10-QPeriod: Q2 FY2015

Elevance Health, Inc. Quarterly Report for Q2 Ended Jun 30, 2015

Filed July 29, 2015For Securities:ELV

Summary

Elevance Health, Inc. (ELV) reported strong financial performance for the six months ended June 30, 2015. Total operating revenue increased by 7.6% year-over-year to $38.6 billion, driven by higher premium revenue in the Government Business segment and increased administrative fees. Net income saw a significant increase of 20.4% to $1.72 billion, or $6.22 per diluted share, reflecting improved operating results across both commercial and government segments and higher net realized investment gains. The company also demonstrated robust operating cash flow, increasing by $365 million to $2.82 billion, primarily due to premium receipts and membership growth. Notably, Elevance Health announced a significant subsequent event: an Agreement and Plan of Merger with Cigna Corporation, valued at approximately $53 billion. This acquisition, expected to close in the second half of 2016, aims to create a premier health benefits company. The company also completed the acquisition of Simply Healthcare in February 2015, strengthening its position in the government sector. Despite these strategic moves, the company also disclosed a cyber attack in February 2015, the full impact of which is still being assessed, and ongoing legal proceedings, including antitrust litigation.

Financial Highlights

51 data points
Beta

Revenue

$20.02B

Net Income

$859.10M

4.3% Net Margin

EPS (Diluted)

$3.13

Total Assets

$64.26B

Cash & Equivalents

$1.55B

Free Cash Flow

$1.03B

Financial Statements
Beta
Revenue$20.02B
SG&A Expenses$3.04B
Operating Income$1.51B
Interest Expense$154.10M
Net Income$859.10M
EPS (Basic)$3.27
EPS (Diluted)$3.13
Shares Outstanding (Basic)263.10M
Shares Outstanding (Diluted)274.30M

Key Highlights

  • 1Total operating revenue for the first six months of 2015 increased 7.6% to $38.6 billion, driven by growth in the Government Business segment.
  • 2Net income for the first six months of 2015 increased 20.4% to $1.72 billion, resulting in diluted EPS of $6.22, a 25.7% increase year-over-year.
  • 3Operating cash flow for the first six months of 2015 was $2.82 billion, up from $2.46 billion in the prior year.
  • 4The company announced a major merger agreement with Cigna Corporation for approximately $53 billion, expected to close in the second half of 2016.
  • 5Elevance Health acquired Simply Healthcare in February 2015, bolstering its Government Business segment.
  • 6The company experienced a cyber attack in February 2015, with ongoing investigations and remediation efforts.
  • 7Medical membership grew by 3.4% to 38.5 million members as of June 30, 2015, with significant growth in the Medicaid segment.

Frequently Asked Questions

For the six months ended June 30, 2015, Elevance Health reported total operating revenue of $38.6 billion, a 7.6% increase compared to the same period in 2014. Net income rose by 20.4% to $1.72 billion, or $6.22 per diluted share, up from $4.95 per diluted share in the prior year. Operating cash flow also improved, reaching $2.82 billion.

Elevance Health announced a definitive merger agreement with Cigna Corporation on July 24, 2015, with an estimated transaction value of approximately $53 billion. This strategic move is intended to create a premier health benefits company with significant scale and diversification. The acquisition is expected to close in the second half of 2016, subject to regulatory and shareholder approvals.

The acquisition of Simply Healthcare, completed in February 2015, is a key part of Elevance Health's strategy to grow its Government Business segment, particularly serving Medicaid and Medicare enrollees in Florida. The financial results reflect its inclusion in the consolidated statements from February 17, 2015 onwards.

The increase in operating revenue was primarily driven by higher premium revenue, especially within the Government Business segment, due to membership growth in Medicaid, ACA-compliant individual plans, and the Simply Healthcare acquisition. Increased administrative fees from self-funded members in Local Group and National Accounts also contributed.

Yes, Elevance Health disclosed it was the target of a sophisticated cyber attack in February 2015, which may lead to significant future expenses and potential liabilities, although the full impact is still being assessed. The company is also involved in ongoing significant legal proceedings, including class-action lawsuits related to out-of-network reimbursement and antitrust allegations concerning BCBSA and its licensees. The company believes it has meritorious defenses but cannot predict the ultimate outcome.