Full Press Release Details
E A R N I N G S R E L E A S E
ELEVANCE HEALTH REPORTS RESULTS FOR FOURTH QUARTER
AND FULL YEAR 2023; SETS FULL YEAR 2024 OUTLOOK
Indianapolis, IN - January 24, 2024 - Elevance Health, Inc. (NYSE: ELV) reported fourth quarter and full year 2023 results.
We are pleased to have delivered another year of strong performance in 2023, enabled by our relentless focus on customer experience and affordability, and continued investments in growth and innovation. The balance and resilience of our business coupled with the focused execution of our enterprise strategy supports our confidence in our outlook for 2024, as we continue to optimize the foundation, and scale our flywheel for sustained growth of the enterprise over the long term.
Gail K. Boudreaux
President and Chief Executive Officer
Elevance Health
Consolidated Enterprise Highlights
| (In billions) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||
| December 31, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| Operating Revenue 1 | $ | 42.5 | $ | 39.7 | $ | 42.5 | $ | 170.2 | $ | 155.7 | ||||||||||
| Operating Gain 1,2,3 | $ | 1.3 | $ | 1.3 | $ | 1.8 | $ | 8.5 | $ | 8.3 | ||||||||||
| Operating Margin 1 | 3.0 | % | 3.2 | % | 4.1 | % | 5.0 | % | 5.3 | % |
Operating revenue was $42.5 billion in the fourth quarter of 2023, an increase of $2.8 billion, or 7 percent compared to fourth quarter 2022. Operating revenue was $170.2 billion in 2023, an increase of $14.5 billion, or 9 percent. The increase in the quarter and year was driven by higher premium revenue in our Health Benefits segment and growth in pharmacy product revenue in CarelonRx.
The benefit expense ratio was 89.2 percent in the fourth quarter, an improvement of 50 basis points compared to fourth quarter 2022, and 87.0 percent for the full year, an improvement of 60 basis points year-over-year. The improvement in the quarter and year was driven by premium rate adjustments to cover medical cost trend. Days in Claims Payable was 47.3 days as of December 31, 2023, a decrease of 1.3 days from September 30, 2023, and a decrease of 0.2 days compared to December 31, 2022.
The operating expense ratio was 11.8 percent both in the fourth quarter and for the full year of 2023, an increase of 30 basis points as compared to the fourth quarter of 2022 and an increase of 40 basis points year-over-year. The increase in the quarter was driven by an acceleration of investments for growth and the increase for the full year was driven by business optimization charges recorded in 2023.
Cash Flow & Balance Sheet
Operating cash flow for 2023 was $8.1 billion, or 1.3 times GAAP net income. As of December 31, 2023, cash and investments at the parent company totaled approximately $1.6 billion.
During the fourth quarter of 2023, the Company repurchased 2.0 million shares of its common stock for $929 million, at a weighted average price of $465.63. For the full year of 2023, the Company repurchased 5.8 million shares of its common stock for $2.7 billion, at a weighted average price of $463.53. As of December 31, 2023, the Company had approximately $4.2 billion of Board approved share repurchase authorization remaining. During the fourth quarter of 2023, the Company paid a quarterly dividend of $1.48 per share, representing a distribution of cash totaling $346 million.
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
| (In billions) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||
| December 31, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| Operating Revenue 1 | $ | 36.5 | $ | 35.0 | $ | 36.7 | $ | 148.6 | $ | 138.5 | ||||||||||
| Operating Gain 1,2 | $ | 0.8 | $ | 0.8 | $ | 1.8 | $ | 6.9 | $ | 6.0 | ||||||||||
| Operating Margin 1 | 2.1 | % | 2.2 | % | 5.0 | % | 4.6 | % | 4.3 | % |
Operating revenue was $36.5 billion in the fourth quarter of 2023, an increase of $1.5 billion, or 4 percent compared to fourth quarter 2022. Operating revenue was $148.6 billion in 2023, an increase of $10.1 billion, or 7 percent. The increase was primarily driven by higher premium revenue in our Commercial Health Benefits business.
Operating gain totaled $767 million in the fourth quarter of 2023, a decline of 2 percent compared to the fourth quarter of 2022. This was primarily driven by investments made in the quarter to support long-term growth. Operating gain totaled $6.9 billion in 2023, an increase of $866 million, or 14 percent year-over-year. This was primarily driven by premium rate adjustments to reflect medical cost trends.
Medical membership totaled approximately 47.0 million as of December 31, 2023, a decrease of 570 thousand, or 1 percent year-over-year. This was driven by attrition in our Medicaid business associated with the resumption of eligibility redeterminations in the second quarter of 2023 and declines in our Employer Group risk-based business. These membership losses were partially offset by growth in BlueCard, Affordable Care Act health plans, and Medicare Advantage.
During the fourth quarter of 2023, medical membership declined by 364 thousand driven by Medicaid membership attrition associated with redeterminations, partially offset by growth in commercial fee-based members.
Carelon is comprised of CarelonRx and Carelon Services.
Reportable Segment Highlights
| (In billions) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||
| December 31, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| Operating Revenue 1,2,3 | $ | 12.4 | $ | 10.9 | $ | 12.0 | $ | 48.0 | $ | 41.4 | ||||||||||
| Operating Gain 1,2,3 | $ | 0.6 | $ | 0.5 | $ | 0.7 | $ | 2.7 | $ | 2.4 | ||||||||||
| Operating Margin 1 | 4.8 | % | 4.7 | % | 5.6 | % | 5.5 | % | 5.8 | % |
Operating revenue in the Carelon segments was $12.4 billion in the fourth quarter of 2023, an increase of $1.5 billion, or 14 percent from fourth quarter 2022. Operating revenue was $48.0 billion in 2023, an increase of $6.6 billion, or 16 percent. The increases for the quarter and the year were driven by growth in pharmacy product revenue in CarelonRx associated with growth in both external pharmacy members served and the acquisition of the BioPlus specialty pharmacy.
Operating gain in the Carelon segments was $592 million in the fourth quarter of 2023, an increase of $78 million, or 15 percent from fourth quarter 2022. The increase in the quarter was primarily driven by improved performance in our Carelon Services businesses. Operating gain was $2.7 billion in 2023, an increase of $252 million, or 10 percent year-over-year. The increase for the full year was primarily driven by higher prescription volumes in CarelonRx associated with growth in external pharmacy members served, the acquisition of the BioPlus specialty pharmacy, and improved performance across our Carelon Services businesses, along with the continued expansion of our post-acute care management business.
About Elevance Health
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 more than 115 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 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 Standard Time ( EST ) to discuss the company s fourth quarter and full year 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) | 800-568-3942 (Domestic Replay) | |
| 312-470-0178 (International) | 203-369-3812 (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 February 23, 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
| Elevance Health Contacts: | ||
| Investor Relations | Media | |
| Stephen Tanal | Leslie Porras | |
| Stephen.Tanal@elevancehealth.com | Leslie.Porras@elevancehealth.com |
Elevance Health
Earnings Release Financial Schedules and Supplementary Information
Quarter and Year Ended December 31, 2023
Elevance Health
Membership and Other Metrics
| Change from | ||||||||||||||||||||
| Medical Membership (in thousands) | December 31, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | September 30, 2023 | |||||||||||||||
| Individual | 1,025 | 789 | 999 | 29.9 | % | 2.6 | % | |||||||||||||
| Employer Group Risk-Based | 3,756 | 3,988 | 3,754 | (5.8 | )% | 0.1 | % | |||||||||||||
| Commercial Risk-Based | 4,781 | 4,777 | 4,753 | 0.1 | % | 0.6 | % | |||||||||||||
| BlueCard | 6,838 | 6,462 | 6,756 | 5.8 | % | 1.2 | % | |||||||||||||
| Employer Group Fee-Based | 20,227 | 20,174 | 20,166 | 0.3 | % | 0.3 | % | |||||||||||||
| Commercial Fee-Based | 27,065 | 26,636 | 26,922 | 1.6 | % | 0.5 | % | |||||||||||||
| Medicare Advantage | 2,047 | 1,977 | 2,064 | 3.5 | % | (0.8 | )% | |||||||||||||
| Medicare Supplement | 923 | 947 | 928 | (2.5 | )% | (0.5 | )% | |||||||||||||
| Total Medicare | 2,970 | 2,924 | 2,992 | 1.6 | % | (0.7 | )% | |||||||||||||
| Medicaid | 10,503 | 11,571 | 11,018 | (9.2 | )% | (4.7 | )% | |||||||||||||
| Federal Employees Health Benefits | 1,642 | 1,623 | 1,640 | 1.2 | % | 0.1 | % | |||||||||||||
| Total Medical Membership | 46,961 | 47,531 | 47,325 | (1.2 | )% | (0.8 | )% | |||||||||||||
| Other Membership (in thousands) | ||||||||||||||||||||
| Life and Disability Members | 4,629 | 4,834 | 4,611 | (4.2 | )% | 0.4 | % | |||||||||||||
| Dental Members | 6,820 | 6,692 | 6,775 | 1.9 | % | 0.7 | % | |||||||||||||
| Dental Administration Members | 1,729 | 1,586 | 1,708 | 9.0 | % | 1.2 | % | |||||||||||||
| Vision Members | 9,944 | 9,813 | 9,861 | 1.3 | % | 0.8 | % | |||||||||||||
| Medicare Part D Standalone Members | 260 | 271 | 261 | (4.1 | )% | (0.4 | )% | |||||||||||||
| Other Metrics (in millions) | ||||||||||||||||||||
| CarelonRx Quarterly Adjusted Scripts | 78.0 | 82.0 | 77.3 | (4.9 | )% | 0.9 | % | |||||||||||||
| Carelon Services Consumers Served | 103.3 | 105.0 | 104.8 | (1.6 | )% | (1.4 | )% |
Elevance Health
Consolidated Statements of Income
| (In millions, except per share data) | Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||||||||||||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||||
| Revenues | ||||||||||||||||||||||||
| Premiums | $ | 35,138 | $ | 33,646 | 4.4 | % | $ | 142,854 | $ | 133,229 | 7.2 | % | ||||||||||||
| Product revenue | 5,394 | 4,137 | 30.4 | % | 19,452 | 14,978 | 29.9 | % | ||||||||||||||||
| Service fees | 1,922 | 1,884 | 2.0 | % | 7,903 | 7,453 | 6.0 | % | ||||||||||||||||
| Total operating revenue | 42,454 | 39,667 | 7.0 | % | 170,209 | 155,660 | 9.3 | % | ||||||||||||||||
| Net investment income | 529 | 373 | 41.8 | % | 1,825 | 1,485 | 22.9 | % | ||||||||||||||||
| Net losses on financial instruments | (336 | ) | (111 | ) | NM | (694 | ) | (550 | ) | NM | ||||||||||||||
| Total revenues | 42,647 | 39,929 | 6.8 | % | 171,340 | 156,595 | 9.4 | % | ||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Benefit expense | 31,334 | 30,195 | 3.8 | % | 124,330 | 116,642 | 6.6 | % | ||||||||||||||||
| Cost of products sold | 4,837 | 3,646 | 32.7 | % | 17,293 | 13,035 | 32.7 | % | ||||||||||||||||
| Operating expense | 4,999 | 4,567 | 9.5 | % | 20,087 | 17,700 | 13.5 | % | ||||||||||||||||
| Interest expense | 259 | 229 | 13.1 | % | 1,030 | 851 | 21.0 | % | ||||||||||||||||
| Amortization of other intangible assets | 217 | 247 | (12.1 | )% | 885 | 767 | 15.4 | % | ||||||||||||||||
| Total expenses | 41,646 | 38,884 | 7.1 | % | 163,625 | 148,995 | 9.8 | % | ||||||||||||||||
| Income before income tax expense | 1,001 | 1,045 | (4.2 | )% | 7,715 | 7,600 | 1.5 | % | ||||||||||||||||
| Income tax expense | 170 | 168 | 1.2 | % | 1,724 | 1,712 | 0.7 | % | ||||||||||||||||
| Net income | 831 | 877 | (5.2 | )% | 5,991 | 5,888 | 1.7 | % | ||||||||||||||||
| Net loss (income) attributable to noncontrolling interests | 25 | (12 | ) | NM | (4 | ) | 6 | NM | ||||||||||||||||
| Shareholders net income | $ | 856 | $ | 865 | (1.0 | )% | $ | 5,987 | $ | 5,894 | 1.6 | % | ||||||||||||
| Shareholders earnings per diluted share | $ | 3.63 | $ | 3.59 | 1.1 | % | $ | 25.22 | $ | 24.28 | 3.9 | % | ||||||||||||
| Diluted shares | 235.8 | 241.2 | (2.2 | )% | 237.4 | 242.8 | (2.2 | )% | ||||||||||||||||
| Benefit expense as a percentage of premiums | 89.2 | % | 89.7 | % | (50 | )bp | 87.0 | % | 87.6 | % | (60 | )bp | ||||||||||||
| Operating expense as a percentage of total operating revenue | 11.8 | % | 11.5 | % | 30 | bp | 11.8 | % | 11.4 | % | 40 | bp | ||||||||||||
| Income before income tax expense as a percentage of total revenue | 2.3 | % | 2.6 | % | (30 | )bp | 4.5 | % | 4.9 | % | (40 | )bp |
NM = calculation not meaningful
Elevance Health
Condensed Consolidated Balance Sheet
| (In millions) | December 31, 2023 | December 31, 2022 | ||||||
| Assets | (Unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 6,526 | $ | 7,387 | ||||
| Fixed maturity and equity securities | 29,843 | 26,905 | ||||||
| Premium and other receivables | 17,865 | 16,044 | ||||||
| Other current assets | 5,795 | 5,281 | ||||||
| Total current assets | 60,029 | 55,617 | ||||||
| Long-term investments | 6,983 | 6,437 | ||||||
| Property and equipment, net | 4,359 | 4,316 | ||||||
| Goodwill and other intangible assets | 35,590 | 34,698 | ||||||
| Other noncurrent assets | 1,967 | 1,687 | ||||||
| Total assets | $ | 108,928 | $ | 102,755 | ||||
| Liabilities and equity | ||||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Medical claims payable | $ | 16,111 | $ | 15,596 | ||||
| Short-term borrowings | 225 | 265 | ||||||
| Current portion of long-term debt | 1,649 | 1,500 | ||||||
| Other current liabilities | 23,806 | 22,335 | ||||||
| Total current liabilities | 41,791 | 39,696 | ||||||
| Long-term debt, less current portion | 23,246 | 22,349 | ||||||
| Other noncurrent liabilities | 4,486 | 4,380 | ||||||
| Total liabilities | 69,523 | 66,425 | ||||||
| Total shareholders equity | 39,306 | 36,243 | ||||||
| Noncontrolling interests | 99 | 87 | ||||||
| Total equity | 39,405 | 36,330 | ||||||
| Total liabilities and equity | $ | 108,928 | $ | 102,755 |
Elevance Health
Condensed Consolidated Statement of Cash Flows
| (In millions) | Twelve Months Ended December 31 | |||||||
| 2023 | 2022 | |||||||
| Operating activities | ||||||||
| Net income | $ | 5,991 | $ | 5,888 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 1,745 | 1,675 | ||||||
| Share-based compensation | 289 | 264 | ||||||
| Changes in operating assets and liabilities | (534 | ) | 423 | |||||
| Other non-cash items | 570 | 149 | ||||||
| Net cash provided by operating activities | 8,061 | 8,399 | ||||||
| Investing activities | ||||||||
| Purchases of investments, net of sales and maturities | (2,700 | ) | (2,338 | ) | ||||
| Purchases of subsidiaries, net of cash acquired | (1,552 | ) | (649 | ) | ||||
| Purchases of property and equipment | (1,296 | ) | (1,152 | ) | ||||
| Other, net | (24 | ) | (421 | ) | ||||
| Net cash used in investing activities | (5,572 | ) | (4,560 | ) | ||||
| Financing activities | ||||||||
| Net change in short-term and long-term borrowings | 626 | 862 | ||||||
| Repurchase and retirement of common stock | (2,676 | ) | (2,316 | ) | ||||
| Cash dividends | (1,395 | ) | (1,229 | ) | ||||
| Other, net | 96 | 1,365 | ||||||
| Net cash used in financing activities | (3,349 | ) | (1,318 | ) | ||||
| Effect of foreign exchange rates on cash and cash equivalents | (1 | ) | (14 | ) | ||||
| Change in cash and cash equivalents | (861 | ) | 2,507 | |||||
| Cash and cash equivalents at beginning of period | 7,387 | 4,880 | ||||||
| Cash and cash equivalents at end of period | $ | 6,526 | $ | 7,387 |
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
| (In millions) | Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||||||||||||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||||
| Operating Revenue | ||||||||||||||||||||||||
| Health Benefits | $ | 36,547 | $ | 34,996 | 4.4 | % | $ | 148,571 | $ | 138,484 | 7.3 | % | ||||||||||||
| Carelon 2,4 | 12,401 | 10,865 | 14.1 | % | 47,982 | 41,386 | 15.9 | % | ||||||||||||||||
| Corporate & Other 4 | 181 | 58 | 212.1 | % | 479 | 399 | 20.1 | % | ||||||||||||||||
| Eliminations 4 | (6,675 | ) | (6,252 | ) | 6.8 | % | (26,823 | ) | (24,609 | ) | 9.0 | % | ||||||||||||
| Total Operating Revenue 1 | $ | 42,454 | $ | 39,667 | 7.0 | % | $ | 170,209 | $ | 155,660 | 9.3 | % | ||||||||||||
| Operating Gain (Loss) | ||||||||||||||||||||||||
| Health Benefits 3,4 | $ | 767 | $ | 785 | (2.3 | )% | $ | 6,888 | $ | 6,022 | 14.4 | % | ||||||||||||
| Carelon 2,3,4 | 592 | 514 | 15.2 | % | 2,655 | 2,403 | 10.5 | % | ||||||||||||||||
| Corporate & Other 1,3,4 | (75 | ) | (40 | ) | NM | 5 | (1,044 | ) | (142 | ) | NM | 5 | ||||||||||||
| Total Operating Gain 1 | $ | 1,284 | $ | 1,259 | 2.0 | % | $ | 8,499 | $ | 8,283 | 2.6 | % | ||||||||||||
| Operating Margin | ||||||||||||||||||||||||
| Health Benefits | 2.1 | % | 2.2 | % | (10 | )bp | 4.6 | % | 4.3 | % | 30 | bp | ||||||||||||
| Carelon | 4.8 | % | 4.7 | % | 10 | bp | 5.5 | % | 5.8 | % | (30 | )bp | ||||||||||||
| Total Operating Margin1 | 3.0 | % | 3.2 | % | (20 | )bp | 5.0 | % | 5.3 | % | (30 | )bp |
Elevance Health
Reconciliation of Medical Claims Payable
| Years Ended December 31 | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (In millions) | (Unaudited) | |||||||||||
| Gross medical claims payable, beginning of year | $ | 15,348 | $ | 13,282 | $ | 11,135 | ||||||
| Ceded medical claims payable, beginning of year | (6 | ) | (21 | ) | (46 | ) | ||||||
| Net medical claims payable, beginning of year | 15,342 | 13,261 | 11,089 | |||||||||
| Business combinations and purchase adjustments | 133 | 420 | ||||||||||
| Net incurred medical claims: | ||||||||||||
| Current year | 121,798 | 113,414 | 100,440 | |||||||||
| Prior years redundancies 1 | (1,571 | ) | (869 | ) | (1,703 | ) | ||||||
| Total net incurred medical claims | 120,227 | 112,545 | 98,737 | |||||||||
| Net payments attributable to: | ||||||||||||
| Current year medical claims | 107,146 | 98,997 | 88,156 | |||||||||
| Prior years medical claims | 12,565 | 11,600 | 8,829 | |||||||||
| Total net payments | 119,711 | 110,597 | 96,985 | |||||||||
| Net medical claims payable, end of year | 15,858 | 15,342 | 13,261 | |||||||||
| Ceded medical claims payable, end of year | 7 | 6 | 21 | |||||||||
| Gross medical claims payable, end of year 2 | $ | 15,865 | $ | 15,348 | $ | 13,282 | ||||||
| Current year medical claims paid as a percentage of current year net incurred medical claims | 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 | 11.4 | % | 7.0 | % | 18.1 | % | ||||||
| Prior year redundancies in the current year as a percentage of prior year net incurred medical claims | 1.4 | % | 0.9 | % | 2.2 | % |
Elevance Health
GAAP Reconciliation
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 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 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 reported below. Prior amounts may be grouped differently to conform to 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 December 31 | Twelve Months Ended December 31 | |||||||||||||||||||||||
| (In millions, except per share data) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||||||||||
| Shareholders net income - As reported | $ | 856 | $ | 949 | (9.8 | )% | $ | 5,987 | $ | 6,025 | (0.6 | )% | ||||||||||||
| Impact of Accounting Standards Update 2018-12 Adoption | (84 | ) | (131 | ) | ||||||||||||||||||||
| Shareholders net income - Restated | $ | 856 | $ | 865 | (1.0 | )% | $ | 5,987 | $ | 5,894 | 1.6 | % | ||||||||||||
| Add / (Subtract): | ||||||||||||||||||||||||
| Net losses on financial instruments | 336 | 111 | 694 | 550 | ||||||||||||||||||||
| Amortization of other intangible assets | 217 | 247 | 885 | 767 | ||||||||||||||||||||
| Transaction and integration related costs | 59 | 36 | 213 | 72 | ||||||||||||||||||||
| Business optimization charges | 22 | 39 | 719 | 39 | ||||||||||||||||||||
| Litigation expenses | 1 | 1 | 6 | 12 | ||||||||||||||||||||
| BCBSA litigation settlement | (8 | ) | (20 | ) | (8 | ) | (44 | ) | ||||||||||||||||
| Tax impact of non-GAAP adjustments | (158 | ) | (102 | ) | (628 | ) | (363 | ) | ||||||||||||||||
| Net adjustment items | 469 | 312 | 1,881 | 1,033 | ||||||||||||||||||||
| Adjusted shareholders net income | $ | 1,325 | $ | 1,177 | 12.6 | % | $ | 7,868 | $ | 6,927 | 13.6 | % | ||||||||||||
| Shareholders earnings per diluted share - As reported | $ | 3.63 | $ | 3.93 | (7.6 | )% | $ | 25.22 | $ | 24.81 | 1.7 | % | ||||||||||||
| Impact of Accounting Standards Update 2018-12 Adoption | (0.34 | ) | (0.53 | ) | ||||||||||||||||||||
| Shareholders earnings per diluted share - Restated | 3.63 | 3.59 | 1.1 | % | 25.22 | 24.28 | 3.9 | % | ||||||||||||||||
| Add / (Subtract): | ||||||||||||||||||||||||
| Net losses on financial instruments | 1.42 | 0.46 | 2.92 | 2.27 | ||||||||||||||||||||
| Amortization of other intangible assets | 0.92 | 1.02 | 3.73 | 3.16 | ||||||||||||||||||||
| Transaction and integration related costs | 0.25 | 0.15 | 0.90 | 0.30 | ||||||||||||||||||||
| Business optimization charges | 0.09 | 0.16 | 3.03 | 0.16 | ||||||||||||||||||||
| Litigation expenses | 0.03 | 0.05 | ||||||||||||||||||||||
| BCBSA litigation settlement | (0.03 | ) | (0.08 | ) | (0.03 | ) | (0.18 | ) | ||||||||||||||||
| Tax impact of non-GAAP adjustments | (0.67 | ) | (0.42 | ) | (2.65 | ) | (1.50 | ) | ||||||||||||||||
| Net adjustment items | 1.99 | 1.29 | 7.92 | 4.25 | ||||||||||||||||||||
| Adjusted shareholders earnings per diluted share | $ | 5.62 | $ | 4.88 | 15.2 | % | $ | 33.14 | $ | 28.53 | 16.2 | % |
Elevance Health
GAAP Reconciliation
| Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||||||||||||||
| (In millions) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||||||||||
| Operating expense - As reported | $ | 4,999 | $ | 4,562 | 9.6 | % | $ | 20,087 | $ | 17,686 | 13.6 | % | ||||||||||||
| Impact of Accounting Standards Update 2018-12 Adoption | 5 | 14 | ||||||||||||||||||||||
| Operating expense - Restated | $ | 4,999 | $ | 4,567 | 9.5 | % | $ | 20,087 | $ | 17,700 | 13.5 | % | ||||||||||||
| Add / (Subtract): | ||||||||||||||||||||||||
| Transaction and integration related costs | (59 | ) | (36 | ) | (213 | ) | (72 | ) | ||||||||||||||||
| Business optimization charges | (22 | ) | (39 | ) | (719 | ) | (39 | ) | ||||||||||||||||
| Litigation expenses | (1 | ) | (1 | ) | (6 | ) | (12 | ) | ||||||||||||||||
| BCBSA litigation settlement | 8 | 20 | 8 | 44 | ||||||||||||||||||||
| Net adjustment items | (74 | ) | (56 | ) | (930 | ) | (79 | ) | ||||||||||||||||
| Adjusted operating expense | $ | 4,925 | $ | 4,511 | 9.2 | % | $ | 19,157 | $ | 17,621 | 8.7 | % | ||||||||||||
| Operating revenue | $ | 42,454 | $ | 39,667 | 7.0 | % | $ | 170,209 | $ | 155,660 | 9.3 | % | ||||||||||||
| Operating expense ratio | 11.8 | % | 11.5 | % | 30 | bp | 11.8 | % | 11.4 | % | 40 | bp | ||||||||||||
| Adjusted operating expense ratio | 11.6 | % | 11.4 | % | 20 | bp | 11.3 | % | 11.3 | % | bp | |||||||||||||
| Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||||||||||||||
| (In millions) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||||||||||
| Income before income tax expense | $ | 1,001 | $ | 1,045 | (4.2 | )% | $ | 7,715 | $ | 7,600 | 1.5 | % | ||||||||||||
| Net investment income | (529 | ) | (373 | ) | (1,825 | ) | (1,485 | ) | ||||||||||||||||
| Net losses on financial instruments | 336 | 111 | 694 | 550 | ||||||||||||||||||||
| Interest expense | 259 | 229 | 1,030 | 851 | ||||||||||||||||||||
| Amortization of other intangible assets | 217 | 247 | 885 | 767 | ||||||||||||||||||||
| Reportable segments operating gain | $ | 1,284 | $ | 1,259 | 2.0 | % | $ | 8,499 | $ | 8,283 | 2.6 | % | ||||||||||||
| Adjustment items | 74 | 56 | 930 | 79 | ||||||||||||||||||||
| Reportable segments adjusted operating gain | $ | 1,358 | $ | 1,315 | 3.3 | % | $ | 9,429 | $ | 8,362 | 12.8 | % | ||||||||||||
| Full Year 2024 Outlook | ||||||||||||||||||||||||
| Shareholders earnings per diluted share | Greater than $34.29 | |||||||||||||||||||||||
| Add / (Subtract): | ||||||||||||||||||||||||
| Amortization of other intangibles | $1.93 | |||||||||||||||||||||||
| Net losses on financial instruments | $1.35 | |||||||||||||||||||||||
| Transaction and integration related costs | $0.31 | |||||||||||||||||||||||
| Litigation expenses | $0.03 | |||||||||||||||||||||||
| Tax impact of non-GAAP adjustments | Approximately $(0.81) | |||||||||||||||||||||||
| Net adjustment items | $2.81 | |||||||||||||||||||||||
| Adjusted shareholders earnings per diluted share | Greater Than $37.10 |
Elevance Health
Financial Guidance Summary
| Full Year 2023 Actual | Full Year 2024 Outlook | |||||||
| Year-End Medical Enrollment (in millions) | ||||||||
| Fee-Based | 27.1 | 27.4 - 27.6 | ||||||
| Risk-Based | 19.9 | 18.4 - 19.0 | ||||||
| Total | 47.0 | 45.8 - 46.6 | ||||||
| Premium Revenue | $142.9 billion | Approximately flat | ||||||
| Product Revenue | $19.5 billion | Mid-single digit growth | ||||||
| Service Fees | $7.9 billion | Low double-digit growth | ||||||
| Total Operating Revenue | $170.2 billion | Flat to low-single digit growth | ||||||
| Benefit Expense Ratio | 87.0% | 87.0% +/- 50 bps | ||||||
| Adjusted Operating Expense Ratio | 11.3% | 11.1% +/- 50 bps | ||||||
| Adjusted Operating Gain | $9.4 billion | Greater than $10.3 billion | ||||||
| Other Pre-Tax Items: | ||||||||
| Net Investment income | $1,825 million | $1,900 million | ||||||
| Interest Expense | ($1,030) million | ($1,100) million | ||||||
| Amortization of Intangible Assets | ($885) million | ($450) million | ||||||
| Net Pre-Tax Expense | ($90) million | $350 million | ||||||
| Adjusted Effective Tax Rate | 23.0% | 22.0% - 24.0% | ||||||
| GAAP Diluted EPS | $25.22 | Greater than $34.29 | ||||||
| Adjusted Diluted EPS | $33.14 | Greater than $37.10 | ||||||
| Diluted Shares | 237.4 million | 233 - 234 million | ||||||
| Operating Cash Flow | $8.1 billion | Greater than $8.1 billion | ||||||
| Segment Level Guidance Metrics | ||||||||
| Operating Revenue Growth Rate | ||||||||
| Health Benefits | $148.6 billion | Approximately flat | ||||||
| CarelonRx | $33.8 billion | Low-single digit | ||||||
| Carelon Services | $14.1 billion | High-teens to low-twenties | ||||||
| Operating Margin vs. 2023 | ||||||||
| Health Benefits | 4.6% | 25 - 50 bps | ||||||
| CarelonRx | 5.8% | 40 - 60 bps | ||||||
| Carelon Services | 4.8% | (30) - 0 bps |
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, including COVID-19, 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 breaches or our failure to comply with any privacy, data or security laws or regulations, including any investigations, claims or litigation related thereto; information technology disruptions; 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; failure to effectively maintain and modernize our information systems; 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.