10-QPeriod: Q3 FY2019

Elevance Health, Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 23, 2019For Securities:ELV

Summary

Elevance Health, Inc. (ELV), formerly Anthem Inc., reported strong financial results for the nine months ended September 30, 2019. Total operating revenue increased by 11.7% year-over-year to $76.0 billion, driven by robust growth in premiums, particularly within the Government Business segment (Medicaid and Medicare), and increased administrative fees and other revenue, bolstered by the new IngenioRx pharmacy benefit manager. Net income saw a significant increase of 16.5% to $3.87 billion, leading to a diluted EPS of $14.83, up from $12.58 in the prior year period. This performance was supported by improved operating results across key segments and a lower effective tax rate, partly due to the suspension of the Health Insurance Provider (HIP) Fee for 2019. The company also maintained a solid operating cash flow of $4.73 billion, indicating strong operational cash generation. Elevance Health continues to expand its membership, with total medical membership growing by 2.7% to over 41 million, primarily in its fully-insured Medicaid and Medicare offerings.

Financial Highlights

52 data points
Beta

Revenue

$26.67B

97.2% Gross Margin

Net Income

$1.18B

4.4% Net Margin

EPS (Diluted)

$4.55

Total Assets

$77.81B

Cash & Equivalents

$4.19B

Free Cash Flow

$1.40B

Financial Statements
Beta
Revenue$26.67B
Cost of Revenue$745.00M
Gross Profit$25.93B
SG&A Expenses$3.42B
Operating Income$1.53B
Interest Expense$185.00M
Net Income$1.18B
EPS (Basic)$4.64
EPS (Diluted)$4.55
Shares Outstanding (Basic)255.20M
Shares Outstanding (Diluted)260.00M

Key Highlights

  • 1Total operating revenue increased by 11.7% to $76.0 billion for the nine months ended September 30, 2019, compared to the prior year period.
  • 2Net income rose by 16.5% to $3.87 billion for the nine months ended September 30, 2019.
  • 3Diluted Earnings Per Share (EPS) increased to $14.83 for the nine months ended September 30, 2019, up from $12.58 in the prior year.
  • 4Medical membership grew by 2.7% to approximately 41 million as of September 30, 2019.
  • 5The company is progressing with its strategy to diversify into health services, including the anticipated acquisition of Beacon Health Options.
  • 6Operating cash flow remained strong, increasing to $4.73 billion for the nine months ended September 30, 2019.
  • 7The Health Insurance Provider (HIP) Fee suspension for 2019 favorably impacted the company's tax expense and effective tax rate.

Frequently Asked Questions

The primary driver of revenue growth was higher premiums, largely due to new Medicaid businesses and expansions, and membership growth in the Medicare business. Increased administrative fees and other revenue, particularly from the new IngenioRx pharmacy benefit manager, also contributed significantly.

Profitability improved significantly. Net income increased by 16.5% to $3.87 billion, and diluted EPS rose to $14.83 from $12.58 in the prior year, driven by improved operating results in key business segments and lower income tax expense due to the suspension of the HIP Fee.

Elevance Health announced an agreement to acquire Beacon Health Options in June 2019. The acquisition was expected to close in late Q4 2019, subject to standard closing conditions and approvals. This acquisition aligns with the company's strategy to diversify into health services.

Total medical membership increased by 2.7% to approximately 41 million members as of September 30, 2019. The growth was primarily driven by an increase in fully-insured membership, particularly in Medicaid and Medicare, and growth in the National Accounts business.