10-QPeriod: Q3 FY2018

Elevance Health, Inc. Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 31, 2018For Securities:ELV

Summary

Elevance Health, Inc. (formerly Anthem, Inc.) reported solid financial results for the nine months ended September 30, 2018. Total operating revenue increased by 2.1% to $68,037 million, driven by higher premium revenue, particularly in the Government Business segment, and increased administrative fees in the Commercial & Specialty Business segment. Net income saw a significant increase of 27.3% to $3,325 million. This growth was primarily attributed to improved operating results in both major business segments, bolstered by the positive impact of acquisitions in the Medicare Advantage space and a lower effective tax rate following the Tax Cuts and Jobs Act. Diluted earnings per share also rose substantially by 29.7% year-over-year. Despite an overall increase in revenue and net income, operating cash flow for the nine months decreased by $2,122 million compared to the prior year. This decline was attributed to factors including lower cash receipts from ACA premium stabilization programs, increased investments in growth initiatives, and membership declines in certain segments. The company continues to actively manage its capital through share repurchases and dividend payments, demonstrating a commitment to shareholder returns while navigating a complex regulatory and market environment.

Financial Highlights

53 data points
Beta

Revenue

$23.25B

100.0% Gross Margin

Net Income

$960.00M

4.1% Net Margin

EPS (Diluted)

$3.62

Total Assets

$74.44B

Cash & Equivalents

$4.26B

Free Cash Flow

$252.00M

Financial Statements
Beta
Revenue$23.25B
Cost of Revenue$0
Gross Profit$23.25B
SG&A Expenses$3.55B
Operating Income$1.25B
Interest Expense$188.00M
Net Income$960.00M
EPS (Basic)$3.70
EPS (Diluted)$3.62
Shares Outstanding (Basic)259.50M
Shares Outstanding (Diluted)265.40M

Key Highlights

  • 1Total operating revenue increased by 2.1% to $68,037 million for the nine months ended September 30, 2018.
  • 2Net income increased by a significant 27.3% to $3,325 million for the nine months ended September 30, 2018.
  • 3Diluted earnings per share (EPS) grew by 29.7% to $12.58 for the nine months ended September 30, 2018.
  • 4The Government Business segment showed strong revenue growth of 13.1%, driven by Medicare business expansion.
  • 5The effective tax rate decreased due to the Tax Cuts and Jobs Act, positively impacting net income.
  • 6Operating cash flow decreased by $2,122 million for the nine months ended September 30, 2018, primarily due to ACA-related programs and growth investments.
  • 7The company acquired America's 1st Choice and HealthSun, contributing to Medicare Advantage membership growth.

Frequently Asked Questions

Revenue growth was primarily driven by higher premium revenue, particularly in the Government Business segment due to Medicare growth, and increased administrative fees in the Commercial & Specialty Business segment. Premium rate increases to cover cost trends and the reinstatement of the Health Insurance Provider (HIP) Fee also contributed.

Operating cash flow decreased primarily due to lower cash receipts from ACA premium stabilization programs, increased spending on growth initiatives, timing of Medicare prepayments, and membership declines in certain segments. These factors outweighed the positive impact of lower income taxes resulting from the Tax Cuts and Jobs Act.

These acquisitions significantly contributed to the growth in the Government Business segment, particularly in Medicare Advantage membership. The acquired entities' operations are included in the consolidated financial statements, bolstering the company's presence in these key markets.

The Tax Cuts and Jobs Act, which reduced the U.S. federal corporate income tax rate from 35% to 21%, led to a significant decrease in income tax expense and the effective tax rate for the nine months ended September 30, 2018. This favorably impacted net income. The company is still finalizing some accounting for the tax effects.