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Anthem Reports Third Quarter 2021 Results, Raises Full Year Outlook
  • Third quarter GAAP net income was $6.13 per share, including net negative adjustment items of $0.66 per share. Adjusted net income was $6.79* per share.
  • Operating revenue grew by 16.0% over the prior year quarter to $35.5 billion, or 17.5% adjusted for the repeal of the health insurance tax.
  • Medical enrollment increased by 2.4 million members year over year and 730 thousand members in the third quarter to 45.1 million members.
  • Fourth quarter 2021 dividend of $1.13 per share declared to shareholders.
  • Raising full year adjusted net income outlook from greater than $25.50* per share to greater than $25.85* per share.

INDIANAPOLIS--(BUSINESS WIRE)--Oct. 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."

*Refer to GAAP reconciliation tables.

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.

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).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anthem, Inc.

 

 

Reportable Segment Highlights

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

Three Months Ended September 30

 

Nine Months Ended September 30

 

 

 

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

Operating Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

$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)

 

NM2

 

(15,173)

 

(11,335)

 

NM2

 

 

Total Operating Revenue1

$35,548

 

$30,649

 

16.0

%

 

$100,925

 

$89,275

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Gain (Loss)3

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

$620

 

($234)

 

NM2

 

$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)

 

NM2

 

52

 

(76)

 

NM2

 

 

Total Operating Gain1

$2,059

 

$201

 

924.4

%

 

$6,301

 

$5,755

 

9.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Specialty Business

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 Margin1

5.8

%

 

0.7

%

 

510 bp

 

6.2

%

 

6.4

%

 

(20) bp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.

See “Basis of Presentation.”

2.

"NM" = calculation not meaningful.

3.

Operating gain for the three months ended September 30, 2020 included $607 related to business optimization charges; $299 for Commercial & Specialty Business; $183 for the Government Business; $3 for IngenioRx; and $122 for the Other segment. Operating gain for the three months ended September 30, 2020 included $594 related to the BCBSA litigation settlement accrual; $566 for the Commercial & Specialty Business and $28 for the Government Business.

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.

OUTLOOK

Full Year 2021:

  • GAAP net income is now expected to be greater than $24.70 per share, including approximately $1.15 per share of net unfavorable items. Excluding these items, adjusted net income is now expected to be greater than $25.85* per share.
  • Operating cash flow is now expected to be greater than $6.0 billion.
  • Investment income is now expected to be approximately $1.2 billion.

* Refer to the GAAP reconciliation tables.

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 realized 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)

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.

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.

Anthem, Inc.

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

%

Anthem, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

(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

Anthem, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

(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

 

(In millions)

September 30,
2021

 

December 31,
2020

Assets

(Unaudited)

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

5,490

 

 

$

5,741

 

Fixed maturity securities

26,348

 

 

23,433

 

Equity securities, current

2,119

 

 

1,559

 

Premium receivables

6,008

 

 

5,279

 

Self-funded receivables

3,349

 

 

2,849

 

Other receivables

3,450

 

 

2,830

 

Other current assets

5,140

 

 

4,060

 

Total current assets

51,904

 

 

45,751

 

 

 

 

 

Long-term investments:

 

 

 

Fixed maturity securities

625

 

 

562

 

Other invested assets

4,959

 

 

4,285

 

Property and equipment, net

3,835

 

 

3,483

 

Goodwill

24,184

 

 

21,691

 

Other intangible assets

10,749

 

 

9,405

 

Other noncurrent assets

1,804

 

 

1,438

 

Total assets

$

98,060

 

 

$

86,615

 

 

 

 

 

Liabilities and equity

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Medical claims payable

$

13,562

 

 

$

11,359

 

Other policyholder liabilities

5,201

 

 

4,590

 

Unearned income

954

 

 

1,259

 

Accounts payable and accrued expenses

5,960

 

 

5,493

 

Short-term borrowings

175

 

 

 

Current portion of long-term debt

849

 

 

700

 

Other current liabilities

8,461

 

 

6,052

 

Total current liabilities

35,162

 

 

29,453

 

 

 

 

 

Long-term debt, less current portion

21,761

 

 

19,335

 

Reserves for future policy benefits

788

 

 

794

 

Deferred tax liabilities, net

2,629

 

 

2,019

 

Other noncurrent liabilities

1,912

 

 

1,815

 

Total liabilities

62,252

 

 

53,416

 

 

 

 

 

Shareholders’ equity

 

 

 

Common stock

2

 

 

3

 

Additional paid-in capital

9,138

 

 

9,244

 

Retained earnings

26,700

 

 

23,802

 

Accumulated other comprehensive (loss) income

(103

)

 

150

 

Total shareholders’ equity

35,737

 

 

33,199

 

Noncontrolling interests

71

 

 

 

Total equity

35,808

 

 

33,199

 

Total liabilities and equity

$

98,060

 

 

$

86,615

 

Anthem, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

(In millions)

Nine Months Ended September 30

 

2021

 

2020

Operating activities

 

 

 

Net income

$4,970

 

 

$4,021

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Net realized gains on financial instruments

(107

)

 

 

(177

)

 

Depreciation and amortization

942

 

 

 

864

 

 

Deferred income taxes

114

 

 

 

(102

)

 

Impairment of property and equipment

 

 

 

195

 

 

Share-based compensation

196

 

 

 

214

 

 

Changes in operating assets and liabilities:

 

 

 

Receivables, net

(1,751

)

 

 

(845

)

 

Other invested assets

(56

)

 

 

6

 

 

Other assets

(470

)

 

 

(988

)

 

Policy liabilities

2,328

 

 

 

1,624

 

 

Unearned income

(308

)

 

 

(95

)

 

Accounts payable and other liabilities

1,093

 

 

 

1,953

 

 

Income taxes

168

 

 

 

104

 

 

Other, net

(427

)

 

 

101

 

 

Net cash provided by operating activities

6,692

 

 

 

6,875

 

 

 

 

 

 

Investing activities

 

 

 

Purchases of investments

(15,130

)

 

 

(16,708

)

 

Proceeds from sale of investments

8,339

 

 

 

8,739

 

 

Maturities, calls and redemptions from investments

3,388

 

 

 

3,763

 

 

Changes in securities lending collateral

(1,030

)

 

 

(668

)

 

Purchases of subsidiaries, net of cash acquired

(3,442

)

 

 

(1,973

)

 

Purchases of property and equipment

(747

)

 

 

(743

)

 

Other, net

(50

)

 

 

(39

)

 

Net cash used in investing activities

(8,672

)

 

 

(7,629

)

 

 

 

 

 

Financing activities

 

 

 

Net (repayments of) commercial paper borrowings

(150

)

 

 

(400

)

 

Net proceeds from (repayments of) short-term borrowings

175

 

 

 

(550

)

 

Net proceeds from long-term borrowings

2,508

 

 

 

1,521

 

 

Changes in securities lending payable

1,030

 

 

 

668

 

 

Repurchase and retirement of common stock

(1,378

)

 

 

(1,342

)

 

Cash dividends

(831

)

 

 

(720

)

 

Proceeds from issuance of common stock under employee stock plans

161

 

 

 

112

 

 

Taxes paid through withholding of common stock under employee stock plans

(101

)

 

 

(112

)

 

Other, net

324

 

 

 

623

 

 

Net cash provided by (used in) financing activities

1,738

 

 

 

(200

)

 

 

 

 

 

Effect of foreign exchange rates on cash and cash equivalents

(9

)

 

 

1

 

 

 

 

 

 

Change in cash and cash equivalents

(251

)

 

 

(953

)

 

Cash and cash equivalents at beginning of period

5,741

 

 

 

4,937

 

 

 

 

 

 

Cash and cash equivalents at end of period

$5,490

 

 

$3,984

 

Anthem, Inc.

Reconciliation of Medical Claims Payable

 

 

Nine Months Ended
September 30

 

Years Ended December 31

 

2021

 

2020

 

2020

 

2019

 

2018

(In millions)

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross medical claims payable, beginning of period

$

11,135

 

 

$

8,647

 

 

$

8,647

 

 

$

7,266

 

 

$

7,814

 

Ceded medical claims payable, beginning of period

(46

)

 

(33

)

 

(33

)

 

(34

)

 

(105

)

Net medical claims payable, beginning of period

11,089

 

 

8,614

 

 

8,614

 

 

7,232

 

 

7,709

 

 

 

 

 

 

 

 

 

 

 

Business combinations and purchase adjustments

420

 

 

339

 

 

339

 

 

 

 

199

 

 

 

 

 

 

 

 

 

 

 

Net incurred medical claims:

 

 

 

 

 

 

 

 

 

Current year

74,097

 

 

61,977

 

 

85,094

 

 

78,695

 

 

69,581

 

Prior years redundancies(1)

(1,822

)

 

(700

)

 

(637

)

 

(500

)

 

(930

)

Total net incurred medical claims

72,275

 

 

61,277

 

 

84,457

 

 

78,195

 

 

68,651

 

 

 

 

 

 

 

 

 

 

 

Net payments attributable to:

 

 

 

 

 

 

 

 

 

Current year medical claims

62,123

 

 

52,879

 

 

74,629

 

 

70,294

 

 

62,748

 

Prior years medical claims

8,400

 

 

7,489

 

 

7,692

 

 

6,519

 

 

6,579

 

Total net payments

70,523

 

 

60,368

 

 

82,321

 

 

76,813

 

 

69,327

 

 

 

 

 

 

 

 

 

 

 

Net medical claims payable, end of period

13,261

 

 

9,862

 

 

11,089

 

 

8,614

 

 

7,232

 

Ceded medical claims payable, end of period

38

 

 

129

 

 

46

 

 

33

 

 

34

 

Gross medical claims payable, end of period

$

13,299

 

 

$

9,991

 

 

$

11,135

 

 

$

8,647

 

 

$

7,266

 

 

 

 

 

 

 

 

 

 

 

Current year medical claims paid as a percentage of current year net incurred medical claims

83.8

%

 

85.3

%

 

87.7

%

 

89.3

%

 

90.2

%

 

 

 

 

 

 

 

 

 

 

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

19.7

%

 

8.8

%

 

8.0

%

 

7.4

%

 

13.7

%

 

 

 

 

 

 

 

 

 

 

Prior year redundancies in the current year as a percentage of prior year net incurred medical claims

2.2

%

 

0.9

%

 

0.8

%

 

0.7

%

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Negative amounts reported for net incurred medical claims related to prior years result from claims being settled for amounts less than originally estimated.

Anthem, Inc.
GAAP Reconciliation
(Unaudited)

Anthem, 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 Anthem, Inc.’s financial results. A reconciliation of Operating Revenue to Total Revenue is set forth in the Consolidated Statements of Income herein. A reconciliation of the non-GAAP measures to the most directly comparable measures calculated in accordance with GAAP, together with a reconciliation of reportable segments operating gain to income before income tax expense, is reported below. Prior amounts may be grouped differently to conform to current presentation.

 

Three Months Ended
September 30

 

 

 

Nine Months Ended
September 30

 

 

(In millions, except per share data)

2021

 

2020

 

 

Change

 

2021

 

2020

 

Change

Shareholders' net income

$

1,509

 

 

$

222

 

 

579.7

%

 

$

4,967

 

 

$

4,021

 

 

23.5

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Net realized losses (gains) on financial instruments

61

 

 

(229

)

 

 

 

(107

)

 

(177

)

 

 

Amortization of other intangible assets

136

 

 

93

 

 

 

 

306

 

 

269

 

 

 

Loss on extinguishment of debt

 

 

30

 

 

 

 

5

 

 

34

 

 

 

Business optimization charges

 

 

607

 

 

 

 

 

 

607

 

 

 

BCBSA litigation settlement

 

 

594

 

 

 

 

 

 

594

 

 

 

Transaction and integration related costs

14

 

 

4

 

 

 

 

35

 

 

27

 

 

 

Litigation expenses

3

 

 

5

 

 

 

 

15

 

 

34

 

 

 

Tax impact of non-GAAP adjustments

(52

)

 

(258

)

 

 

 

(71

)

 

(329

)

 

 

Net adjustment items

162

 

 

846

 

 

 

 

183

 

 

1,059

 

 

 

Adjusted shareholders' net income

$

1,671

 

 

$

1,068

 

 

56.5

%

 

$

5,150

 

 

$

5,080

 

 

1.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' net income per diluted share

$

6.13

 

 

$

0.87

 

 

604.6

%

 

$

20.09

 

 

$

15.75

 

 

27.6

%

Add / (Subtract):

 

 

 

 

 

 

 

 

 

 

 

Net realized losses (gains) on financial instruments

0.25

 

 

(0.90

)

 

 

 

(0.43

)

 

(0.69

)

 

 

Amortization of other intangible assets

0.55

 

 

0.37

 

 

 

 

1.24

 

 

1.05

 

 

 

Loss on extinguishment of debt

 

 

0.12

 

 

 

 

0.02

 

 

0.13

 

 

 

Business optimization charges

 

 

2.39

 

 

 

 

 

 

2.38

 

 

 

BCBSA litigation settlement

 

 

2.34

 

 

 

 

 

 

2.33

 

 

 

Transaction and integration related costs

0.06

 

 

0.02

 

 

 

 

0.14

 

 

0.11

 

 

 

Litigation expenses

0.01

 

 

0.02

 

 

 

 

0.06

 

 

0.13

 

 

 

Tax impact of non-GAAP adjustments

(0.21

)

 

(1.01

)

 

 

 

(0.29

)

 

(1.29

)

 

 

Rounding impact

 

 

(0.02

)

 

 

 

 

 

 

 

 

Net adjustment items

0.66

 

 

3.33

 

 

 

 

0.74

 

 

4.15

 

 

 

Adjusted shareholders' net income per diluted share

$

6.79

 

 

$

4.20

 

 

61.7

%

 

$

20.83

 

 

$

19.90

 

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year 2021 Outlook

 

 

 

 

 

 

Shareholders' net income per diluted share

Greater than $24.70

 

 

 

 

 

 

Add / (Subtract):

 

 

 

 

 

 

 

Net realized gains on financial instruments

($0.43

)

 

 

 

 

 

 

Loss on extinguishment of debt

$0.02

 

 

 

 

 

 

 

Transaction and integration related costs

$0.14

 

 

 

 

 

 

 

Litigation expenses

$0.06

 

 

 

 

 

 

 

Amortization of other intangible assets

Approximately $1.79

 

 

 

 

 

 

Tax impact of non-GAAP adjustments

Approximately $(0.43)

 

 

 

 

 

 

Net adjustment items

Approximately $1.15

 

 

 

 

 

 

Adjusted shareholders' net income per diluted share

Greater than $25.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30

 

 

 

Nine Months Ended
September 30

 

 

(In millions)

2021

 

2020

 

 

Change

 

2021

 

2020

 

Change

Reportable segments operating gain

$

2,059

 

 

$

201

 

 

924.4

%

 

$

6,301

 

 

$

5,755

 

 

9.5

%

Net investment income

335

 

 

280

 

 

 

 

1,026

 

 

591

 

 

 

Net realized (losses) gains on financial instruments

(61

)

 

229

 

 

 

 

107

 

 

177

 

 

 

Interest expense

(201

)

 

(198

)

 

 

 

(598

)

 

(593

)

 

 

Amortization of other intangible assets

(136

)

 

(93

)

 

 

 

(306

)

 

(269

)

 

 

Loss on extinguishment of debt

 

 

(30

)

 

 

 

(5

)

 

(34

)

 

 

Income before income tax expense

$

1,996

 

 

$

389

 

 

413.1

%

 

$

6,525

 

 

$

5,627

 

 

16.0

%

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 otherwise required by federal securities laws, we do not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof. These risks and uncertainties include, but are not limited to: the impact of large scale medical emergencies, such as public health epidemics and pandemics, including COVID-19, and catastrophes; trends in healthcare costs and utilization rates; our ability to secure sufficient premium rates, including regulatory approval for and implementation of such rates; the impact of federal and state regulation, including ongoing changes in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended; changes in economic and market conditions, as well as regulations that may negatively affect our liquidity and investment portfolios; our ability to contract with providers on cost-effective and competitive terms; competitive pressures and our ability to adapt to changes in the industry and develop and implement strategic growth opportunities; reduced enrollment; unauthorized disclosure of member or employee sensitive or confidential information, including the impact and outcome of any investigations, inquiries, claims and litigation related thereto; 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; risks and uncertainties related to our pharmacy benefit management (“PBM”), business including non-compliance by any party with the PBM services agreement between us and CaremarkPCS Health, L.L.C.; medical malpractice or professional liability claims or other risks related to healthcare and PBM services provided by our subsidiaries; general risks associated with mergers, acquisitions, joint ventures and strategic alliances; changes in U.S. tax laws; 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; 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; failure to effectively maintain and modernize our information systems; events that may negatively affect our licenses with the Blue Cross and Blue Shield Association; the impact of international laws and regulations; intense competition to attract and retain employees; and various laws and provisions in our governing documents that may prevent or discourage takeovers and business combinations.

Anthem Contacts:
Investor Relations
Stephen Tanal
Stephen.Tanal@anthem.com

Media
Michelle Vanstory
Michelle.Vanstory@anthem.com

Source: Anthem, Inc.