Elevance Health Reports Third Quarter 2023 Results

Rhea-AI Summary

Elevance Health, Inc. reported strong financial performance in Q3 2023 with a GAAP net income of $5.45 per share and adjusted net income of $8.99 per share. Operating gain grew 12.6% YoY to $2.5 billion. Operating cash flow was $2.6 billion.

Positive

• Elevance Health expects GAAP net income to be greater than $26.40 per share and adjusted net income to be greater than $33.00 per share in 2023.
• Operating revenue increased by 7.2% YoY to $42.5 billion in Q3 2023, driven by higher premium revenue in Health Benefits and growth in pharmacy product revenue in CarelonRx.
• The benefit expense ratio improved by 40 basis points to 86.8% in Q3 2023.
• Days in Claims Payable increased to 48.6 days as of September 30, 2023.
• The operating expense ratio increased to 12.9% in Q3 2023 due to a business optimization charge.
• Operating cash flow decreased by $2.3 billion YoY to approximately $2.6 billion in Q3 2023.
• During Q3 2023, the company repurchased 1.1 million shares of its common stock for $480 million.
• The company paid a quarterly dividend of $1.48 per share in Q3 2023.
• The company recorded net losses of $124 million in its investment portfolio in Q3 2023.
• Elevance Health's Health Benefits segment reported an operating gain of $1.8 billion in Q3 2023, representing growth of 13.0% YoY.
• The Carelon segment reported an operating gain of $650 million in Q3 2023, driven by the expansion of post-acute care services and the acquisition of BioPlus.
• The Corporate & Other segment reported an operating loss of $741 million in Q3 2023 due to business optimization charges.

Negative

• None.

• Third quarter GAAP net income was $5.45 per share, including net negative adjustment items of $3.54 per share. Adjusted net income was $8.99* per share.
• Operating gain, excluding adjustment items, grew 12.6% year-over-year to $2.5 billion.
• Operating cash flow was $2.6 billion.

INDIANAPOLIS--(BUSINESS WIRE)-- Elevance Health, Inc. (NYSE: ELV) reported third quarter 2023 results reflecting strong financial performance across the enterprise.

“Elevance Health delivered another quarter of solid performance reflecting the strength and balance of our diversified portfolio of businesses, our continued investments in innovation and growth, and our relentless focus on affordability, simplicity, and customer experience,” said Gail K. Boudreaux, President and CEO. “With affordability a paramount concern for all payors and a more uncertain forward-looking operating environment, we took action during the third quarter that will enhance our ability to act nimbly and operate efficiently. Along with the earnings power of our Health Benefits and Carelon businesses, we are well-positioned to meet our commitments to all of our stakeholders while continuing to advance our whole health strategy.”

As a result of outperformance year-to-date, the Company now expects GAAP net income to be greater than $26.40 per share in 2023, and adjusted net income to be greater than $33.00 per share.

*Refer to GAAP reconciliation tables.

CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $5.45 per share in the third quarter, including net negative adjustment items of $3.54 per share. Adjusted net income was $8.99* per share.

*Please refer to the GAAP reconciliation tables.

Membership: Medical membership totaled approximately 47.3 million as of September 30, 2023, an increase of 42 thousand, or 0.1 percent year-over-year, driven primarily by growth in BlueCard, Affordable Care Act health plans, and Medicare Advantage membership, partially offset by attrition in Medicaid due to the resumption of eligibility redeterminations and a new entrant into one of our state Medicaid programs in the third quarter, as well as declines in our Employer Group risk-based business.

During the third quarter of 2023, medical membership decreased by 664 thousand driven by attrition in Medicaid due to the aforementioned dynamics.

Operating Revenue: Operating revenue was $42.5 billion in the third quarter of 2023, an increase of $2.9 billion, or 7.2 percent year-over-year. The increase was primarily driven by higher premium revenue in our Health Benefits business and growth in pharmacy product revenue in CarelonRx due to 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 86.8 percent in the third quarter, an improvement of 40 basis points year-over-year. The improvement was driven by premium rate adjustments in recognition of medical cost trend.

Medical claims reserves established at December 31, 2022 developed within the range of the Company’s expectations as of the third quarter of 2023.

Days in Claims Payable: Days in Claims Payable was 48.6 days as of September 30, 2023, an increase of 2.1 days from June 30, 2023 and an increase of 0.9 days compared to September 30, 2022.

Operating Expense Ratio: The operating expense ratio was 12.9% in the third quarter of 2023, an increase of 150 basis points from 11.4% in the third quarter of 2022. The increase was due to a business optimization charge recognized in the quarter.

In the third quarter, we completed a strategic review of our operations, assets, and investments to enhance operating efficiency, refine the focus of our investments in innovation and optimize our physical footprint. This resulted in a net charge of $697 million, comprised of the write-off of certain information technology assets and contract exit costs, a reduction in staff including the relocation of certain job functions, and the impairment of assets associated with the closure or partial closure of data centers and offices.

Operating Cash Flow: Operating cash flow was approximately $2.6 billion, or 2.0 times net income in the third quarter of 2023, a decrease of $2.3 billion as compared to the prior year quarter. The year-on-year decrease was driven by the receipt of an additional month of CMS payments in the third quarter of 2022.

Share Repurchase Program: During the third quarter of 2023, the Company repurchased 1.1 million shares of its common stock for $480 million, at a weighted average price of $451.68. Year-to-date, as of the end of the third quarter, the Company repurchased 3.8 million shares of its common stock for $1.7 billion, at a weighted average price of $462.42. As of September 30, 2023, the Company had approximately $5.1 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the third quarter of 2023, the Company paid a quarterly dividend of $1.48 per share, representing a distribution of cash totaling $348 million.

On October 17, 2023, the Audit Committee of the Company's Board of Directors declared a fourth quarter 2023 dividend to shareholders of $1.48 per share. The fourth quarter dividend is payable on December 21, 2023, to shareholders of record at the close of business on December 6, 2023.

Investment Portfolio & Capital Position: During the third quarter of 2023, the Company recorded net losses of $124 million. During the third quarter of 2022, the Company recorded net losses of $57 million. These amounts are excluded from adjusted earnings per share.

As of September 30, 2023, the Company’s net unrealized loss position in the investment portfolio was $2.4 billion, consisting primarily of fixed maturity securities. As of September 30, 2023, cash and investments at the parent company totaled approximately $1.7 billion.

REPORTABLE SEGMENTS

Elevance Health has four reportable segments: Health Benefits (comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard, Medicaid, Medicare, 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, Inc.
Reportable Segment Highlights
(Unaudited)
(In millions)	Three Months Ended September 30											Nine Months Ended September 30
		2023				2022			Change				2023				2022			Change
					(Restated)											(Restated)
Operating Revenue
Health Benefits	$	36,744			$	35,065			4.8	%		$	112,024			$	103,488			8.2	%
Carelon1		11,892				10,403			14.3	%			35,135				30,088			16.8	%
Corporate & Other		242				211			14.7	%			780				799			(2.4	)%
Eliminations		(6,398	)			(6,054	)		5.7	%			(20,184	)			(18,382	)		9.8	%
Total Operating Revenue2	$	42,480			$	39,625			7.2	%		$	127,755			$	115,993			10.1	%
Operating Gain (Loss)
Health Benefits	$	1,847			$	1,634			13.0	%		$	6,154			$	5,266			16.9	%
Carelon1		650				641			1.4	%			2,003				1,831			9.4	%
Corporate & Other2		(741	)			(24	)		NM4				(942	)			(73	)		NM4
Total Operating Gain3	$	1,756			$	2,251			(22.0	)%		$	7,215			$	7,024			2.7	%
Operating Margin
Health Benefits		5.0	%			4.7	%		30 bp				5.5	%			5.1	%		40 bp
Carelon1		5.5	%			6.2	%		(70) bp				5.7	%			6.1	%		(40) bp
Total Operating Margin2		4.1	%			5.7	%		(160) bp				5.6	%			6.1	%		(50) bp

1.	Operating Revenue and Operating Gain for Carelon for the three months ended September 30, 2023 included $8,518 and $477 for CarelonRx; $3,374 and $173 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the three months ended September 30, 2022 included $7,249 and $516 for CarelonRx; $3,154 and $125 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the nine months ended September 30, 2023 included $25,008 and $1,485 for CarelonRx; $10,127 and $518 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the nine months ended September 30, 2022 included $21,003 and $1,393 for CarelonRx; $9,085 and $438 for Carelon Services, respectively.
2.	Operating gain for Corporate & Other for the three and nine months ended September 30, 2023 included a business optimization charge of $697.
3.	See “Basis of Presentation.”
4.	"NM" = calculation not meaningful.

Health Benefits: Operating gain in the Health Benefits segment totaled $1.8 billion in the third quarter of 2023, an increase of $213 million from $1.6 billion in the third quarter of 2022, representing growth of 13.0%. The increase was primarily driven by premium rate adjustments to cover medical cost trend on higher levels of post-pandemic care.

Carelon: Operating gain in the Carelon segment was $650 million in the third quarter of 2023, an increase of $9 million from $641 million in the third quarter of 2022. The increase was primarily driven by the continued expansion of our post-acute care services business, the acquisition of BioPlus in the first quarter of 2023, and improved performance in our Behavioral Health business, partially offset by the non-recurrence of out of period fee-based revenue recognized in the third quarter of 2022 in CarelonRx.

Corporate & Other: The Company reported an operating loss of $741 million in the Corporate & Other segment for the third quarter of 2023, a decrease of $717 million from an operating loss of $24 million in the third quarter of 2022, driven by business optimization charges.

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.

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)	866-405-7293 (Domestic Replay)
312-470-0178 (International)	203-369-0605 (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 17, 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 117 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)	September 30, 2023		September 30, 2022		June 30, 2023		September 30, 2022			June 30, 2023
Individual	999		800		949		24.9	%		5.3	%
Employer Group Risk-Based	3,754		3,988		3,765		(5.9	)%		(0.3	)%
Commercial Risk-Based	4,753		4,788		4,714		(0.7	)%		0.8	%
BlueCard®	6,756		6,453		6,737		4.7	%		0.3	%
Employer Group Fee-Based	20,166		20,184		20,160		(0.1	)%		—	%
Commercial Fee-Based	26,922		26,637		26,897		1.1	%		0.1	%
Medicare Advantage	2,064		1,969		2,059		4.8	%		0.2	%
Medicare Supplement	928		945		926		(1.8	)%		0.2	%
Total Medicare	2,992		2,914		2,985		2.7	%		0.2	%
Medicaid	11,018		11,319		11,759		(2.7	)%		(6.3	)%
Federal Employees Health Benefits	1,640		1,625		1,634		0.9	%		0.4	%
Total Medical Membership	47,325		47,283		47,989		0.1	%		(1.4	)%
Other Membership (in thousands)
Life and Disability Members	4,611		4,796		4,686		(3.9	)%		(1.6	)%
Dental Members	6,775		6,655		6,728		1.8	%		0.7	%
Dental Administration Members	1,708		1,577		1,694		8.3	%		0.8	%
Vision Members	9,861		9,628		9,850		2.4	%		0.1	%
Medicare Part D Standalone Members	261		274		263		(4.7	)%		(0.8	)%
Other Metrics (in millions)
CarelonRx Quarterly Adjusted Scripts	77.3		76.9		77.4		0.5	%		(0.1	)%
Carelon Services Consumers Served	104.8		105.3		103.6		(0.5	)%		1.2	%

Elevance Health, Inc.
Consolidated Statements of Income
(Unaudited)
(In millions, except per share data)		Three Months Ended September 30
			2023				2022			Change
						(Restated)
Revenues
Premiums		$	35,259			$	33,722			4.6	%
Product revenue			5,177				3,972			30.3	%
Service fees			2,044				1,931			5.9	%
Total operating revenue			42,480				39,625			7.2	%
Net investment income			493				371			32.9	%
Net losses on financial instruments			(124	)			(57	)		NM
Total revenues			42,849				39,939			7.3	%
Expenses
Benefit expense			30,606				29,421			4.0	%
Cost of products sold			4,648				3,437			35.2	%
Operating expense			5,470				4,516			21.1	%
Interest expense			259				213			21.6	%
Amortization of other intangible assets			212				225			(5.8	)%
Total expenses			41,195				37,812			8.9	%
Income before income tax expense			1,654				2,127			(22.2	)%
Income tax expense			354				529			(33.1	)%
Net income			1,300				1,598			(18.6	)%
Net (income) loss attributable to noncontrolling interests			(11	)			5			NM
Shareholders' net income		$	1,289			$	1,603			(19.6	)%
Shareholders' net income per diluted share		$	5.45			$	6.62			(17.7	)%
Diluted shares			236.5				242.2			(2.4	)%
Benefit expense as a percentage of premiums			86.8	%			87.2	%		(40) bp
Operating expense as a percentage of total operating revenue			12.9	%			11.4	%		150 bp
Income before income tax expense as a percentage of total revenue			3.9	%			5.3	%		(140) bp
"NM" = calculation not meaningful

Elevance Health, Inc.
Consolidated Statements of Income
(Unaudited)
(In millions, except per share data)		Nine Months Ended September 30
			2023				2022			Change
						(Restated)
Revenues
Premiums		$	107,716			$	99,583			8.2	%
Product revenue			14,058				10,841			29.7	%
Service fees			5,981				5,569			7.4	%
Total operating revenue			127,755				115,993			10.1	%
Net investment income			1,296				1,112			16.5	%
Net losses on financial instruments			(358	)			(439	)		NM
Total revenues			128,693				116,666			10.3	%
Expenses
Benefit expense			92,996				86,447			7.6	%
Cost of products sold			12,456				9,389			32.7	%
Operating expense			15,088				13,133			14.9	%
Interest expense			771				622			24.0	%
Amortization of other intangible assets			668				520			28.5	%
Total expenses			121,979				110,111			10.8	%
Income before income tax expense			6,714				6,555			2.4	%
Income tax expense			1,554				1,544			0.6	%
Net income			5,160				5,011			3.0	%
Net (income) loss attributable to noncontrolling interests			(29	)			18			NM
Shareholders' net income		$	5,131			$	5,029			2.0	%
Shareholders' net income per diluted share		$	21.56			$	20.67			4.3	%
Diluted shares			238.0				243.3			(2.2	)%
Benefit expense as a percentage of premiums			86.3	%			86.8	%		(50) bp
Operating expense as a percentage of total operating revenue			11.8	%			11.3	%		50 bp
Income before income tax expense as a percentage of total revenue			5.2	%			5.6	%		(40) bp
"NM" = calculation not meaningful

Elevance Health, Inc.
Consolidated Balance Sheets
(In millions)	September 30, 2023				December 31, 2022
Assets	(Unaudited)				(Restated)
Current assets:
Cash and cash equivalents	$	10,919			$	7,387
Fixed maturity securities		27,811				25,952
Equity securities		165				953
Premium receivables		7,883				7,083
Self-funded receivables		3,756				4,663
Other receivables		5,293				4,298
Other current assets		5,358				5,281
Total current assets		61,185				55,617
Long-term investments:
Fixed maturity securities		816				752
Other invested assets		6,118				5,685
Property and equipment, net		4,248				4,316
Goodwill		25,291				24,383
Other intangible assets		10,491				10,315
Other noncurrent assets		2,329				1,687
Total assets	$	110,478			$	102,755
Liabilities and equity
Liabilities
Current liabilities:
Medical claims payable	$	16,176			$	15,596
Other policyholder liabilities		5,681				5,933
Unearned income		4,332				1,112
Accounts payable and accrued expenses		5,983				5,607
Short-term borrowings		—				265
Current portion of long-term debt		799				1,500
Other current liabilities		10,366				9,683
Total current liabilities		43,337				39,696
Long-term debt, less current portion		24,045				22,349
Reserves for future policy benefits		807				803
Deferred tax liabilities, net		1,779				2,015
Other noncurrent liabilities		1,971				1,562
Total liabilities		71,939				66,425
Shareholders’ equity
Common stock		2				2
Additional paid-in capital		8,830				9,084
Retained earnings		32,103				29,647
Accumulated other comprehensive loss		(2,512	)			(2,490	)
Total shareholders’ equity		38,423				36,243
Noncontrolling interests		116				87
Total equity		38,539				36,330
Total liabilities and equity	$	110,478			$	102,755

Elevance Health, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In millions)	Nine Months Ended September 30
		2023				2022
					(Restated)
Operating activities
Net income	$	5,160			$	5,011
Adjustments to reconcile net income to net cash provided by operating activities:
Net losses on financial instruments		358				439
Equity in net earnings of other invested assets		70				(304	)
Depreciation and amortization		1,321				1,202
Deferred income taxes		(361	)			(183	)
Impairment of property and equipment		446				—
Share-based compensation		217				191
Changes in operating assets and liabilities:
Receivables, net		(727	)			(678	)
Other invested assets		(46	)			46
Other assets		(936	)			(465	)
Policy liabilities		333				1,588
Unearned income		3,220				2,548
Accounts payable and other liabilities		1,717				598
Income taxes		257				(41	)
Other, net		3				(35	)
Net cash provided by operating activities		11,032				9,917
Investing activities
Purchases of investments		(24,337	)			(19,612	)
Proceeds from sale of investments		7,830				9,402
Maturities, calls and redemptions from investments		14,531				7,606
Changes in securities lending collateral		55				(677	)
Purchases of subsidiaries, net of cash acquired		(1,570	)			(623	)
Purchases of property and equipment		(970	)			(854	)
Other, net		(82	)			(91	)
Net cash used in investing activities		(4,543	)			(4,849	)
Financing activities
Net proceeds from commercial paper borrowings		—				375
Net proceeds from (repayments of) short-term borrowings		(265	)			(10	)
Net proceeds from (repayments of) long-term borrowings		666				304
Changes in securities lending payable		(54	)			685
Changes in bank overdrafts		(523	)			181
Repurchase and retirement of common stock		(1,748	)			(1,748	)
Cash dividends		(1,049	)			(924	)
Proceeds from issuance of common stock under employee stock plans		112				152
Taxes paid through withholding of common stock under employee stock plans		(99	)			(91	)
Other, net		5				16
Net cash used in financing activities		(2,955	)			(1,060	)
Effect of foreign exchange rates on cash and cash equivalents		(2	)			(16	)
Change in cash and cash equivalents		3,532				3,992
Cash and cash equivalents at beginning of period		7,387				4,880
Cash and cash equivalents at end of period	$	10,919			$	8,872

Elevance Health, Inc.
Reconciliation of Medical Claims Payable
	Nine Months Ended September 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		91,058				84,177				113,414				100,440				85,094
Prior years redundancies1		(1,342	)			(901	)			(869	)			(1,703	)			(637	)
Total net incurred medical claims		89,716				83,276				112,545				98,737				84,457
Net payments attributable to:
Current year medical claims		77,048				70,453				98,997				88,156				74,629
Prior years medical claims		12,097				11,219				11,600				8,829				7,692
Total net payments		89,145				81,672				110,597				96,985				82,321
Net medical claims payable, end of period		15,913				14,998				15,342				13,261				11,089
Ceded medical claims payable, end of period		4				3				6				21				46
Gross medical claims payable, end of period	$	15,917			$	15,001			$	15,348			$	13,282			$	11,135
Current year medical claims paid as a percentage of current year net incurred medical claims		84.6	%			83.7	%			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		9.6	%			7.3	%			7.0	%			18.1	%			8.0	%
Prior year redundancies in the current year as a percentage of prior year net incurred medical claims		1.2	%			0.9	%			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. Net adjustment items per share may not sum due to rounding.

	Three Months Ended September 30											Nine Months Ended September 30
(In millions, except per share data)		2023				2022			Change				2023				2022			Change
Shareholders' net income - As reported	$	1,289			$	1,618			(20.3	)%		$	5,131			$	5,076			1.1	%
Impact of Accounting Standards Update 2018-12 Adoption		—				(15	)						—				(47	)
Shareholders' net income - Restated	$	1,289			$	1,603			(19.6	)%		$	5,131			$	5,029			2.0	%
Add / (Subtract):
Net losses on financial instruments		124				57							358				439
Amortization of other intangible assets		212				225							668				520
Business optimization charges		697				—							697				—
BCBSA litigation settlement		—				(24	)						—				(24	)
Transaction and integration related costs		73				13							154				36
Litigation expenses		2				6							5				11
Tax impact of non-GAAP adjustments		(270	)			(72	)						(470	)			(261	)
Net adjustment items		838				205							1,412				721
Adjusted shareholders' net income	$	2,127			$	1,808			17.6	%		$	6,543			$	5,750			13.8	%
Shareholders' net income per diluted share - As reported	$	5.45			$	6.68			(18.4	)%		$	21.56			$	20.86			3.4	%
Impact of Accounting Standards Update 2018-12 Adoption		—				(0.06	)						—				(0.19	)
Shareholders' net income per diluted share - Restated		5.45				6.62			(17.7	)%			21.56				20.67			4.3	%
Add / (Subtract):
Net losses on financial instruments		0.52				0.24							1.50				1.80
Amortization of other intangible assets		0.90				0.93							2.81				2.14
Business optimization charges		2.95				—							2.93				—
BCBSA litigation settlement		—				(0.10	)						—				(0.10	)
Transaction and integration related costs		0.31				0.05							0.65				0.15
Litigation expenses		0.01				0.02							0.02				0.05
Tax impact of non-GAAP adjustments		(1.14	)			(0.30	)						(1.97	)			(1.07	)
Net adjustment items		3.54				0.84							5.93				2.96
Adjusted shareholders' net income per diluted share	$	8.99			$	7.46			20.5	%		$	27.49			$	23.63			16.3	%
	Full Year 2023 Outlook
Shareholders' net income per diluted share	Greater than $26.40
Add / (Subtract):
Net losses on financial instruments	$					1.50
Business optimization charges	$					2.93
Transaction and integration related costs	$					0.65
Litigation expenses	$					0.02
Amortization of other intangible assets	$					3.69
Tax impact of non-GAAP adjustments	Approximately $(2.19)
Net adjustment items	$					6.60
Adjusted shareholders' net income per diluted share	Greater Than $33.00
	Three Months Ended September 30											Nine Months Ended September 30
(In millions)		2023				2022			Change				2023				2022			Change
					(Restated)											(Restated)
Income before income tax expense	$	1,654			$	2,127			(22.2	)%		$	6,714			$	6,555			2.4	%
Net investment income		(493	)			(371	)						(1,296	)			(1,112	)
Net losses on financial instruments		124				57							358				439
Interest expense		259				213							771				622
Amortization of other intangible assets		212				225							668				520
Reportable segments operating gain	$	1,756			$	2,251			(22.0	)%		$	7,215			$	7,024			2.7	%

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 undertake to 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 healthcare laws and regulations, 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 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 pharmacy, healthcare 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231017462634/en/

Elevance Health Contacts:

Investor Relations

Stephen Tanal

Stephen.Tanal@elevancehealth.com

Media

Leslie Porras

Leslie.Porras@elevancehealth.com

Source: Elevance Health, Inc.

FAQ

What is Elevance Health's expected net income for 2023?

Elevance Health expects GAAP net income to be greater than $26.40 per share and adjusted net income to be greater than $33.00 per share in 2023.

What was the operating cash flow in Q3 2023?

The operating cash flow was $2.6 billion in Q3 2023.

What was the operating gain in the Health Benefits segment in Q3 2023?

The operating gain in the Health Benefits segment was $1.8 billion in Q3 2023.

What was the operating loss in the Corporate & Other segment in Q3 2023?

The Corporate & Other segment reported an operating loss of $741 million in Q3 2023.

Did Elevance Health repurchase any shares in Q3 2023?

Yes, during Q3 2023, the company repurchased 1.1 million shares of its common stock for $480 million.