10-QPeriod: Q1 FY2011

Elevance Health, Inc. Quarterly Report for Q1 Ended Mar 31, 2011

Filed April 27, 2011For Securities:ELV

Summary

Elevance Health (formerly WellPoint) reported solid financial results for the first quarter of 2011. The company saw an increase in net income to $926.6 million, up 6% year-over-year, leading to a diluted EPS of $2.44, a 24% increase. This growth was driven by improved operating results in the Commercial and Other segments, despite a slight decrease in total operating revenue which fell 1% to $14.65 billion, largely due to the conversion of some large accounts from fully-insured to self-funded plans. The company also demonstrated strong operational cash flow, generating $1.11 billion. Significant share repurchase activity contributed to the EPS growth, with approximately $741.6 million spent on repurchases during the quarter. Elevance Health maintains a strong financial position with $20.7 billion in cash, cash equivalents, and investments.

Financial Highlights

50 data points
Beta

Revenue

$14.89B

Net Income

$926.60M

6.2% Net Margin

EPS (Diluted)

$2.44

Total Assets

$50.92B

Cash & Equivalents

$2.40B

Free Cash Flow

$1.01B

Financial Statements
Beta
Revenue$14.89B
SG&A Expenses$2.08B
Operating Income$1.35B
Interest Expense$105.90M
Net Income$926.60M
EPS (Basic)$2.48
EPS (Diluted)$2.44
Shares Outstanding (Basic)374.00M
Shares Outstanding (Diluted)379.30M

Key Highlights

  • 1Net income increased by 6% to $926.6 million compared to the prior year's first quarter.
  • 2Diluted EPS rose significantly by 24% to $2.44, aided by a reduced share count from ongoing buybacks.
  • 3Total operating revenue saw a slight decrease of 1% to $14.65 billion, mainly impacted by membership shifts to self-funded plans.
  • 4Operating cash flow was robust, reaching $1.11 billion for the quarter.
  • 5The company repurchased approximately $741.6 million of its common stock during the quarter, highlighting a commitment to capital return.
  • 6Consolidated cash, cash equivalents, and investments totaled $20.7 billion as of March 31, 2011, indicating strong liquidity.
  • 7The Commercial segment showed improved operating gain, up 15%, despite a revenue decline.

Frequently Asked Questions

The increase in net income was primarily driven by improved operating results in the Commercial and Other segments, alongside a decrease in other-than-temporary impairment losses on investments and the impact of share repurchases reducing the number of outstanding shares.

The slight decrease in total operating revenue was mainly due to the conversion of two large groups from fully-insured to self-funded plans, and some membership declines in the Local Group and National Accounts businesses. This was partially offset by premium rate increases and growth in administrative fees from self-funded membership.

Elevance Health actively managed its capital by repurchasing approximately $741.6 million of its common stock and declaring a quarterly dividend of $0.25 per share. The company also maintained a strong liquidity position with over $20.7 billion in cash, cash equivalents, and investments.

For the rolling 12 months ended March 31, 2011, the cost of care trend was estimated at 7.5% plus or minus 50 basis points. This was driven by unit costs more than utilization, with inpatient costs rising due to increased cost per admission and outpatient costs increasing due to price hikes in provider contracts. Pharmacy costs were influenced by specialty drugs and drug price inflation, though mitigated by a generic usage and the Express Scripts agreement.