business. Key to the EPS growth was a substantial share repurchase program, which reduced the outstanding share count. The company also highlighted its strong financial position, with significant cash and investment balances. Management noted the ongoing impact of healthcare reform legislation, which is expected to bring significant changes to the industry landscape in the coming years, and emphasized continued focus on managing healthcare costs through various programs and strategic initiatives.

Financial Highlights

48 data points

Beta

Revenue

$15.07B

Net Income

$876.80M

0.1% Net Margin

EPS (Diluted)

$1.96

Total Assets

$51.18B

Cash & Equivalents

$3.53B

Free Cash Flow

-$443.10M

Financial Statements

Beta

Revenue	$15.07B
SG&A Expenses	$2.17B
Operating Income	$1.29B
Interest Expense	$99.40M
Net Income	$876.80M
EPS (Basic)	$1.99
EPS (Diluted)	$1.96
Shares Outstanding (Basic)	441.10M
Shares Outstanding (Diluted)	446.60M

Key Highlights

1Net income increased 51% to $876.8 million for the quarter.
2Diluted EPS surged 69% to $1.96, benefiting from a reduced share count due to significant share repurchases.
3Total operating revenue decreased 3% to $14.9 billion, primarily due to membership declines in the Local Group business and the sale of the PBM segment.
4Benefit expense decreased 3% to $11.4 billion, driven by membership changes and improved benefit expense ratios.
5Other-than-temporary impairment losses on investments recognized in income decreased significantly from $305.0 million in Q1 2009 to $19.7 million in Q1 2010.
6The company repurchased approximately 20.9 million shares for $1.4 billion during the quarter, demonstrating a strong commitment to capital return.
7Management is actively monitoring and evaluating the potential impacts of the recently enacted Patient Protection and Affordable Care Act.

Elevance Health, Inc. Quarterly Report for Q1 Ended Mar 31, 2010

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions