10-QPeriod: Q2 FY2022

Elevance Health, Inc. Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 20, 2022For Securities:ELV

Summary

Elevance Health, Inc. (ELV) reported strong revenue growth for the second quarter and first half of 2022, driven by increased membership, particularly in its Government Business segment (Medicaid and Medicare), and higher premium rates. Total operating revenue increased by 15.6% for the quarter and 16.8% year-to-date. Despite revenue growth, net income saw a slight decrease year-over-year, primarily attributed to losses on financial instruments compared to gains in the prior year, and increased amortization expenses related to acquisitions and rebranding efforts. The company successfully expanded its market reach, notably in the Individual and Government segments, and continued its strategic acquisitions, including Integra Managed Care. Elevance Health also recently rebranded, reflecting its evolution into a broader health partner. The company maintains a strong liquidity position and is actively managing its capital through share repurchases and dividends, indicating confidence in its ongoing operational performance and future prospects.

Financial Highlights

52 data points
Beta

Revenue

$38.63B

92.1% Gross Margin

Net Income

$1.63B

4.2% Net Margin

EPS (Diluted)

$6.73

Total Assets

$100.88B

Cash & Equivalents

$6.46B

Free Cash Flow

$2.16B

Financial Statements
Beta
Revenue$38.63B
Cost of Revenue$3.07B
Gross Profit$35.56B
SG&A Expenses$4.27B
Operating Income$2.35B
Interest Expense$208.00M
Net Income$1.63B
EPS (Basic)$6.80
EPS (Diluted)$6.73
Shares Outstanding (Basic)240.70M
Shares Outstanding (Diluted)243.40M

Key Highlights

  • 1Total operating revenue increased by 15.6% to $38.5 billion for the three months ended June 30, 2022, and by 16.8% to $76.4 billion for the six months ended June 30, 2022, compared to the prior year periods.
  • 2Medical membership grew by 6.1% to 47.1 million as of June 30, 2022, driven by strong performance in both the Government Business (Medicaid and Medicare) and Commercial & Specialty Business segments.
  • 3Net income for the three months ended June 30, 2022, was $1.65 billion, a decrease of 8.4% compared to $1.80 billion in the prior year, primarily due to losses on financial instruments and increased amortization expenses.
  • 4Diluted earnings per share (EPS) were $6.79 for the three months ended June 30, 2022, a decrease from $7.25 in the prior year, but EPS for the six months ended June 30, 2022, increased slightly to $14.18 from $13.95.
  • 5The company completed the acquisition of Integra Managed Care, further expanding its reach in the long-term care sector for Medicaid members in New York.
  • 6Elevance Health announced a significant rebranding initiative, organizing its brand portfolio under core go-to-market brands: Anthem Blue Cross/Anthem Blue Cross and Blue Shield, Wellpoint, and Carelon, to better reflect its comprehensive health services.
  • 7Operating cash flow for the six months ended June 30, 2022, increased to $5.0 billion from $4.2 billion in the prior year, reflecting improved net income and working capital changes.

Frequently Asked Questions

Elevance Health demonstrates strong revenue growth and membership expansion, indicating robust operational performance. While net income saw a slight sequential decline due to market fluctuations and strategic investments in rebranding and acquisitions, the company maintains a healthy cash flow and a solid balance sheet, supported by its diversified business segments.

Revenue growth is primarily driven by an increase in premium revenue, stemming from higher membership across both Government (Medicaid and Medicare) and Commercial segments, and from premium rate adjustments aimed at covering medical cost trends. The IngenioRx pharmacy benefits management segment also contributed positively due to increased prescription volume.

The rebranding, which includes organizing its brand portfolio under Wellpoint and Carelon, is expected to better align with its 'lifetime, trusted health partner' strategy and improve market positioning. Recent acquisitions, such as Integra Managed Care, contribute to membership growth and revenue expansion. However, these strategic initiatives, along with the rebranding, have led to increased amortization expenses, impacting short-term profitability, as noted in the financial results.

Key challenges include ongoing uncertainty and potential costs related to the COVID-19 pandemic's impact on healthcare utilization and expenses, evolving regulatory landscapes (including potential changes to the ACA and new price transparency rules), and ongoing litigation, such as the Blue Cross Blue Shield Antitrust Litigation. Market volatility impacting financial instruments also presents a risk, as seen in the current quarter's results.