Second quarter GAAP net income was $7.79 per share, including net negative adjustment items of $1.25 per share. Adjusted net income was $9.04* per share.
Operating revenue grew 12.7% year-over-year to $43.4 billion
Operating gain grew 12.0% year-over-year to $2.6 billion
Medical enrollment increased 938 thousand members year-over-year to 48.0 million members
Third quarter 2023 dividend of $1.48 per share declared to shareholders
INDIANAPOLIS–(BUSINESS WIRE)–Elevance Health, Inc. (NYSE: ELV) reported second quarter 2023 results reflecting strong financial performance, including double-digit growth in revenue, operating earnings, and adjusted earnings per share.
“Our solid execution and continued progress of our strategy to become a lifetime trusted health partner resulted in strong second quarter and first half results,” said Gail K. Boudreaux, President and CEO. “Our focused efforts to optimize our mature businesses, invest in high-growth opportunities, and accelerate our growth through Carelon to meet the whole health needs of consumers positions us well for the rest of 2023 and beyond.”
Given the strong performance in the first half of the year and momentum across Elevance Health, we now expect GAAP net income to be greater than $29.09 per share in 2023, and adjusted net income to be greater than $32.85 per share.
*Refer to GAAP reconciliation tables.
CONSOLIDATED HIGHLIGHTS
Earnings Per Share: GAAP net income was $7.79 per share in the second quarter, including net negative adjustment items of $1.25 per share. Adjusted net income was $9.04* per share.
*Please refer to the GAAP reconciliation tables.
Membership: Medical membership totaled approximately 48.0 million as of June 30, 2023, an increase of 938 thousand, or 2.0 percent year-over-year, driven primarily by growth in Medicaid, BlueCard, ACA health plan, and Medicare Advantage members, partially offset by attrition in our Employer Group risk-based business.
During the second quarter of 2023, medical membership decreased by 135 thousand driven by attrition in Medicaid due to the resumption of eligibility redeterminations.
Operating Revenue: Operating revenue was $43.4 billion in the second quarter of 2023, an increase of $4.9 billion, or 12.7 percent year-over-year. The increase was primarily driven by premium rate increases in our Health Benefits business and higher premium revenue due to membership growth in Medicaid and Medicare. The increase in operating revenue was further attributable to growth in pharmacy product revenue within CarelonRx driven by growth in external pharmacy members served and the acquisition of BioPlus in the first quarter of 2023.
Benefit Expense Ratio: The benefit expense ratio was 86.4 percent in the second quarter of 2023, a decrease of 70 basis points year-over-year. The decrease was driven by premium rate adjustments to more accurately reflect cost of care.
Medical claims reserves established at December 31, 2022 developed in line with the Company’s expectations as of the second quarter of 2023.
Days in Claims Payable: Days in Claims Payable was 46.5 days as of June 30, 2023, an increase of 0.5 days from March 31, 2023 and a decrease of 1.3 days compared to June 30, 2022. The timing of certain provider pass-through payments and corresponding reserves set in the prior year had the effect of increasing Days in Claims Payable by 1.8 days in the second quarter of 2022. Adjusting for these impacts, Days in Claims Payable would have increased 0.5 days year-over-year.
Operating Expense Ratio: The operating expense ratio was 11.1 percent in the second quarter of 2023, unchanged from 11.1 percent in the second quarter of 2022.
Operating Cash Flow: Operating cash flow was approximately $2.0 billion, or 1.1 times net income in the second quarter of 2023.
Share Repurchase Program: During the second quarter of 2023, the Company repurchased 1.4 million shares of its common stock for $646 million, at a weighted average price of $457.34. Year-to-date, as of the end of the second quarter, the Company repurchased 2.7 million shares of its common stock for $1.3 billion, at a weighted average price of $466.62. As of June 30, 2023, the Company had approximately $5.6 billion of Board-approved share repurchase authorization remaining.
Cash Dividend: During the second quarter of 2023, the Company paid a quarterly dividend of $1.48 per share, representing a distribution of cash totaling $350 million.
On July 18, 2023, the Audit Committee of the Company’s Board of Directors declared a third quarter 2023 dividend to shareholders of $1.48 per share. The third quarter dividend is payable on September 22, 2023, to shareholders of record at the close of business on September 8, 2023.
Investment Portfolio & Capital Position: During the second quarter of 2023, the Company recorded net losses of $121 million. During the second quarter of 2022, the Company recorded net losses of $231 million. These amounts are excluded from adjusted earnings per share.
As of June 30, 2023, the Company’s net unrealized loss position in the investment portfolio was $1.9 billion, consisting primarily of fixed maturity securities. As of June 30, 2023, cash and investments at the parent company totaled approximately $1.0 billion.
REPORTABLE SEGMENTS
Elevance Health has four reportable segments: Health Benefits, the aggregation of our Commercial & Specialty Business and Government Business (comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard businesses, Medicaid, Medicare, and Federal Health Products & Services businesses); CarelonRx (formerly IngenioRx); Carelon Services (formerly known as Diversified Business Group); 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, Inc.
Reportable Segment Highlights
(Unaudited)
(In millions)
Three Months Ended June 30
Six Months Ended June 30
2023
2022
Change
2023
2022
Change
(Restated)
(Restated)
Operating Revenue
Health Benefits
$38,000
$34,396
10.5
%
$75,280
$68,423
10.0
%
Carelon1
11,907
10,054
18.4
%
23,243
19,685
18.1
%
Corporate & Other
287
315
(8.9
)%
538
588
(8.5
)%
Eliminations
(6,817
)
(6,283
)
8.5
%
(13,786
)
(12,328
)
11.8
%
Total Operating Revenue2
$43,377
$38,482
12.7
%
$85,275
$76,368
11.7
%
Operating Gain (Loss)
Health Benefits
$2,148
$1,781
20.6
%
$4,307
$3,632
18.6
%
Carelon1
632
592
6.8
%
1,353
1,190
13.7
%
Corporate & Other
(152
)
(27
)
NM3
(201
)
(49
)
NM3
Total Operating Gain2
$2,628
$2,346
12.0
%
$5,459
$4,773
14.4
%
Operating Margin
Health Benefits
5.7
%
5.2
%
50
bp
5.7
%
5.3
%
40
bp
Carelon1
5.3
%
5.9
%
(60
) bp
5.8
%
6.0
%
(20
) bp
Total Operating Margin2
6.1
%
6.1
%
—
bp
6.4
%
6.3
%
10
bp
1.
Operating Revenue and Operating Gain for Carelon for the three months ended June 30, 2023 included $8,466 and $496 for CarelonRx; $3,441 and $136 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the three months ended June 30, 2022 included $7,071 and $479 for CarelonRx; $2,983 and $113 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the six months ended June 30, 2023 included $16,490 and $1,008 for CarelonRx; $6,753 and $345 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the six months ended June 30, 2022 included $13,754 and $877 for CarelonRx; $5,931 and $313 for Carelon Services, respectively.
2.
See “Basis of Presentation.”
3.
“NM” = calculation not meaningful.
Health Benefits: Operating gain in the Health Benefits segment totaled $2.1 billion in the second quarter of 2023, an increase of $367 million from $1.8 billion in the second quarter of 2022, representing growth of approximately 21%. The increase was primarily driven by premium rate adjustments to more accurately reflect cost of care and membership growth in Medicaid, partially offset by a charge associated with a court ruling impacting health plans in a certain state related to prior years’ COVID-19 costs.
Carelon: Operating gain in the Carelon segment was $632 million in the second quarter of 2023, an increase of $40 million from $592 million in the second quarter of 2022. The increase was primarily driven by improved performance in our medical management business and the expansion of our post-acute care services, partially offset by higher medical cost trends and the non-recurrence of an out of period favorable adjustment in the second quarter of 2022 in CarelonRx.
Corporate & Other: The Company reported an operating loss of $152 million in the Corporate & Other segment for the second quarter of 2023, a decrease of $125 million from an operating loss of $27 million in the second quarter of 2022, driven by an increase in unallocated corporate expenses.
Basis of Presentation
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.
Operating margin is defined as operating gain divided by operating revenue.
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 second 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)
800-391-9853 (Domestic Replay)
312-470-0178 (International)
203-369-3269 (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 August 18, 2023. 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.
About Elevance Health, Inc.
Elevance Health is a lifetime, trusted health partner fueled by its purpose to improve the health of humanity. The company supports consumers, families, and communities across the entire care journey – connecting them to the care, support, and resources they need to lead healthier lives. Elevance Health’s companies serve approximately 118 million people through a diverse portfolio of industry-leading medical, digital, pharmacy, behavioral, clinical, and complex care solutions. For more information, please visit www.elevancehealth.com or follow us @ElevanceHealth on Twitter and Elevance Health on LinkedIn.
Elevance Health, Inc.
Membership and Other Metrics
(Unaudited)
Change from
Medical Membership (in thousands)
June 30,
2023
June 30,
2022
March 31,
2023
June 30,
2022
March 31,
2023
Individual
949
803
942
18.2
%
0.7
%
Employer Group Risk-Based
3,765
4,020
3,798
(6.3
)%
(0.9
)%
Commercial Risk-Based
4,714
4,823
4,740
(2.3
)%
(0.5
)%
BlueCard®
6,737
6,445
6,607
4.5
%
2.0
%
Employer Group Fee-Based
20,160
20,086
20,278
0.4
%
(0.6
)%
Commercial Fee-Based
26,897
26,531
26,885
1.4
%
—
%
Medicare Advantage
2,059
1,946
2,053
5.8
%
0.3
%
Medicare Supplement
926
942
925
(1.7
)%
0.1
%
Total Medicare
2,985
2,888
2,978
3.4
%
0.2
%
Medicaid
11,759
11,181
11,889
5.2
%
(1.1
)%
Federal Employees Health Benefits
1,634
1,628
1,632
0.4
%
0.1
%
Total Medical Membership
47,989
47,051
48,124
2.0
%
(0.3
)%
Other Membership (in thousands)
Life and Disability Members
4,686
4,779
4,771
(1.9
)%
(1.8
)%
Dental Members
6,728
6,620
6,743
1.6
%
(0.2
)%
Dental Administration Members
1,694
1,589
1,697
6.6
%
(0.2
)%
Vision Members
9,850
9,385
9,904
5.0
%
(0.5
)%
Medicare Part D Standalone Members
263
276
264
(4.7
)%
(0.4
)%
Other Metrics (in millions)
CarelonRx Quarterly Adjusted Scripts
77.4
76.4
75.7
1.3
%
2.2
%
Carelon Services Consumers Served
103.6
104.7
104.0
(1.1
)%
(0.4
)%
Elevance Health, Inc.
Consolidated Statements of Income
(Unaudited)
(In millions, except per share data)
Three Months Ended
June 30
2023
2022
Change
(Restated)
Revenues
Premiums
$
36,589
$
33,076
10.6
%
Product revenue
4,859
3,568
36.2
%
Service fees
1,929
1,838
5.0
%
Total operating revenue
43,377
38,482
12.7
%
Net investment income
416
381
9.2
%
Net losses on financial instruments
(121
)
(231
)
NM
Total revenues
43,672
38,632
13.0
%
Expenses
Benefit expense
31,604
28,795
9.8
%
Cost of products sold
4,327
3,069
41.0
%
Operating expense
4,818
4,272
12.8
%
Interest expense
261
208
25.5
%
Amortization of other intangible assets
221
166
33.1
%
Total expenses
41,231
36,510
12.9
%
Income before income tax expense
2,441
2,122
15.0
%
Income tax expense
585
488
19.9
%
Net income
1,856
1,634
13.6
%
Net (income) loss attributable to noncontrolling interests
(3
)
3
NM
Shareholders’ net income
$
1,853
$
1,637
13.2
%
Shareholders’ net income per diluted share
$
7.79
$
6.73
15.8
%
Diluted shares
237.8
243.4
(2.3
)%
Benefit expense as a percentage of premiums
86.4
%
87.1
%
(70
) bp
Operating expense as a percentage of total operating revenue
11.1
%
11.1
%
—
bp
Income before income tax expense as a percentage of total revenue
5.6
%
5.5
%
10
bp
“NM” = calculation not meaningful
Elevance Health, Inc.
Consolidated Statements of Income
(Unaudited)
(In millions, except per share data)
Six Months Ended
June 30
2023
2022
Change
(Restated)
Revenues
Premiums
$
72,457
$
65,861
10.0
%
Product revenue
8,881
6,869
29.3
%
Service fees
3,937
3,638
8.2
%
Total operating revenue
85,275
76,368
11.7
%
Net investment income
803
741
8.4
%
Net losses on financial instruments
(234
)
(382
)
NM
Total revenues
85,844
76,727
11.9
%
Expenses
Benefit expense
62,390
57,026
9.4
%
Cost of products sold
7,808
5,952
31.2
%
Operating expense
9,618
8,617
11.6
%
Interest expense
512
409
25.2
%
Amortization of other intangible assets
456
295
54.6
%
Total expenses
80,784
72,299
11.7
%
Income before income tax expense
5,060
4,428
14.3
%
Income tax expense
1,200
1,015
18.2
%
Net income
3,860
3,413
13.1
%
Net (income) loss attributable to noncontrolling interests
(18
)
13
NM
Shareholders’ net income
$
3,842
$
3,426
12.1
%
Shareholders’ net income per diluted share
$
16.10
$
14.05
14.6
%
Diluted shares
238.7
243.9
(2.1
)%
Benefit expense as a percentage of premiums
86.1
%
86.6
%
(50
) bp
Operating expense as a percentage of total operating revenue
11.3
%
11.3
%
—
bp
Income before income tax expense as a percentage of total revenue
5.9
%
5.8
%
10
bp
“NM” = calculation not meaningful
Elevance Health, Inc.
Consolidated Balance Sheets
(In millions)
June 30,
2023
December 31,
2022
Assets
(Unaudited)
(Restated)
Current assets:
Cash and cash equivalents
$
9,991
$
7,387
Fixed maturity securities
28,021
25,952
Equity securities
272
953
Premium receivables
7,431
7,083
Self-funded receivables
3,896
4,663
Other receivables
5,196
4,298
Other current assets
4,936
5,281
Total current assets
59,743
55,617
Long-term investments:
Fixed maturity securities
775
752
Other invested assets
5,993
5,685
Property and equipment, net
4,547
4,316
Goodwill
25,274
24,383
Other intangible assets
10,703
10,315
Other noncurrent assets
2,133
1,687
Total assets
$
109,168
$
102,755
Liabilities and equity
Liabilities
Current liabilities:
Medical claims payable
$
16,165
$
15,596
Other policyholder liabilities
5,954
5,933
Unearned income
4,458
1,112
Accounts payable and accrued expenses
5,033
5,607
Short-term borrowings
265
265
Current portion of long-term debt
—
1,500
Other current liabilities
9,696
9,683
Total current liabilities
41,571
39,696
Long-term debt, less current portion
24,859
22,349
Reserves for future policy benefits
797
803
Deferred tax liabilities, net
1,852
2,015
Other noncurrent liabilities
1,777
1,562
Total liabilities
70,856
66,425
Shareholders’ equity
Common stock
2
2
Additional paid-in capital
8,761
9,084
Retained earnings
31,608
29,647
Accumulated other comprehensive loss
(2,166
)
(2,490
)
Total shareholders’ equity
38,205
36,243
Noncontrolling interests
107
87
Total equity
38,312
36,330
Total liabilities and equity
$
109,168
$
102,755
Elevance Health, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In millions)
Six Months Ended June 30
2023
2022
(Restated)
Operating activities
Net income
$
3,860
$
3,413
Adjustments to reconcile net income to net cash provided by operating activities:
Net losses on financial instruments
234
382
Equity in net earnings of other invested assets
73
(258
)
Depreciation and amortization
895
751
Deferred income taxes
(393
)
(181
)
Share-based compensation
139
122
Changes in operating assets and liabilities:
Receivables, net
(299
)
(662
)
Other invested assets
(42
)
32
Other assets
(529
)
(412
)
Policy liabilities
583
1,548
Unearned income
3,346
(182
)
Accounts payable and other liabilities
160
632
Income taxes
391
(159
)
Other, net
1
(33
)
Net cash provided by operating activities
8,419
4,993
Investing activities
Purchases of investments
(17,648
)
(13,253
)
Proceeds from sale of investments
5,339
7,140
Maturities, calls and redemptions from investments
10,656
4,347
Changes in securities lending collateral
145
(620
)
Purchases of subsidiaries, net of cash acquired
(1,651
)
(609
)
Purchases of property and equipment
(651
)
(549
)
Other, net
(46
)
(58
)
Net cash used in investing activities
(3,856
)
(3,602
)
Financing activities
Net proceeds from commercial paper borrowings
90
250
Net proceeds from (repayments of) short-term borrowings
(90
)
(100
)
Net proceeds from (repayments of) long-term borrowings
666
357
Changes in securities lending payable
(145
)
620
Changes in bank overdrafts
(500
)
817
Repurchase and retirement of common stock
(1,268
)
(1,169
)
Cash dividends
(701
)
(618
)
Proceeds from issuance of common stock under employee stock plans
81
116
Taxes paid through withholding of common stock under employee stock plans
(99
)
(88
)
Other, net
5
10
Net cash (used in) provided by financing activities
(1,961
)
195
Effect of foreign exchange rates on cash and cash equivalents
2
(10
)
Change in cash and cash equivalents
2,604
1,576
Cash and cash equivalents at beginning of period
7,387
4,880
Cash and cash equivalents at end of period
$
9,991
$
6,456
Elevance Health, Inc.
Reconciliation of Medical Claims Payable
Six Months Ended June 30
Years Ended December 31
2023
2022
2022
2021
2020
(In millions)
(Unaudited)
(Unaudited)
Gross medical claims payable, beginning of period
$
15,348
$
13,282
$
13,282
$
11,135
$
8,647
Ceded medical claims payable, beginning of period
(6
)
(21
)
(21
)
(46
)
(33
)
Net medical claims payable, beginning of period
15,342
13,261
13,261
11,089
8,614
Business combinations and purchase adjustments
—
133
133
420
339
Net incurred medical claims:
Current year
61,290
55,737
113,414
100,440
85,094
Prior years redundancies1
(1,112
)
(972
)
(869
)
(1,703
)
(637
)
Total net incurred medical claims
60,178
54,765
112,545
98,737
84,457
Net payments attributable to:
Current year medical claims
48,217
42,882
98,997
88,156
74,629
Prior years medical claims
11,409
10,401
11,600
8,829
7,692
Total net payments
59,626
53,283
110,597
96,985
82,321
Net medical claims payable, end of period
15,894
14,876
15,342
13,261
11,089
Ceded medical claims payable, end of period
8
13
6
21
46
Gross medical claims payable, end of period
$
15,902
$
14,889
$
15,348
$
13,282
$
11,135
Current year medical claims paid as a percentage of current year net incurred medical claims
78.7
%
76.9
%
87.3
%
87.8
%
87.7
%
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
7.8
%
7.9
%
7.0
%
18.1
%
8.0
%
Prior year redundancies in the current year as a percentage of prior year net incurred medical claims
1.0
%
1.0
%
0.9
%
2.0
%
0.8
%
1. Negative amounts reported for net incurred medical claims related to prior years result from claims being settled for amounts less than originally estimated.
Elevance Health, Inc.
GAAP Reconciliation
(Unaudited)
Elevance Health, Inc. has referenced “Adjusted Net Income” and “Adjusted Net Income Per Share,” which are non-GAAP measures, in this document. These non-GAAP measures are not intended to be alternatives to any measure calculated in accordance with GAAP. In addition to these non-GAAP measures, references are made to the measures “Operating Revenue” and “Operating Gain.” Each of these measures is provided to further aid investors in understanding and analyzing the company’s core operating results and comparing Elevance Health, Inc.’s 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 reported below. Prior amounts may be grouped differently to conform to current presentation.
Three Months Ended
June 30
Six Months Ended
June 30
(In millions, except per share data)
2023
2022
Change
2023
2022
Change
Shareholders’ net income – As reported
$
1,853
$
1,653
12.1
%
$
3,842
$
3,458
11.1
%
Impact of Accounting Standards Update 2018-12 Adoption
—
(16
)
—
(32
)
Shareholders’ net income – Restated
$
1,853
$
1,637
13.2
%
$
3,842
$
3,426
12.1
%
Add / (Subtract):
Net losses on financial instruments
121
231
234
382
Amortization of other intangible assets
221
166
456
295
Transaction and integration related costs
55
14
81
23
Litigation expenses
2
4
3
5
Tax impact of non-GAAP adjustments
(103
)
(111
)
(200
)
(189
)
Net adjustment items
296
304
574
516
Adjusted shareholders’ net income
$
2,149
$
1,941
10.7
%
$
4,416
$
3,942
12.0
%
Shareholders’ net income per diluted share – As reported
$
7.79
$
6.79
14.7
%
$
16.10
$
14.18
13.5
%
Impact of Accounting Standards Update 2018-12 Adoption
—
(0.06
)
—
(0.13
)
Shareholders’ net income per diluted share – Restated
7.79
6.73
15.8
%
16.10
14.05
14.6
%
Add / (Subtract):
Net losses on financial instruments
0.51
0.95
0.98
1.57
Amortization of other intangible assets
0.93
0.68
1.91
1.21
Transaction and integration related costs
0.23
0.06
0.34
0.09
Litigation expenses
0.01
0.02
0.01
0.02
Tax impact of non-GAAP adjustments
(0.43
)
(0.46
)
(0.84
)
(0.77
)
Rounding impact
—
(0.01
)
—
(0.01
)
Net adjustment items
1.25
1.24
2.40
2.11
Adjusted shareholders’ net income per diluted share
$
9.04
$
7.97
13.4
%
$
18.50
$
16.16
14.5
%
Full Year 2023 Outlook
Shareholders’ net income per diluted share
Greater than $29.09
Add / (Subtract):
Net losses on financial instruments
$0.98
Transaction and integration related costs
$0.34
Litigation expenses
$0.01
Amortization of other intangible assets
$3.68
Tax impact of non-GAAP adjustments
Approximately $(1.25
)
Net adjustment items
$3.76
Adjusted shareholders’ net income per diluted share
Greater Than $32.85
Three Months Ended
June 30
Six Months Ended
June 30
(In millions)
2023
2022
Change
2023
2022
Change
(Restated)
(Restated)
Income before income tax expense
$
2,441
$
2,122
15.0
%
$
5,060
$
4,428
14.3
%
Net investment income
(416
)
(381
)
(803
)
(741
)
Net losses on financial instruments
121
231
234
382
Interest expense
261
208
512
409
Amortization of other intangible assets
221
166
456
295
Reportable segments operating gain
$
2,628
$
2,346
12.0
%
$
5,459
$
4,773
14.4
%
Contacts
Investor Relations
Stephen Tanal
[email protected]
Media
Leslie Porras
[email protected]