Elevance Health Reports Third Quarter 2024 Results

Barchart · 10/17 05:00

Elevance Health, Inc. (NYSE: ELV) reported third quarter 2024 results.

“We remain confident in the long-term earnings potential of our diverse businesses as we navigate a dynamic operating environment and unprecedented challenges in the Medicaid business. We expect Medicaid rates will align with the needs of our members in time, and are taking proactive actions to enhance operational efficiencies that will ensure we emerge from this period even stronger.”

Gail K. Boudreaux

President and Chief Executive Officer

Given third quarter results and the timing mismatch between Medicaid rates and acuity, Elevance Health now expects 2024 GAAP net income per diluted share to be approximately $26.50 and adjusted net income per diluted share to be approximately $33.00.

1.

Refer to GAAP reconciliation tables herein for reconciliation of GAAP to adjusted measures.

2.

Earnings per diluted share ("EPS").

 

 

 

 

 

 

 

 

 

 

Elevance Health

 

 

Consolidated Enterprise Highlights

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

(In billions)

Three Months Ended

 

 

 

 

September 30,

2024

 

September 30,

2023

 

June 30,

2024

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue1

$44.7

 

$42.5

 

$43.2

 

 

 

Operating Gain1,2

$1.4

 

$1.8

 

$2.8

 

 

 

Adjusted Operating Gain1,3

$2.4

 

$2.5

 

$2.8

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin1

3.1 %

 

4.1 %

 

6.4 %

 

 

 

Adjusted Operating Margin1,3

5.3 %

 

6.0 %

 

6.6 %

 

 

 

 

 

 

 

 

 

 

 

1.

See “Basis of Presentation” herein.

2.

Operating Gain for the three months ended September 30, 2024, and September 30, 2023, include items that are excluded from adjusted shareholders' net income. See "GAAP Reconciliation."

3.

Adjusted Operating Gain for the three months ended September 30, 2024, and September 30, 2023, exclude items that are excluded from adjusted shareholders' net income. See "GAAP Reconciliation" herein.

Operating revenue was $44.7 billion in the third quarter of 2024, an increase of $2.2 billion compared to the prior year quarter. This was driven by higher premium yields in our Health Benefits segment and growth in CarelonRx product revenue, partially offset by membership attrition in our Medicaid business.

The benefit expense ratio was 89.5 percent, an increase of 270 basis points, driven primarily by the timing mismatch between Medicaid rates and the higher acuity of our members. Days in Claims Payable was 42.8 days as of September 30, 2024, a decrease of 2.5 days from June 30, 2024, and a decrease of 5.8 days compared to September 30, 2023 due to increases in average benefit expense per day.

The operating expense ratio was 11.8 percent, an improvement of 110 basis points. Excluding adjustment items, the operating expense ratio was 9.6 percent, an improvement of 150 basis points, reflecting disciplined cost management to enhance operating efficiency.

Cash Flow & Balance Sheet

Operating cash flow was $2.7 billion in the quarter, an increase of approximately $0.1 billion year-over-year. As of September 30, 2024, cash and investments at the parent company totaled approximately $2.6 billion.

During the third quarter of 2024, the Company repurchased 0.1 million shares of its common stock for $60 million, at a weighted average price of $511.01, and paid a quarterly dividend of $1.63 per share, representing a distribution of cash totaling $378 million. As of September 30, 2024, the Company had approximately $3.1 billion of Board approved share repurchase authorization remaining. On October 15, 2024, our Audit Committee, pursuant to authorization granted by the Board of Directors, authorized an $8.0 billion increase to the common stock repurchase program. The Company intends to utilize this authorization over a multi-year period, subject to market and industry conditions.

Health Benefits is comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard®, Medicare, Medicaid, and Federal Health Products & Services businesses.

 

 

 

 

 

 

 

 

 

 

Health Benefits

 

 

Reportable Segment Highlights

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

(In billions)

Three Months Ended

 

 

 

 

September 30,

2024

 

September 30,

2023

 

June 30,

2024

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue1

$38.3

 

$36.7

 

$37.2

 

 

 

Operating Gain1

$1.6

 

$1.8

 

$2.1

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin1

4.2 %

 

5.0 %

 

5.8 %

 

 

 

 

 

 

 

 

 

 

 

1.

See “Basis of Presentation” herein.

Health Benefits segment operating revenue was $38.3 billion in the third quarter of 2024, an increase of $1.5 billion compared to the prior year quarter, driven primarily by higher premium yields, partially offset by membership attrition in our Medicaid business.

Operating gain totaled $1.6 billion, impacted primarily by the unfavorable mix shift in Medicaid membership related to eligibility redeterminations, partially offset by premium rate increases, focused medical management, and the proactive actions we are taking to enhance operating efficiency.

Medical membership totaled approximately 45.8 million as of September 30, 2024, a decrease of 1.5 million, or 3 percent, driven by attrition in our Medicaid business associated with eligibility redeterminations and footprint adjustments in certain Medicaid states. These losses were partially offset by growth in Employer Group fee-based and Affordable Care Act health plan membership.

Carelon is comprised of CarelonRx and Carelon Services.

 

 

 

 

 

 

 

 

 

 

Carelon

 

 

Reportable Segment Highlights

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

(In billions)

Three Months Ended

 

 

 

 

September 30,

2024

 

September 30,

2023

 

June 30,

2024

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue1

$13.8

 

$12.0

 

$13.3

 

 

 

Operating Gain1

$0.8

 

$0.7

 

$0.7

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin1

5.8 %

 

5.6 %

 

5.3 %

 

 

 

 

 

 

 

 

 

 

 

1.

See “Basis of Presentation” herein.

Operating revenue for Carelon was $13.8 billion in the third quarter of 2024, an increase of $1.8 billion, or 15 percent compared to the prior year quarter. This was driven by the launch and growth of risk-based capabilities in Carelon Services and growth in CarelonRx product revenue, related to the acquisition of Paragon Healthcare in the first quarter and increases in external members served.

Operating gain for Carelon totaled $0.8 billion, an increase of $134 million, or 20 percent, primarily driven by growth in product revenue and a one-time favorable intra-year true up in CarelonRx, partially offset by results in our Carelon Health businesses.

Quarterly Dividend

On October 15, 2024, the Audit Committee of the Company's Board of Directors declared a fourth quarter 2024 dividend to shareholders of $1.63 per share. The fourth quarter dividend is payable on December 20, 2024, to shareholders of record at the close of business on December 5, 2024.

About Elevance Health

Elevance Health is a lifetime, trusted health partner whose purpose is to improve the health of humanity. The company supports consumers, families, and communities across the entire healthcare journey – connecting them to the care, support, and resources they need to lead better lives. Elevance Health’s companies serve approximately 113 million consumers through a diverse portfolio of industry-leading medical, pharmacy, behavioral, clinical, and complex care solutions. For more information, please visit www.elevancehealth.com or follow us @ElevanceHealth on X and Elevance Health on LinkedIn.

Conference Call and Webcast

Management will host a conference call and webcast today at 8:30 a.m. Eastern Daylight Time (“EDT”) to discuss the company’s third quarter results and outlook. The conference call should be accessed at least 15 minutes prior to the start of the call with the following numbers:

888-947-9963 (Domestic)

866-510-4837 (Domestic Replay)

312-470-0178 (International)

203-369-1943 (International Replay)

The access code for today's conference call is 3972058. There is no access code for the replay. The replay will be available from 11:30 a.m. EDT today, until the end of the day on November 15, 2024. The call will also be available through a live webcast at www.elevancehealth.com under the “Investors” link. A webcast replay will be available following the call.

Basis of Presentation

  1. Operating revenue and operating gain/loss are the key measures used by management to evaluate performance in each of its reporting segments, allocate resources, set incentive compensation targets and to forecast future operating performance. Operating gain/loss is calculated as total operating revenue less benefit expense, cost of products sold and operating expense. It does not include net investment income, net gains/losses on financial instruments, interest expense, amortization of other intangible assets, gains/losses on extinguishment of debt or income taxes, as these items are managed in a corporate shared service environment and are not the responsibility of operating segment management. Refer to the GAAP reconciliation tables.
  2. Operating margin is defined as operating gain divided by operating revenue.

Elevance Health

Earnings Release Financial Schedules and Supplementary Information

Quarter & Year-to-Date Ended September 30, 2024

  • Membership and Other Metrics
  • Quarterly & Year-to-Date Consolidated Statements of Income
  • Condensed Consolidated Balance Sheet
  • Condensed Consolidated Statement of Cash Flows
  • Supplemental Financial Information - Reportable Segments
  • Supplemental Financial Information - Reconciliation of Medical Claims Payable
  • Reconciliation of Non-GAAP Financial Measures

Elevance Health

Membership and Other Metrics

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change from

Medical Membership (in thousands)

September 30,

2024

 

September 30,

2023

 

June 30,

2024

 

September 30,

2023

 

June 30,

2024

Individual

1,299

 

999

 

1,281

 

30.0 %

 

1.4 %

Employer Group Risk-Based

3,672

 

3,754

 

3,648

 

(2.2) %

 

0.7 %

Commercial Risk-Based

4,971

 

4,753

 

4,929

 

4.6 %

 

0.9 %

BlueCard®1

6,677

 

6,737

 

6,692

 

(0.9) %

 

(0.2) %

Employer Group Fee-Based

20,589

 

20,166

 

20,542

 

2.1 %

 

0.2 %

Commercial Fee-Based

27,266

 

26,903

 

27,234

 

1.3 %

 

0.1 %

Medicare Advantage

2,047

 

2,064

 

2,031

 

(0.8) %

 

0.8 %

Medicare Supplement

894

 

928

 

894

 

(3.7) %

 

— %

Total Medicare

2,941

 

2,992

 

2,925

 

(1.7) %

 

0.5 %

Medicaid

8,926

 

11,018

 

9,028

 

(19.0) %

 

(1.1) %

Federal Employees Health Benefits

1,656

 

1,640

 

1,660

 

1.0 %

 

(0.2) %

Total Medical Membership

45,760

 

47,306

 

45,776

 

(3.3) %

 

— %

Other Membership (in thousands)

 

 

 

 

 

 

 

 

 

Dental Members

7,021

 

6,775

 

7,008

 

3.6 %

 

0.2 %

Dental Administration Members

1,878

 

1,708

 

1,851

 

10.0 %

 

1.5 %

Vision Members

10,382

 

9,861

 

10,275

 

5.3 %

 

1.0 %

Medicare Part D Standalone Members

258

 

261

 

260

 

(1.1) %

 

(0.8) %

Other Metrics (in millions)

 

 

 

 

 

 

 

 

 

CarelonRx Quarterly Adjusted Scripts

80.2

 

77.3

 

78.2

 

3.8 %

 

2.6 %

Carelon Services Consumers Served

101.3

 

104.8

 

102.3

 

(3.3) %

 

(1.0) %

 

 

 

 

 

 

 

 

 

 

1.

BlueCard® membership for the three months ended September 30, 2023, is restated to align to the Blue Cross Blue Shield Association reporting methodology. For the three months ended September 30, 2023, BlueCard® membership has been restated lower by 19.

Elevance Health

Consolidated Statements of Income

(Unaudited)

(In millions, except per share data)

Three Months Ended

September 30

 

 

Nine Months Ended

September 30

 

2024

 

2023

 

Change

 

 

2024

 

2023

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Premiums

$ 36,809

 

$ 35,259

 

4.4 %

 

 

$ 107,921

 

$ 107,716

 

0.2 %

Product revenue

5,887

 

5,177

 

13.7 %

 

 

15,916

 

14,058

 

13.2 %

Service fees

2,023

 

2,044

 

(1.0) %

 

 

6,378

 

5,981

 

6.6 %

Total operating revenue

44,719

 

42,480

 

5.3 %

 

 

130,215

 

127,755

 

1.9 %

Net investment income

551

 

493

 

11.8 %

 

 

1,524

 

1,296

 

17.6 %

Net losses on financial instruments

(125)

 

(124)

 

NM

 

 

(371)

 

(358)

 

NM

(Loss) gain on sale of business

(39)

 

 

NM

 

 

201

 

 

NM

Total revenues

45,106

 

42,849

 

5.3 %

 

 

131,569

 

128,693

 

2.2 %

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Benefit expense

32,949

 

30,606

 

7.7 %

 

 

94,067

 

92,996

 

1.2 %

Cost of products sold

5,093

 

4,648

 

9.6 %

 

 

13,738

 

12,456

 

10.3 %

Operating expense

5,269

 

5,470

 

(3.7) %

 

 

15,221

 

15,088

 

0.9 %

Interest expense

300

 

259

 

15.8 %

 

 

845

 

771

 

9.6 %

Amortization of other intangible assets

122

 

212

 

(42.5) %

 

 

400

 

668

 

(40.1) %

Total expenses

43,733

 

41,195

 

6.2 %

 

 

124,271

 

121,979

 

1.9 %

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

1,373

 

1,654

 

(17.0) %

 

 

7,298

 

6,714

 

8.7 %

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

365

 

354

 

3.1 %

 

 

1,740

 

1,554

 

12.0 %

Net income

1,008

 

1,300

 

(22.5) %

 

 

5,558

 

5,160

 

7.7 %

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss (income) attributable to noncontrolling interests

8

 

(11)

 

NM

 

 

4

 

(29)

 

NM

Shareholders' net income

$ 1,016

 

$ 1,289

 

(21.2) %

 

 

$ 5,562

 

$ 5,131

 

8.4 %

Shareholders' earnings per diluted share

$ 4.36

 

$ 5.45

 

(20.0) %

 

 

$ 23.81

 

$ 21.56

 

10.4 %

Diluted shares

233.1

 

236.5

 

(1.4) %

 

 

233.6

 

238.0

 

(1.8) %

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit expense as a percentage of premiums

89.5 %

 

86.8 %

 

270 bp

 

 

87.2 %

 

86.3 %

 

90 bp

Operating expense as a percentage of total operating revenue

11.8 %

 

12.9 %

 

(110) bp

 

 

11.7 %

 

11.8 %

 

(10) bp

Income before income tax expense as a percentage of total revenue

3.0 %

 

3.9 %

 

(90) bp

 

 

5.5 %

 

5.2 %

 

30 bp

"NM" = calculation not meaningful

Elevance Health

Condensed Consolidated Balance Sheet

(In millions)

September 30,

2024

 

December 31,

2023

Assets

(Unaudited)

 

 

Current assets:

 

 

 

Cash and cash equivalents

$7,866

 

$6,526

Fixed maturity and equity securities

30,067

 

29,843

Premium and other receivables

18,399

 

17,865

Other current assets

5,949

 

5,795

Assets held for sale

565

 

Total current assets

62,846

 

60,029

 

 

 

 

Long-term investments

10,287

 

6,983

Property and equipment, net

4,505

 

4,359

Goodwill and other intangible assets

36,292

 

35,590

Other noncurrent assets

2,603

 

1,967

Total assets

$116,533

 

$108,928

 

 

 

 

Liabilities and equity

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Medical claims payable

$15,346

 

$16,111

Short-term borrowings

360

 

225

Current portion of long-term debt

2,100

 

1,649

Other current liabilities

24,064

 

23,806

Liabilities held for sale

163

 

Total current liabilities

42,033

 

41,791

 

 

 

 

Long-term debt, less current portion

24,688

 

23,246

Other noncurrent liabilities

5,933

 

4,486

Total liabilities

72,654

 

69,523

 

 

 

 

Total shareholders’ equity

43,775

 

39,306

Noncontrolling interests

104

 

99

Total equity

43,879

 

39,405

Total liabilities and equity

$116,533

 

$108,928

Elevance Health

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 

 

 

 

(In millions)

Nine Months Ended September 30

 

2024

 

2023

 

 

 

 

Operating activities

 

 

 

Net income

$5,558

 

 

$5,160

 

Depreciation and amortization

995

 

 

1,321

 

Share-based compensation

220

 

 

217

 

Changes in operating assets and liabilities

(1,701

)

 

3,821

 

Other non-cash items

30

 

 

513

 

Net cash provided by operating activities

5,102

 

 

11,032

 

 

 

 

 

Investing activities

 

 

 

Purchases of investments, net of sales and maturities

(1,614

)

 

(1,976

)

Net purchases of subsidiaries, net of cash acquired/sold

(725

)

 

(1,570

)

Purchases of property and equipment

(934

)

 

(970

)

Other, net

(256

)

 

(27

)

Net cash used in investing activities

(3,529

)

 

(4,543

)

 

 

 

 

Financing activities

 

 

 

Net change in short-term and long-term borrowings

1,915

 

 

401

 

Repurchase and retirement of common stock

(1,089

)

 

(1,748

)

Cash dividends

(1,135

)

 

(1,049

)

Other, net

94

 

 

(559

)

Net cash provided by (used in) financing activities

(215

)

 

(2,955

)

 

 

 

 

Effect of foreign exchange rates on cash and cash equivalents

2

 

 

(2

)

 

 

 

 

Change in cash and cash equivalents

1,360

 

 

3,532

 

Cash and cash equivalents at beginning of period

6,526

 

 

7,387

 

Less cash and equivalents included in assets held for sale at end of period

(20

)

 

 

 

 

 

 

Cash and cash equivalents at end of period

$7,866

 

 

$10,919

 

REPORTABLE SEGMENTS

Elevance Health has four reportable segments: Health Benefits (comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard®, Medicare, Medicaid, and Federal Health Products & Services businesses); CarelonRx; Carelon Services; and Corporate & Other (comprised of businesses that do not individually meet the quantitative thresholds for an operating division as well as corporate expenses not allocated to our other reportable segments).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elevance Health

 

 

Reportable Segment Highlight Details

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

Three Months Ended September 30

 

Nine Months Ended September 30

 

 

 

2024

 

2023

 

Change

 

2024

 

2023

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Benefits

$38,278

 

$36,744

 

4.2 %

 

$112,695

 

$112,024

 

0.6 %

 

 

CarelonRx

9,143

 

8,518

 

7.3 %

 

25,984

 

25,008

 

3.9 %

 

 

Carelon Services

4,638

 

3,509

 

32.2 %

 

13,192

 

10,573

 

24.8 %

 

 

Corporate & Other

74

 

95

 

(22.1) %

 

323

 

298

 

8.4 %

 

 

Eliminations

(7,414)

 

(6,386)

 

16.1 %

 

(21,979)

 

(20,148)

 

9.1 %

 

 

Total Operating Revenue1

$44,719

 

$42,480

 

5.3 %

 

$130,215

 

$127,755

 

1.9 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Gain (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Benefits

$1,604

 

$1,834

 

(12.5) %

 

$6,036

 

$6,121

 

(1.4) %

 

 

CarelonRx

619

 

477

 

29.8 %

 

1,639

 

1,485

 

10.4 %

 

 

Carelon Services

184

 

192

 

(4.2) %

 

682

 

578

 

18.0 %

 

 

Corporate & Other2

(999)

 

(747)

 

NM3

 

(1,168)

 

(969)

 

NM3

 

 

Total Operating Gain1

$1,408

 

$1,756

 

(19.8) %

 

$7,189

 

$7,215

 

(0.4) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Benefits

4.2 %

 

5.0 %

 

(80) bp

 

5.4 %

 

5.5 %

 

(10) bp

 

 

CarelonRx

6.8 %

 

5.6 %

 

120 bp

 

6.3 %

 

5.9 %

 

40 bp

 

 

Carelon Services

4.0 %

 

5.5 %

 

(150) bp

 

5.2 %

 

5.5 %

 

(30) bp

 

 

Total Operating Margin1

3.1 %

 

4.1 %

 

(100) bp

 

5.5 %

 

5.6 %

 

(10) bp

 

1.

See “Basis of Presentation” on page 5 herein.

2.

Operating Gain for the three months ended September 30, 2024, and September 30, 2023, included items adjusted out of adjusted shareholders' net income. See "GAAP Reconciliation" herein.

3.

"NM" = calculation not meaningful.

Elevance Health

Reconciliation of Medical Claims Payable

 

 

Nine Months Ended September 30

 

Years Ended December 31

 

2024

 

2023

 

2023

 

2022

 

2021

(In millions)

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross medical claims payable, beginning of period

$

15,865

 

 

$

15,348

 

 

$

15,348

 

 

$

13,282

 

 

$

11,135

 

Ceded medical claims payable, beginning of period

 

(7

)

 

 

(6

)

 

 

(6

)

 

 

(21

)

 

 

(46

)

Net medical claims payable, beginning of period

 

15,858

 

 

 

15,342

 

 

 

15,342

 

 

 

13,261

 

 

 

11,089

 

 

 

 

 

 

 

 

 

 

 

Business combinations and purchase adjustments

 

 

 

 

 

 

 

 

 

 

133

 

 

 

420

 

 

 

 

 

 

 

 

 

 

 

Net incurred medical claims:

 

 

 

 

 

 

 

 

 

Current year

 

92,715

 

 

 

91,058

 

 

 

121,798

 

 

 

113,414

 

 

 

100,440

 

Prior years redundancies1

 

(1,610

)

 

 

(1,342

)

 

 

(1,571

)

 

 

(869

)

 

 

(1,703

)

Total net incurred medical claims

 

91,105

 

 

 

89,716

 

 

 

120,227

 

 

 

112,545

 

 

 

98,737

 

 

 

 

 

 

 

 

 

 

 

Net payments attributable to:

 

 

 

 

 

 

 

 

 

Current year medical claims

 

79,220

 

 

 

77,048

 

 

 

107,146

 

 

 

98,997

 

 

 

88,156

 

Prior years medical claims

 

12,567

 

 

 

12,097

 

 

 

12,565

 

 

 

11,600

 

 

 

8,829

 

Total net payments

 

91,787

 

 

 

89,145

 

 

 

119,711

 

 

 

110,597

 

 

 

96,985

 

 

 

 

 

 

 

 

 

 

 

Net medical claims payable, end of period

 

15,176

 

 

 

15,913

 

 

 

15,858

 

 

 

15,342

 

 

 

13,261

 

Ceded medical claims payable, end of period

 

9

 

 

 

4

 

 

 

7

 

 

 

6

 

 

 

21

 

Gross medical claims payable, end of period2

$

15,185

 

 

$

15,917

 

 

$

15,865

 

 

$

15,348

 

 

$

13,282

 

 

 

 

 

 

 

 

 

 

 

Current year medical claims paid as a percentage of current year net incurred medical claims

 

85.4

%

 

 

84.6

%

 

 

88.0

%

 

 

87.3

%

 

 

87.8

%

 

 

 

 

 

 

 

 

 

 

Prior year redundancies in the current year as a percentage of prior year net medical claims payable less prior year redundancies in the current year

 

11.3

%

 

 

9.6

%

 

 

11.4

%

 

 

7.0

%

 

 

18.1

%

 

 

 

 

 

 

 

 

 

 

Prior year redundancies in the current year as a percentage of prior year net incurred medical claims

 

1.3

%

 

 

1.2

%

 

 

1.4

%

 

 

0.9

%

 

 

2.0

%

1.

Negative amounts reported for net incurred medical claims related to prior years result from claims being settled for amounts less than originally estimated.

2.

Excludes insurance lines other than short duration.

Elevance Health

GAAP Reconciliation

(Unaudited)

This document references non-GAAP measures, including “Adjusted Shareholders’ Net Income,” “Adjusted Shareholders’ Net Income Per Share,” “Adjusted EPS,” “Adjusted Operating Gain,” “Adjusted Operating Expense” and “Adjusted Operating Expense Ratio,” which are non-GAAP measures. These non-GAAP measures are intended to aid investors when comparing Elevance Health’s financial results among periods and are not intended to be alternatives to any measure calculated in accordance with GAAP. Reconciliations of these non-GAAP measures to the most directly comparable measures calculated in accordance with GAAP are available below. In addition to these non-GAAP measures, references are made to the measures “Operating Revenue” and “Operating Gain/Loss,” “Operating Margin” and “Adjusted EPS”. Operating revenue and operating gain/loss are the key measures used by management to evaluate performance in each of its reportable segments, allocate resources, set incentive compensation targets and to forecast future operating performance. Operating gain/loss is calculated as total operating revenue less benefit expense, cost of products sold and operating expense. It does not include net investment income, net gains/losses on financial instruments, interest expense, amortization of other intangible assets and gains/losses on extinguishment of debt or income taxes, as these items are managed in a corporate shared service environment and are not the responsibility of operating segment management. Each of these measures is provided to further aid investors in understanding and analyzing Elevance Health’s operating and financial results. A reconciliation of Operating Revenue to Total Revenue is set forth in the Consolidated Statements of Income herein. A reconciliation of the non-GAAP measures to the most directly comparable measures calculated in accordance with GAAP, together with a reconciliation of reportable segments operating gain to income before income tax expense, is provided below. Prior amounts may be grouped differently to conform to the current presentation. Net adjustment items per share may not sum due to rounding. A reconciliation of Operating Revenue to Total Revenue is set forth in the Consolidated Statements of Income herein.

 

Three Months Ended September 30

 

 

 

Nine Months Ended September 30

 

 

(In millions, except per share data)

 

2024

 

 

 

2023

 

 

Change

 

 

2024

 

 

 

2023

 

 

Change

Shareholders' net income

$

1,016

 

 

$

1,289

 

 

(21.2

)%

 

$

5,562

 

 

$

5,131

 

 

8.4

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Litigation and settlement expenses1

 

669

 

 

 

2

 

 

 

 

 

680

 

 

 

5

 

 

 

Business optimization charges1

 

268

 

 

 

697

 

 

 

 

 

268

 

 

 

697

 

 

 

Net losses on financial instruments

 

125

 

 

 

124

 

 

 

 

 

371

 

 

 

358

 

 

 

Amortization of other intangible assets

 

122

 

 

 

212

 

 

 

 

 

400

 

 

 

668

 

 

 

Transaction and integration related costs1

 

42

 

 

 

73

 

 

 

 

 

158

 

 

 

154

 

 

 

Loss (gain) on sale of business

 

39

 

 

 

 

 

 

 

 

(201

)

 

 

 

 

 

Tax impact of non-GAAP adjustments

 

(329

)

 

 

(270

)

 

 

 

 

(432

)

 

 

(470

)

 

 

Net adjustment items

 

936

 

 

 

838

 

 

 

 

 

1,244

 

 

 

1,412

 

 

 

Adjusted shareholders' net income

$

1,952

 

 

$

2,127

 

 

(8.2

)%

 

$

6,806

 

 

$

6,543

 

 

4.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' earnings per diluted share

$

4.36

 

 

$

5.45

 

 

(20.0

)%

 

$

23.81

 

 

$

21.56

 

 

10.4

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Litigation and settlement expenses1

 

2.87

 

 

 

0.01

 

 

 

 

 

2.91

 

 

 

0.02

 

 

 

Business optimization charges1

 

1.15

 

 

 

2.95

 

 

 

 

 

1.15

 

 

 

2.93

 

 

 

Net losses on financial instruments

 

0.54

 

 

 

0.52

 

 

 

 

 

1.59

 

 

 

1.50

 

 

 

Amortization of other intangible assets

 

0.52

 

 

 

0.90

 

 

 

 

 

1.71

 

 

 

2.81

 

 

 

Transaction and integration related costs1

 

0.18

 

 

 

0.31

 

 

 

 

 

0.68

 

 

 

0.65

 

 

 

Loss (gain) on sale of business

 

0.17

 

 

 

 

 

 

 

 

(0.86

)

 

 

 

 

 

Tax impact of non-GAAP adjustments

 

(1.41

)

 

 

(1.14

)

 

 

 

 

(1.85

)

 

 

(1.97

)

 

 

Net adjustment items

 

4.01

 

 

 

3.54

 

 

 

 

 

5.33

 

 

 

5.93

 

 

 

Adjusted shareholders' earnings per diluted share

$

8.37

 

 

$

8.99

 

 

(6.9

)%

 

$

29.14

 

 

$

27.49

 

 

6.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30

 

 

 

Nine Months Ended September 30

 

 

(In millions)

 

2024

 

 

 

2023

 

 

Change

 

 

2024

 

 

 

2023

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

$

1,373

 

 

$

1,654

 

 

(17.0

)%

 

$

7,298

 

 

$

6,714

 

 

8.7

%

Net investment income

 

(551

)

 

 

(493

)

 

 

 

 

(1,524

)

 

 

(1,296

)

 

 

Loss (gain) on sale of business

 

39

 

 

 

 

 

 

 

 

(201

)

 

 

 

 

 

Net losses on financial instruments

 

125

 

 

 

124

 

 

 

 

 

371

 

 

 

358

 

 

 

Interest expense

 

300

 

 

 

259

 

 

 

 

 

845

 

 

 

771

 

 

 

Amortization of other intangible assets

 

122

 

 

 

212

 

 

 

 

 

400

 

 

 

668

 

 

 

Reportable segments operating gain

$

1,408

 

 

$

1,756

 

 

(19.8

)%

 

$

7,189

 

 

$

7,215

 

 

(0.4

)%

1.

Adjustment item resides in the Corporate & Other reportable segment.

2.

Totals may not foot due to rounding

Elevance Health

GAAP Reconciliation

(Unaudited)

 

 

Three Months Ended September 30

 

 

 

Nine Months Ended September 30

 

 

(In millions)

 

2024

 

 

 

2023

 

 

Change

 

 

2024

 

 

 

2023

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Reportable segments operating gain

$

1,408

 

 

$

1,756

 

 

(19.8

)%

 

$

7,189

 

 

$

7,215

 

 

(0.4

)%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Litigation and settlement expenses1

 

669

 

 

 

2

 

 

 

 

 

680

 

 

 

5

 

 

 

Business optimization charges1

 

268

 

 

 

697

 

 

 

 

 

268

 

 

 

697

 

 

 

Transaction and integration related costs1

 

42

 

 

 

73

 

 

 

 

 

158

 

 

 

154

 

 

 

Net adjustment items

 

979

 

 

 

772

 

 

 

 

 

1,106

 

 

 

856

 

 

 

Reportable segments adjusted operating gain

$

2,387

 

 

$

2,528

 

 

(5.6

)%

 

$

8,295

 

 

$

8,071

 

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30

 

 

 

Nine Months Ended September 30

 

 

(In millions)

 

2024

 

 

 

2023

 

 

Change

 

 

2024

 

 

 

2023

 

 

Change

Operating expense

$

5,269

 

 

$

5,470

 

 

(3.7

)%

 

$

15,221

 

 

$

15,088

 

 

0.9

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Litigation and settlement expenses1

 

(669

)

 

 

(2

)

 

 

 

 

(680

)

 

 

(5

)

 

 

Business optimization charges1

 

(268

)

 

 

(697

)

 

 

 

 

(268

)

 

 

(697

)

 

 

Transaction and integration related costs1

 

(42

)

 

 

(73

)

 

 

 

 

(158

)

 

 

(154

)

 

 

Net adjustment items

 

(979

)

 

 

(772

)

 

 

 

 

(1,106

)

 

 

(856

)

 

 

Adjusted operating expense

$

4,290

 

 

$

4,698

 

 

(8.7

)%

 

$

14,115

 

 

$

14,232

 

 

(0.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

$

44,719

 

 

$

42,480

 

 

5.3

%

 

$

130,215

 

 

$

127,755

 

 

1.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense ratio

 

11.8

%

 

 

12.9

%

 

(110) bp

 

 

11.7

%

 

 

11.8

%

 

(10) bp

Adjusted operating expense ratio

 

9.6

%

 

 

11.1

%

 

(150) bp

 

 

10.8

%

 

 

11.1

%

 

(30) bp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year 2024 Outlook

 

 

 

 

 

 

 

 

Shareholders' earnings per diluted share

Approximately $26.50

 

 

 

 

 

 

 

 

Add / (Subtract):

 

 

 

 

 

 

 

 

 

Litigation and settlement expenses1

$2.93

 

 

 

 

 

 

 

 

 

Amortization of other intangibles

$2.21

 

 

 

 

 

 

 

 

 

Net losses on financial instruments

$1.93

 

 

 

 

 

 

 

 

 

Business optimization charges1

$1.15

 

 

 

 

 

 

 

 

 

Transaction and integration related costs1

$1.03

 

 

 

 

 

 

 

 

 

Gain on sale of business

($0.86

)

 

 

 

 

 

 

 

 

Tax impact of non-GAAP adjustments

Approximately ($1.89)

 

 

 

 

 

 

 

 

Net adjustment items

$6.50

 

 

 

 

 

 

 

 

 

Adjusted shareholders' earnings per diluted share

Approximately $33.00

 

 

 

 

 

 

 

 

1.

Adjustment item resides in the Corporate & Other reportable segment.

Forward-Looking Statements

This document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our views about future events and financial performance and are generally not historical facts. Words such as “expect,” “feel,” “believe,” “will,” “may,” “should,” “anticipate,” “intend,” “estimate,” “project,” “forecast,” “plan” and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to: financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. You are also urged to carefully review and consider the various risks and other disclosures discussed in our reports filed with the U.S. Securities and Exchange Commission from time to time, which attempt to advise interested parties of the factors that affect our business. Except to the extent required by law, we do not update or revise any forward-looking statements to reflect events or circumstances occurring after the date hereof. These risks and uncertainties include, but are not limited to: trends in healthcare costs and utilization rates; reduced enrollment; our ability to secure and implement sufficient premium rates; the impact of large scale medical emergencies, such as public health epidemics and pandemics, and other catastrophes; the impact of new or changes in existing federal, state and international laws or regulations, including laws and regulations impacting healthcare, insurance, pharmacy services and other diversified products and services, or their enforcement or application; the impact of cyber-attacks or other privacy or data security incidents or our failure to comply with any privacy, data or security laws or regulations, including any investigations, claims or litigation related thereto; failure to effectively maintain and modernize our information systems or failure of our information systems or technology, including artificial intelligence, to operate as intended; failure to effectively maintain the availability and integrity of our data; changes in economic and market conditions, as well as regulations that may negatively affect our liquidity and investment portfolios; competitive pressures and our ability to adapt to changes in the industry and develop and implement strategic growth opportunities; risks and uncertainties regarding Medicare and Medicaid programs, including those related to non-compliance with the complex regulations imposed thereon; our ability to maintain and achieve improvement in Centers for Medicare and Medicaid Services Star ratings and other quality scores and funding risks with respect to revenue received from participation therein; a negative change in our healthcare product mix; costs and other liabilities associated with litigation, government investigations, audits or reviews; our ability to contract with providers on cost-effective and competitive terms; risks associated with providing healthcare, pharmacy and other diversified products and services, including medical malpractice or professional liability claims and non-compliance by any party with the pharmacy services agreement between us and CaremarkPCS Health, L.L.C.; risks associated with mergers, acquisitions, joint ventures and strategic alliances; possible impairment of the value of our intangible assets if future results do not adequately support goodwill and other intangible assets; possible restrictions in the payment of dividends from our subsidiaries and increases in required minimum levels of capital; our ability to repurchase shares of our common stock and pay dividends on our common stock due to the adequacy of our cash flow and earnings and other considerations; the potential negative effect from our substantial amount of outstanding indebtedness and the risk that increased interest rates or market volatility could impact our access to or further increase the cost of financing; a downgrade in our financial strength ratings; the effects of any negative publicity related to the health benefits industry in general or us in particular; events that may negatively affect our licenses with the Blue Cross and Blue Shield Association; intense competition to attract and retain employees; risks associated with our international operations; and various laws and provisions in our governing documents that may prevent or discourage takeovers and business combinations.