Summary
Elevance Health, Inc. (formerly Anthem, Inc.) reported its third quarter 2020 financial results, showing a notable increase in total revenues driven by higher premium revenue, particularly in its Government Business segment (Medicaid and Medicare), and the contribution from its IngenioRx pharmacy benefit management (PBM) business. Despite revenue growth, net income for the quarter saw a significant decrease compared to the prior year, primarily due to substantial charges related to business optimization initiatives and an accrual for the Blue Cross Blue Shield antitrust litigation. The company highlighted growth in its total medical membership, which increased by 4.0% year-over-year, fueled by Medicaid and Medicare expansion, partially offset by declines in fully-insured Local Group membership due to COVID-19 related unemployment. Financially, the company demonstrated strong operating cash flow. However, the report also details the impact of the COVID-19 pandemic, which has led to mixed effects on utilization and costs, with deferred elective procedures initially lowering claim costs but a rebound noted in the third quarter. The company also incurred additional COVID-19 related expenses. Management's focus remains on navigating these dynamic conditions, managing costs, and driving strategic growth, particularly through its PBM and integrated health services offerings.
Financial Highlights
51 data points| Revenue | $31.16B |
| Cost of Revenue | $2.22B |
| Gross Profit | $28.94B |
| SG&A Expenses | $5.30B |
| Operating Income | $201.00M |
| Interest Expense | $198.00M |
| Net Income | $222.00M |
| EPS (Basic) | $0.88 |
| EPS (Diluted) | $0.87 |
| Shares Outstanding (Basic) | 251.00M |
| Shares Outstanding (Diluted) | 254.20M |
Key Highlights
- 1Total operating revenue increased by 15.9% year-over-year for the three months ended September 30, 2020, reaching $30,649 million, driven by premium revenue growth in the Government Business and pharmacy product revenue from IngenioRx.
- 2Net income for the third quarter decreased significantly by 81.2% to $222 million, primarily due to $607 million in business optimization charges and a $594 million accrual for the BCBSA antitrust litigation settlement.
- 3Total medical membership grew by 4.0% to 42.6 million as of September 30, 2020, with significant increases in Medicaid (17.5%) and Medicare Advantage (17.7%), while Local Group membership saw a slight decline due to COVID-19 related unemployment.
- 4Operating cash flow for the nine months ended September 30, 2020, increased to $6,875 million from $4,734 million in the prior year, partly due to delayed payroll tax payments permitted by the CARES Act.
- 5The company completed the acquisition of Beacon Health Options, Inc. in February 2020, integrating it into its 'Other' segment and contributing to revenue growth in that segment.
- 6Selling, general, and administrative expenses increased by 55.2% for the quarter, largely due to the business optimization initiatives, BCBSA litigation accrual, and the reinstatement of the Health Insurance Provider (HIP) Fee.
- 7Despite a decrease in quarterly net income, diluted earnings per share for the nine months ended September 30, 2020, increased by 6.2% to $15.75, reflecting improved profitability over the longer period and a lower weighted-average share count.