Full Press Release Details
ANTHEM REPORTS THIRD QUARTER 2021 RESULTS,
RAISES FULL YEAR OUTLOOK
Indianapolis, Ind. - October 20, 2021 Anthem, Inc. (NYSE: ANTM) reported third quarter 2021 results reflecting strong financial performance.
Our deep connection to the communities we serve, commitment to advancing a digital platform for health and our differentiated approach to addressing the whole health of the people we serve has underpinned our strong performance despite the challenging environment due to COVID, said Gail Boudreaux, President and CEO. The strong growth we saw across all of our benefits business in the third quarter demonstrates that our core offerings, as well as additional innovative products and services continue to resonate in the market. We believe the momentum we are seeing and our ability to deliver on our strategy will be further accelerated by recent changes in our leadership .
CONSOLIDATED HIGHLIGHTS
Earnings Per Share: GAAP net income was $6.13 per share in the third quarter, including net negative adjustment items of $0.66 per share. Adjusted net income was $6.79* per share.
*Please refer to the GAAP reconciliation tables on page 15.
Membership: Medical enrollment totaled approximately 45.1 million members at September 30, 2021, an increase of 2.4 million lives, or 5.7 percent from the prior year quarter. Government Business enrollment increased by 2.3 million lives compared to the prior year quarter, primarily driven by organic growth in the Medicaid business, aided by the temporary suspension of eligibility recertification efforts in our markets, the acquisition of MMM, the launch of HealthyBlue in North Carolina, and organic growth in our Medicare Advantage business. Commercial & Specialty Business enrollment increased by 162 thousand lives compared to the prior year quarter primarily driven by strong risk-based membership growth, partially offset by in-group attrition in the group fee-based business as a result of the economic environment.
During the third quarter of 2021, medical enrollment increased sequentially by 730 thousand lives, driven by the launch of HealthyBlue in North Carolina, incremental growth in the Medicaid business, and sales in excess of lapses in our Commercial risk-based businesses, partially offset by in-group attrition in the group fee-based business.
Operating Revenue: Operating revenue was $35.5 billion in the third quarter of 2021, an increase of $4.9 billion, or 16.0 percent, from the prior year quarter and 17.5 percent after adjusting for the repeal of the health insurance tax in 2021. The increase was driven by higher premium revenue due to growth in Medicaid and Medicare and growth in pharmacy product revenue related to IngenioRx, partially offset by the repeal of the health insurance tax.
Benefit Expense Ratio: The benefit expense ratio was 87.7 percent in the third quarter of 2021, an increase of 90 basis points versus the prior year quarter and a decrease of 50 basis points after adjusting for the repeal of the health insurance tax in 2021. Excluding the impact of the repeal of the health insurance tax, the decrease was primarily driven by unfavorable rate adjustments in our Medicaid business in the third quarter of 2020.
Medical claims reserves established at December 31, 2020 developed better than the Company s expectations during the third quarter of 2021, with the majority offset by rebates, risk-corridors and other related mechanisms.
Days in Claims Payable: Days in Claims Payable was 46.8 days as of September 30, 2021, a decrease of 1.3 days from June 30, 2021 and an increase of 5.7 days as compared to September 30, 2020. The timing of the acquisitions of MMM and myNEXUS increased Days in Claims Payable at June 30, 2021. Normalizing for timing impacts associated with these acquisitions, Days in Claims payable would have increased by 0.2 days sequentially.
SG&A Expense Ratio: The SG&A expense ratio was 11.1 percent in the third quarter of 2021, a decrease of 620 basis points from 17.3 percent in the third quarter of 2020, primarily driven by the absence of charges related to business optimization and the BCBSA litigation settlement taken in the third quarter of 2020, growth in operating revenue, and the repeal of the health insurance tax in 2021, partially offset by increased spend to support growth.
Operating Cash Flow: Operating cash flow was $2.5 billion, or 1.7 times net income in the third quarter of 2021, an increase of $3.7 billion as compared to the prior year quarter. The year-on-year increase was primarily driven by outflows in the third quarter of 2020 which did not repeat in 2021, principally the payment of the health insurance tax as well as estimated Federal income tax payments which were deferred from the second quarter of 2020, as was permitted by the IRS.
Share Repurchase Program : During the third quarter of 2021, the Company repurchased 1.2 million shares of its common stock for $450 million, at a weighted average price of $378.85. As of September 30, 2021, the Company had approximately $4.7 billion of Board-approved share repurchase authorization remaining.
Cash Dividend: During the third quarter of 2021, the Company paid a quarterly dividend of $1.13 per share, representing a distribution of cash totaling $276 million.
On October 19, 2021, the Audit Committee declared a fourth quarter 2021 dividend to shareholders of $1.13 per share. On an annualized basis, this equates to a dividend of $4.52 per share. The fourth quarter dividend is payable on December 21, 2021 to shareholders of record at the close of business on December 3, 2021.
Investment Portfolio & Capital Position: During the third quarter of 2021, the Company recorded net realized losses of $61 million. During the third quarter of 2020, the Company recorded net realized gains of $229 million. These amounts are excluded from adjusted earnings per share.
As of September 30, 2021, the Company s net unrealized gain position in the investment portfolio was $878 million, consisting primarily of fixed maturity securities. As of September 30, 2021 cash and investments at the parent company totaled approximately $1.4 billion.
REPORTABLE SEGMENTS
Anthem, Inc. 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 Diversified Business Group and corporate expenses not allocated to our other reportable segments).
Reportable Segment Highlights
| (In millions) | Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | |||||||||||||||||||
| Operating Revenue | ||||||||||||||||||||||||
| Commercial & Specialty | $ | 9,863 | $ | 9,326 | 5.8 | % | $ | 28,904 | $ | 27,476 | 5.2 | % | ||||||||||||
| Government Business | 21,658 | 18,101 | 19.7 | % | 61,007 | 52,809 | 15.5 | % | ||||||||||||||||
| IngenioRx | 6,549 | 5,582 | 17.3 | % | 18,630 | 16,048 | 16.1 | % | ||||||||||||||||
| Other | 2,670 | 1,798 | 48.5 | % | 7,557 | 4,277 | 76.7 | % | ||||||||||||||||
| Eliminations | (5,192 | ) | (4,158 | ) | NM | 2 | (15,173 | ) | (11,335 | ) | NM | 2 | ||||||||||||
| Total Operating Revenue 1 | $ | 35,548 | $ | 30,649 | 16.0 | % | $ | 100,925 | $ | 89,275 | 13.0 | % | ||||||||||||
| Operating Gain (Loss) 3 | ||||||||||||||||||||||||
| Commercial & Specialty | $ | 620 | ($ | 234 | ) | NM | 2 | $ | 2,679 | $ | 2,558 | 4.7 | % | |||||||||||
| Government Business | 967 | 246 | 293.1 | % | 2,313 | 2,275 | 1.7 | % | ||||||||||||||||
| IngenioRx | 445 | 345 | 29.0 | % | 1,257 | 998 | 26.0 | % | ||||||||||||||||
| Other | 27 | (156 | ) | NM | 2 | 52 | (76 | ) | NM | 2 | ||||||||||||||
| Total Operating Gain 1 | $ | 2,059 | $ | 201 | 924.4 | % | $ | 6,301 | $ | 5,755 | 9.5 | % | ||||||||||||
| Operating Margin | ||||||||||||||||||||||||
| Commercial & Specialty | 6.3 | % | (2.5 | )% | 880 bp | 9.3 | % | 9.3 | % | bp | ||||||||||||||
| Government Business | 4.5 | % | 1.4 | % | 310 bp | 3.8 | % | 4.3 | % | (50 | ) bp | |||||||||||||
| IngenioRx | 6.8 | % | 6.2 | % | 60 bp | 6.7 | % | 6.2 | % | 50 | bp | |||||||||||||
| Total Operating Margin 1 | 5.8 | % | 0.7 | % | 510 bp | 6.2 | % | 6.4 | % | (20 | ) bp |
Commercial & Specialty Business: Operating gain in the Commercial & Specialty Business segment totaled $620 million in the third quarter of 2021, an increase of $854 million from an operating loss of $234 million in the third quarter of 2020. The increase was primarily attributable to BCBSA litigation settlement and business optimization charges taken in the third quarter of 2020.
Government Business: Operating gain in the Government Business segment was $967 million in the third quarter of 2021, an increase of $721 million from $246 million in the third quarter of 2020. The increase was primarily attributable to the impact of negative rate adjustments in the Medicaid business in the third quarter of 2020 associated with COVID-19, BCBSA litigation settlement and business optimization charges taken in the third quarter of 2020, and membership growth in the Medicaid and Medicare businesses, including growth resulting from the acquisition of MMM.
IngenioRx: Operating gain was $445 million in the third quarter of 2021, an increase of $100 million, or 29.0 percent, from $345 million in the third quarter of 2020. The increase was driven by growth in integrated medical and pharmacy membership.
Other: The Company reported an operating gain of $27 million in the Other segment for the third quarter of 2021, compared with an operating loss of $156 million in the prior year quarter. The increase was primarily driven by business optimization charges taken in the third quarter of 2020 and a decline in unallocated corporate expenses.
Full Year 2021:
Basis of Presentation
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) | 800-945-7761 (Domestic Replay) | |
| 312-470-0178 (International) | 203-369-3954 (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 November 19, 2021. The call will also be available through a live webcast at www.antheminc.com under the Investors link. A webcast replay will be available following the call.
| Anthem Contacts: | ||
| Investor Relations | Media | |
| Stephen Tanal | Michelle Vanstory | |
| Stephen.Tanal@anthem.com | Michelle.Vanstory@anthem.com |
About Anthem, Inc.
Anthem is a leading health benefits company dedicated to improving lives and communities, and making healthcare simpler. Through its affiliated companies, Anthem serves more than 117 million people, including more than 45 million within its family of health plans. We aim to be the most innovative, valuable and inclusive partner. For more information, please visit www.antheminc.com or follow @AnthemInc on Twitter.
Membership Summary
(Unaudited and in Thousands)
| Change from | ||||||||||||||||||||
| Medical Membership | September 30, 2021 | September 30, 2020 | June 30, 2021 | September 30, 2020 | June 30, 2021 | |||||||||||||||
| Commercial & Specialty Business | ||||||||||||||||||||
| Individual | 769 | 701 | 738 | 9.7 | % | 4.2 | % | |||||||||||||
| Group Risk-Based | 3,946 | 3,774 | 3,851 | 4.6 | % | 2.5 | % | |||||||||||||
| Commercial Risk-Based | 4,715 | 4,475 | 4,589 | 5.4 | % | 2.7 | % | |||||||||||||
| BlueCard | 6,166 | 6,106 | 6,235 | 1.0 | % | (1.1 | )% | |||||||||||||
| Group Fee-Based | 19,370 | 19,508 | 19,372 | (0.7 | )% | % | ||||||||||||||
| Commercial Fee-Based | 25,536 | 25,614 | 25,607 | (0.3 | )% | (0.3 | )% | |||||||||||||
| Total Commercial & Specialty Business | 30,251 | 30,089 | 30,196 | 0.5 | % | 0.2 | % | |||||||||||||
| Government Business | ||||||||||||||||||||
| Medicare Advantage | 1,853 | 1,416 | 1,824 | 30.9 | % | 1.6 | % | |||||||||||||
| Medicare Supplement | 947 | 933 | 936 | 1.5 | % | 1.2 | % | |||||||||||||
| Total Medicare | 2,800 | 2,349 | 2,760 | 19.2 | % | 1.4 | % | |||||||||||||
| Medicaid | 10,391 | 8,569 | 9,754 | 21.3 | % | 6.5 | % | |||||||||||||
| Federal Employees Health Benefits | 1,629 | 1,618 | 1,631 | 0.7 | % | (0.1 | )% | |||||||||||||
| Total Government Business | 14,820 | 12,536 | 14,145 | 18.2 | % | 4.8 | % | |||||||||||||
| Total Medical Membership | 45,071 | 42,625 | 44,341 | 5.7 | % | 1.6 | % | |||||||||||||
| Other Membership | ||||||||||||||||||||
| Life and Disability Members | 4,695 | 5,029 | 4,732 | (6.6 | )% | (0.8 | )% | |||||||||||||
| Dental Members | 6,637 | 6,356 | 6,606 | 4.4 | % | 0.5 | % | |||||||||||||
| Dental Administration Members | 1,486 | 1,315 | 1,497 | 13.0 | % | (0.7 | )% | |||||||||||||
| Vision Members | 7,974 | 7,487 | 7,819 | 6.5 | % | 2.0 | % | |||||||||||||
| Medicare Part D Standalone Members | 438 | 405 | 433 | 8.1 | % | 1.2 | % |
Consolidated Statements of Income
| (In millions, except per share data) | Three Months Ended September 30 | |||||||||||
| 2021 | 2020 | Change | ||||||||||
| Revenues | ||||||||||||
| Premiums | $ | 30,395 | $ | 26,392 | 15.2 | % | ||||||
| Product revenue | 3,353 | 2,598 | 29.1 | % | ||||||||
| Administrative fees and other revenue | 1,800 | 1,659 | 8.5 | % | ||||||||
| Total operating revenue | 35,548 | 30,649 | 16.0 | % | ||||||||
| Net investment income | 335 | 280 | 19.6 | % | ||||||||
| Net realized (losses) gains on financial instruments | (61 | ) | 229 | NM | ||||||||
| Total revenues | 35,822 | 31,158 | 15.0 | % | ||||||||
| Expenses | ||||||||||||
| Benefit expense | 26,645 | 22,921 | 16.2 | % | ||||||||
| Cost of products sold | 2,898 | 2,222 | 30.4 | % | ||||||||
| Selling, general and administrative expense | 3,946 | 5,305 | (25.6 | )% | ||||||||
| Interest expense | 201 | 198 | 1.5 | % | ||||||||
| Amortization of other intangible assets | 136 | 93 | 46.2 | % | ||||||||
| Loss on extinguishment of debt | 30 | NM | ||||||||||
| Total expenses | 33,826 | 30,769 | 9.9 | % | ||||||||
| Income before income tax expense | 1,996 | 389 | 413.1 | % | ||||||||
| Income tax expense | 494 | 167 | 195.8 | % | ||||||||
| Net income | 1,502 | 222 | 576.6 | % | ||||||||
| Net loss attributable to noncontrolling interests | 7 | NM | ||||||||||
| Shareholders net income | $ | 1,509 | $ | 222 | 579.7 | % | ||||||
| Shareholders net income per diluted share | $ | 6.13 | $ | 0.87 | 604.6 | % | ||||||
| Diluted shares | 246.0 | 254.2 | (3.2 | )% | ||||||||
| Benefit expense as a percentage of premiums | 87.7 | % | 86.8 | % | 90 | bp | ||||||
| Selling, general and administrative expense as a percentage of total operating revenue | 11.1 | % | 17.3 | % | (620 | )bp | ||||||
| Income before income tax expense as a percentage of total revenue | 5.6 | % | 1.2 | % | 440 | bp |
NM = calculation not meaningful
Consolidated Statements of Income
| (In millions, except per share data) | Nine Months Ended September 30 | |||||||||||
| 2021 | 2020 | Change | ||||||||||
| Revenues | ||||||||||||
| Premiums | $ | 86,604 | $ | 77,001 | 12.5 | % | ||||||
| Product revenue | 9,132 | 7,485 | 22.0 | % | ||||||||
| Administrative fees and other revenue | 5,189 | 4,789 | 8.4 | % | ||||||||
| Total operating revenue | 100,925 | 89,275 | 13.0 | % | ||||||||
| Net investment income | 1,026 | 591 | 73.6 | % | ||||||||
| Net realized gains on financial instruments | 107 | 177 | (39.5 | )% | ||||||||
| Total revenues | 102,058 | 90,043 | 13.3 | % | ||||||||
| Expenses | ||||||||||||
| Benefit expense | 75,107 | 63,957 | 17.4 | % | ||||||||
| Cost of products sold | 7,825 | 6,431 | 21.7 | % | ||||||||
| Selling, general and administrative expense | 11,692 | 13,132 | (11.0 | )% | ||||||||
| Interest expense | 598 | 593 | 0.8 | % | ||||||||
| Amortization of other intangible assets | 306 | 269 | 13.8 | % | ||||||||
| Loss on extinguishment of debt | 5 | 34 | (85.3 | )% | ||||||||
| Total expenses | 95,533 | 84,416 | 13.2 | % | ||||||||
| Income before income tax expense | 6,525 | 5,627 | 16.0 | % | ||||||||
| Income tax expense | 1,555 | 1,606 | (3.2 | )% | ||||||||
| Net income | 4,970 | 4,021 | 23.6 | % | ||||||||
| Net income attributable to noncontrolling interests | (3 | ) | NM | |||||||||
| Shareholders net income | $ | 4,967 | $ | 4,021 | 23.5 | % | ||||||
| Shareholders net income per diluted share | $ | 20.09 | $ | 15.75 | 27.6 | % | ||||||
| Diluted shares | 247.2 | 255.3 | (3.2 | )% | ||||||||
| Benefit expense as a percentage of premiums | 86.7 | % | 83.1 | % | 360 | bp | ||||||
| Selling, general and administrative expense as a percentage of total operating revenue | 11.6 | % | 14.7 | % | (310 | )bp | ||||||
| Income before income tax expense as a percentage of total revenue | 6.4 | % | 6.2 | % | 20 | bp |
NM = calculation not meaningful
Anthem, Inc. Consolidated Balance Sheets
Current assets:
Cash and cash equivalents
Fixed maturity securities
Equity securities, current
Premium receivables
Self-funded receivables
Other receivables
Other current assets
Total current assets
Long-term investments:
Fixed maturity securities
Other invested assets
Property and equipment, net
Other intangible assets
Other noncurrent assets
Liabilities and equity
Current liabilities:
Medical claims payable
Other policyholder liabilities
Unearned income
Accounts payable and accrued expenses
Short-term borrowings
Current portion of long-term debt
Other current liabilities
Total current liabilities
Long-term debt, less current portion
Reserves for future policy benefits
Deferred tax liabilities, net
Other noncurrent liabilities
Total liabilities
Shareholders equity
Additional paid-in capital
Retained earnings