10-QPeriod: Q3 FY2022

Elevance Health, Inc. Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 19, 2022For Securities:ELV

Summary

Elevance Health, Inc. (ELV) reported strong financial results for the third quarter and the first nine months of 2022, driven by significant revenue growth and a solid increase in net income. Total operating revenue surged by 11.5% year-over-year for the quarter and 14.9% for the nine-month period, primarily fueled by robust performance in the Government Business segment, notably Medicaid membership growth and acquisitions, as well as increased pharmacy product revenue from IngenioRx. Net income also saw a healthy increase, growing 7.4% for the quarter and 1.8% for the nine months. This growth was supported by improved operating gains across most segments, though partially offset by increased amortization expenses related to recent acquisitions and rebranding efforts. The company demonstrated effective management of medical cost trends and benefit expense ratios. With a significant increase in total medical membership, Elevance Health is well-positioned to continue its growth trajectory, leveraging its diversified business segments and strategic acquisitions.

Financial Highlights

52 data points
Beta

Revenue

$39.94B

91.4% Gross Margin

Net Income

$1.60B

4.0% Net Margin

EPS (Diluted)

$6.62

Total Assets

$103.03B

Cash & Equivalents

$8.87B

Free Cash Flow

$4.62B

Financial Statements
Beta
Revenue$39.94B
Cost of Revenue$3.44B
Gross Profit$36.50B
SG&A Expenses$4.52B
Operating Income$2.25B
Interest Expense$213.00M
Net Income$1.60B
EPS (Basic)$6.69
EPS (Diluted)$6.62
Shares Outstanding (Basic)239.60M
Shares Outstanding (Diluted)242.20M

Key Highlights

  • 1Total operating revenue increased by 11.5% to $39.6 billion for the three months ended September 30, 2022, compared to $35.5 billion in the prior year period.
  • 2Shareholders' net income increased by 7.4% to $1.62 billion for the three months ended September 30, 2022, compared to $1.51 billion in the prior year period.
  • 3Total medical membership grew by 4.9% to 47.3 million members as of September 30, 2022, compared to 45.1 million members in the prior year period.
  • 4The Government Business segment showed strong growth, with operating revenue increasing by 13.4% for the quarter, driven by Medicaid membership growth and acquisitions.
  • 5IngenioRx segment revenue increased by 10.7% for the quarter, driven by higher prescription volume.
  • 6Diluted earnings per share (EPS) increased by 9.0% to $6.68 for the three months ended September 30, 2022, compared to $6.13 in the prior year period.
  • 7The company paid $1.75 billion in share repurchases and $0.92 billion in dividends during the nine months ended September 30, 2022, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

Elevance Health's revenue growth was primarily driven by higher premium revenue in its Medicaid business, fueled by membership growth resulting from the temporary suspension of Medicaid eligibility recertification due to the COVID-19 pandemic, along with contributions from recent acquisitions like Integra and Ohio Medicaid members. Additionally, increased pharmacy product revenue from IngenioRx, stemming from membership growth and higher script volume, also contributed significantly.

Elevance Health demonstrated improved profitability, with shareholders' net income increasing by 7.4% to $1.62 billion for the three months ended September 30, 2022. This increase was primarily attributed to operating gain improvements across its Commercial & Specialty Business, Other, and IngenioRx segments. Diluted earnings per share also rose by 9.0% to $6.68 for the quarter.

Elevance Health experienced robust membership growth, with total medical membership increasing by 4.9% to 47.3 million as of September 30, 2022. This growth was primarily organic, with notable increases in both the Commercial & Specialty Business and Government Business segments. The company anticipates further growth, particularly as Medicaid eligibility recertifications resume, potentially leading members to seek coverage in their commercial plans.

Elevance Health is involved in several legal and regulatory matters, including ongoing litigation related to Blue Cross Blue Shield antitrust issues. While a settlement was approved for subscriber plaintiffs, appeals are still pending. The company is also managing other regulatory proceedings and investigations. Management believes it has meritorious defenses in these matters and is actively defending its position, but the ultimate outcome of some of these cases remains uncertain and could potentially impact financial results.