10-QPeriod: Q2 FY2021

Elevance Health, Inc. Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 21, 2021For Securities:ELV

Summary

Elevance Health, Inc. (formerly Anthem, Inc.) reported strong revenue growth in the second quarter of 2021, with total revenues reaching $33.85 billion, an increase of 15.7% compared to the same period in 2020. This growth was primarily driven by a significant increase in premium revenues within the Government Business segment, fueled by membership gains in Medicaid and Medicare Advantage, and bolstered by higher pharmacy product revenue from the IngenioRx segment. Despite the revenue surge, net income saw a decrease of 20.9% to $1.80 billion, mainly attributed to rising benefit expenses related to the return of non-COVID-19 healthcare utilization to pre-pandemic levels and increased COVID-19 related costs, alongside lower operating gains in the Commercial & Specialty and Government segments. The company also completed two strategic acquisitions in the quarter: MMM Holdings, LLC and myNEXUS, Inc., which are expected to contribute to future growth and strategic alignment. The balance sheet shows a healthy increase in total assets to $96.10 billion, driven by significant increases in goodwill and other intangible assets resulting from these acquisitions. Debt levels also increased to support growth and operations. The company maintained a strong liquidity position, though operating cash flow saw a notable decrease compared to the prior year, primarily due to changes in working capital and tax payments. Overall, Elevance Health demonstrated robust top-line growth driven by its government business and PBM services, alongside strategic acquisitions. However, investors should note the pressure on profitability due to rising healthcare costs and the lingering impacts of the pandemic on utilization and expenses. The company's financial health remains solid, supported by its investment portfolio and strong liquidity.

Financial Highlights

52 data points
Beta

Revenue

$33.85B

92.3% Gross Margin

Net Income

$1.80B

5.3% Net Margin

EPS (Diluted)

$7.25

Total Assets

$96.10B

Cash & Equivalents

$5.26B

Free Cash Flow

$1.40B

Financial Statements
Beta
Revenue$33.85B
Cost of Revenue$2.61B
Gross Profit$31.24B
SG&A Expenses$3.82B
Operating Income$2.08B
Interest Expense$205.00M
Net Income$1.80B
EPS (Basic)$7.33
EPS (Diluted)$7.25
Shares Outstanding (Basic)244.50M
Shares Outstanding (Diluted)247.40M

Key Highlights

  • 1Total revenues increased by 15.7% year-over-year to $33.85 billion for the three months ended June 30, 2021, driven by growth in Government Business and IngenioRx.
  • 2Net income decreased by 20.9% to $1.80 billion, impacted by higher benefit expenses and increased COVID-19 related healthcare costs.
  • 3Total assets grew to $96.10 billion, largely due to significant goodwill and intangible asset increases from recent acquisitions.
  • 4The company completed two strategic acquisitions in the quarter: MMM Holdings, LLC and myNEXUS, Inc., aimed at expanding its healthcare services capabilities.
  • 5Medical membership increased by 4.4% to 44.34 million, primarily driven by growth in the Government Business segment, particularly Medicaid and Medicare Advantage.
  • 6Operating cash flow for the six months ended June 30, 2021, decreased significantly to $4.19 billion from $8.03 billion in the prior year, attributed to working capital changes and higher tax payments.
  • 7The company's effective tax rate decreased from 27.7% to 23.5% due to the repeal of the non-tax deductible Health Insurance Provider Fee.

Frequently Asked Questions

Elevance Health's revenue growth in the second quarter of 2021 was primarily driven by higher premium revenue in its Government Business segment, fueled by increased membership in Medicaid and Medicare Advantage. Additionally, higher pharmacy product revenue from its IngenioRx segment contributed significantly to the top-line increase.

Net income decreased by 20.9% year-over-year primarily due to a substantial increase in benefit expenses. This was caused by the return of non-COVID-19 healthcare utilization to pre-pandemic levels, elevated COVID-19 related healthcare costs, and lower operating gains in the Commercial & Specialty and Government business segments. These factors offset the strong revenue performance.

The acquisitions of MMM Holdings, LLC and myNEXUS, Inc. contributed to a significant increase in goodwill and other intangible assets on the balance sheet, driving the total asset growth to $96.10 billion. While the full financial impact will unfold over time, these acquisitions are strategically aligned with Elevance Health's vision to expand its healthcare services and care management capabilities, particularly in the Medicare and Medicaid spaces and home-based care.

Total medical membership increased by 4.4% to 44.34 million. This growth was predominantly in the Government Business segment, with strong increases in Medicaid and Medicare Advantage membership, partly due to ongoing suspensions of Medicaid eligibility recertification and recent acquisitions. The Commercial & Specialty Business segment saw a slight decline, mainly in the Group fee-based category, attributed to increased attrition likely related to the COVID-19 pandemic.