10-QPeriod: Q3 FY2011

Elevance Health, Inc. Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 26, 2011For Securities:ELV

Summary

Elevance Health, Inc. (formerly WellPoint, Inc.) reported its third-quarter results for the period ending September 30, 2011. The company experienced a slight increase in total operating revenue, driven by premium rate adjustments and membership growth in specific segments, particularly its Senior business. However, net income saw a decrease compared to the prior year quarter, primarily due to lower operating results in the Commercial and Consumer segments. Despite this, diluted Earnings Per Share (EPS) showed a modest increase, largely attributed to a reduced number of outstanding shares resulting from ongoing share repurchase programs. The company also completed a significant acquisition, CareMore Health Group, Inc., which is expected to bolster its offerings in the senior market. Management highlighted strategic initiatives focused on enhancing healthcare value and improving health outcomes, particularly for seniors. The report also detailed ongoing litigation and risk factors, which are common for large health insurers. Investors should note the company's continued commitment to capital return through share buybacks and dividends, balanced with strategic investments and debt management.

Financial Highlights

53 data points
Beta

Revenue

$15.40B

100.0% Gross Margin

Net Income

$683.20M

4.4% Net Margin

EPS (Diluted)

$1.90

Total Assets

$52.55B

Cash & Equivalents

$2.51B

Free Cash Flow

$1.30B

Financial Statements
Beta
Revenue$15.40B
Cost of Revenue$0
Gross Profit$15.40B
SG&A Expenses$2.12B
Operating Income$972.60M
Interest Expense$108.20M
Net Income$683.20M
EPS (Basic)$1.92
EPS (Diluted)$1.90
Shares Outstanding (Basic)356.00M
Shares Outstanding (Diluted)360.40M

Key Highlights

  • 1Total operating revenue increased by 5.9% to $15.16 billion for the third quarter of 2011 compared to the same period in 2010.
  • 2Net income decreased by 7.6% to $683.2 million for the third quarter of 2011 compared to the prior year quarter.
  • 3Diluted Earnings Per Share (EPS) increased by 3.3% to $1.90 for the third quarter of 2011, aided by share repurchases.
  • 4The company completed the acquisition of CareMore Health Group, Inc., a senior-focused health care delivery program, in August 2011.
  • 5Medical membership increased by 2.6% to 34.36 million members as of September 30, 2011, driven by growth in National Accounts and Senior segments.
  • 6Operating cash flow for the first nine months of 2011 was $3.32 billion, a significant increase from $830 million in the same period of 2010.
  • 7The company's consolidated debt-to-capital ratio was 29.7% as of September 30, 2011.

Frequently Asked Questions

Elevance Health (WellPoint, Inc.) reported a 5.9% increase in total operating revenue for the three months ended September 30, 2011, reaching $15.16 billion. This growth was primarily driven by premium rate increases to cover cost trends and increased membership in its Senior business, along with higher reimbursement from the Federal Employee Program.

Net income decreased by 7.6% to $683.2 million for the third quarter of 2011 compared to the same period in 2010. This decline was mainly attributed to lower operating results in the Commercial and Consumer segments, partially offset by a decrease in income tax expense. However, diluted Earnings Per Share (EPS) saw a slight increase of 3.3% to $1.90, benefiting from a reduced share count due to ongoing share repurchase activities.

The most significant strategic activity was the completion of the acquisition of CareMore Health Group, Inc. on August 22, 2011. CareMore is a senior-focused Medicare Advantage program that complements Elevance Health's strategy to grow in the senior market and improve health outcomes for seniors. The company also continued its share repurchase program, returning capital to shareholders.

Total medical membership grew by 2.6% year-over-year to 34.36 million members, with notable increases in National Accounts and Senior segments. The company estimates its cost of care trend for its local group fully-insured business to be around 7.0% for the twelve months ending September 30, 2011, driven by unit costs in inpatient and outpatient services, as well as pharmacy trends. Management is focused on cost management through contracting, plan design, and value-based care initiatives.