Anthem : Q2 2022 Earnings Release (PDF)

P R E S S R E L E A S E

ELEVANCE HEALTH REPORTS SECOND QUARTER 2022 RESULTS,

RAISES FULL YEAR OUTLOOK

• Second quarter GAAP net income was $6.79 per share, including net negative adjustment items of $1.25 per share. Adjusted net income was $8.04* per share.
• Operating revenue grew 15.6% over the prior year quarter to $38.5 billion.
• Operating gain grew 13.7% over the prior year quarter to $2.4 billion.
• Medical enrollment increased 2.7 million members year-over-year and 276 thousand members during the quarter to 47.1 million members.
• Third quarter 2022 dividend of $1.28 per share declared to shareholders.

Indianapolis, Ind. - July 20, 2022 - Elevance Health, Inc. (NYSE: ELV) reported second quarter 2022 results reflecting strong financial performance, including double-digit growth in revenue, operating earnings, and adjusted earnings per share.

"The disciplined execution of our strategy, and the balance and resilience of our diversified portfolio of businesses has enabled us to deliver another quarter of strong organic growth, and we have raised our outlook for 2022 earnings per share as a result," said Gail K. Boudreaux, President and CEO. "Our recent name change to Elevance Health and the broader rebranding strategy underscores our transformation to a lifetime, trusted health partner and our diversified set of businesses that lend resilience in any business environment. We are uniquely well- positioned for growth in the future as we remain focused on meeting the needs of our clients and customers."

The Company now expects GAAP net income to be greater than $25.28 per share, including approximately $3.42 per share of net unfavorable items. The Company now expects full-year adjusted net income to be greater than $28.70 per share, based on stronger than expected results year-to-date.

*Refer to GAAP reconciliation tables on page 14.

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CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $6.79 per share in the second quarter, including net negative adjustment items of $1.25 per share. Adjusted net income was $8.04* per share, up 14.4% from $7.03 in the same period a year ago.

*Please refer to the GAAP reconciliation tables on page 14.

Membership: Medical enrollment totaled approximately 47.1 million members as of June 30, 2022, an increase of 2.7 million, or 6.1 percent from the prior year quarter. Government Business enrollment increased by 1.6 million lives compared to the prior year quarter, primarily driven by organic growth in the Medicaid business, aided by the suspension of eligibility recertification efforts in our markets, the launch of Healthy Blue in North Carolina, the acquisitions of Paramount Advantage and Integra Managed Care and organic growth in Medicare Advantage. Commercial & Specialty Business enrollment increased by 1.2 million year over year primarily driven by strong sales in both fee-based and risk-based businesses.

During the second quarter of 2022, medical enrollment increased by 276 thousand lives driven by organic growth in Medicaid due to suspension of eligibility recertification, higher BlueCard activity and the acquisition of Integra Managed Care, which added 43 thousand members.

Operating Revenue: Operating revenue was $38.5 billion in the second quarter of 2022, an increase of $5.2 billion, or 15.6 percent, from the prior year quarter. The increase was driven by higher premium revenue due to membership growth in Medicaid, the acquisitions of MMM and Paramount Advantage, as well as premium rate increases to cover overall cost trends and growth in Medicare Advantage and Commercial risk-based membership. The increase in operating revenue was further attributable to the growth in pharmacy product revenue within IngenioRx, the acquisition of Integra Managed Care and the launch of Healthy Blue in North Carolina.

Benefit Expense Ratio: The benefit expense ratio was 87.0 percent in the second quarter of 2022, an increase of 20 basis points over the prior year quarter. The increase was primarily driven by a shift in mix of business driven by faster growth in Government programs, which have a higher benefit expense ratio, as compared to growth in the Commercial & Specialty risk business, which represented 27% of premium revenue in the second quarter, down from 29% in the prior year quarter.

Medical claims reserves established at December 31, 2021 developed in line with the Company's expectations as of the second quarter of 2022.

Days in Claims Payable: Days in Claims Payable was 47.8 days as of June 30, 2022, an increase of 0.9 days from March 31, 2022 and a decrease of 0.3 days compared to June 30, 2021. The timing of certain provider pass-through payments and corresponding reserves set in the current year had the effect of increasing Days in Claims Payable by 1.8 days, which we expect will reverse in the third quarter, while the timing of the acquisitions of MMM and myNEXUS increased Days in Claims Payable by 1.6 days in the second quarter of 2021.

SG&A Expense Ratio: The SG&A expense ratio was 11.1 percent in the second quarter of 2022, a decrease of 40 basis points from 11.5 percent in the second quarter of 2021. The decrease was primarily driven by operating expense leverage associated with growth in operating revenue, partially offset by increased spend to support growth.

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Operating Cash Flow: Operating cash flow was approximately $2.5 billion, or 1.5 times net income in the second quarter of 2022, an increase of $769 million as compared to the prior year quarter. The year- on-year increase was driven by the impact of working capital changes, including the timing of certain provider pass-through payments.

Share Repurchase Program: During the second quarter of 2022, the Company repurchased 1.3 million shares of its common stock for $624 million, at a weighted average price of $489.07. Year-to-date, as of the end of the second quarter, the Company repurchased 2.5 million shares of its common stock for $1.2 billion, at a weighted average price of $471.72. As of June 30, 2022, the Company had approximately $3.0 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the second quarter of 2022, the Company paid a quarterly dividend of $1.28 per share, representing a distribution of cash totaling $309 million.

On July 19, 2022, the Audit Committee of the Company's Board of Directors declared a third quarter 2022 dividend to shareholders of $1.28 per share. The third quarter dividend is payable on September 23, 2022, to shareholders of record at the close of business on September 9, 2022.

Investment Portfolio & Capital Position: During the second quarter of 2022, the Company recorded net losses of $231 million. During the second quarter of 2021, the Company recorded net gains of $172 million. These amounts are excluded from adjusted earnings per share.

As of June 30, 2022, the Company's net unrealized loss position in the investment portfolio was $2.0 billion, consisting primarily of fixed maturity securities. As of June 30, 2022 cash and investments at the parent company totaled approximately $948 million.

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REPORTABLE SEGMENTS

Elevance Health has four reportable segments: Commercial & Specialty Business (comprised of Individual, Group risk- based, Group fee-based, and BlueCard businesses); Government Business (comprised of the Medicaid, Medicare, and Federal Health Products & Services businesses); IngenioRx; and Other (comprised of the Carelon companies, formerly known as our Diversified Business Group, and 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
	2022	2021		Change	2022	2021		Change
Operating Revenue
Commercial & Specialty Business	$10,561	$9,550	10.6 %	$20,830	$19,041	9.4 %
Government Business	23,835	20,066	18.8 %	47,593	39,349	21.0 %
IngenioRx	7,071	6,219	13.7 %	13,754	12,081	13.8 %
Other	3,298	2,517	31.0 %	6,519	4,887	33.4 %
Eliminations	(6,283)	(5,073)	23.9 %	(12,328)	(9,981)	23.5 %
Total Operating Revenue1	$38,482		$33,279		15.6 %		$76,368		$65,377		16.8 %
Operating Gain
Commercial & Specialty Business	$806	$791	1.9 %	$1,888	$2,059	(8.3)%
Government Business	996	868	14.7 %	1,785	1,346	32.6 %
IngenioRx	479	405	18.3 %	877	812	8.0 %
Other	86	17	405.9 %	264	25	956.0 %
Total Operating Gain1	$2,367		$2,081		13.7 %		$4,814		$4,242		13.5 %
Operating Margin
Commercial & Specialty Business	7.6 %	8.3 %		(70) bp	9.1 %	10.8 %		(170) bp
Government Business	4.2 %	4.3 %		(10) bp	3.8 %	3.4 %		40 bp
IngenioRx	6.8 %	6.5 %		30 bp	6.4 %	6.7 %		(30) bp
Total Operating Margin1	6.2 %	6.3 %		(10) bp	6.3 %	6.5 %		(20) bp

1. See "Basis of Presentation" on page 6 herein.
2. "NM" = calculation not meaningful.

Commercial & Specialty Business: Operating gain in the Commercial & Specialty Business segment totaled $806 million in the second quarter of 2022, an increase of $15 million from $791 million in the second quarter of 2021. The increase was primarily driven by the positive contribution from growth in risk- and fee-based membership, partially offset by the net unfavorable effect of COVID.

Government Business: Operating gain in the Government Business segment was $996 million in the second quarter of 2022, an increase of $128 million from $868 million in the second quarter of 2021. The increase was primarily attributable to premium rates in Medicare that better reflect the acuity of our members and membership growth in Medicaid.

IngenioRx: Operating gain was $479 million in the second quarter of 2022, an increase of $74 million from $405 million in the second quarter of 2021. The increase was driven by an in-year out of period favorable adjustment and the impact of higher prescription volume associated with growth in integrated medical and pharmacy members.

Other: The Company reported an operating gain of $86 million in the Other segment for the second quarter of 2022, an increase of $69 million from $17 million in the prior year quarter. The increase was driven by improved performance in Carelon's affiliated and unaffiliated earnings.

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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 selling, general and administrative 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 page 14 for the GAAP reconciliation tables.
2. 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)	866-430-8797	(Domestic Replay)
312-470-0178	(International)	203-369-0943	(International Replay)

The access code for today's conference call is 3972058. The replay will be available from 11:30 a.m. EDT today, until the end of the day on August 20, 2022. The call will also be available through a live webcast at www.elevancehealth.comunder the "Investors" link. A webcast replay will be available following the call.

Elevance Health Contacts:
Investor Relations	Media
Stephen Tanal	Leslie Porras
[e-mail]	[e-mail]

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