INDIANAPOLIS--(BUSINESS WIRE)--Anthem, Inc. (NYSE: ANTM) reported fourth quarter and full year 2021 results reflecting strong financial performance, including double-digit top and bottom line growth.
"2021 was another year of strong growth for Anthem as we continued our transformation from a health benefits company to a lifetime trusted partner in health," said Gail K. Boudreaux, President and CEO. "We begin 2022 with ongoing momentum across all our businesses, and we're confident in our ability to deliver earnings growth consistent with our long-term targeted range as we innovate for consumers and advance our digital platform for health. Anthem is uniquely positioned to achieve our purpose of improving the Health of Humanity thanks to our 98,000 dedicated employees and their unwavering commitment to the customers and communities we serve."
*Refer to GAAP reconciliation tables.
CONSOLIDATED HIGHLIGHTS
Earnings Per Share: GAAP net income was $4.63 per share in the fourth quarter, including net negative adjustment items of $0.51 per share. Adjusted net income was $5.14* per share. Full year GAAP net income was $24.73 per share, including net negative adjustment items of $1.25 per share. Adjusted net income was $25.98* per share. Adjusted net income per share for 2021 grew by 15.6% compared to 2020.
*Please refer to the GAAP reconciliation tables.
Membership: Medical enrollment totaled approximately 45.4 million members as of December 31, 2021, an increase of 2.4 million, or 5.7 percent from the prior year quarter. Government Business enrollment increased by 2.2 million lives compared to the prior year quarter, primarily driven by organic growth in the Medicaid business, aided by the suspension of eligibility recertification efforts in our markets, the acquisition of MMM, the launch of HealthyBlue in North Carolina, and organic growth in our Medicare Advantage business. Commercial & Specialty Business enrollment increased by 249 thousand year over year primarily driven by strong risk-based membership growth, partially offset by in-group attrition in the group fee-based business.
During the fourth quarter of 2021, medical enrollment increased sequentially by 303 thousand driven by organic growth in the Medicaid business, and growth in Commercial risk-based and fee-based membership.
Operating Revenue: Operating revenue was $36.0 billion in the fourth quarter of 2021, an increase of $4.5 billion, or 14.2 percent, from the prior year quarter and 15.9 percent after adjusting for the repeal of the health insurance tax in 2021. Operating revenue for 2021 was $136.9 billion, representing 13.4 percent growth over 2020, and 15.0 percent growth after adjusting for the repeal of the health insurance tax in 2021. The increase for both the quarter and the full year was driven by higher premium revenue due to growth in Medicaid, Medicare and Commercial risk-based membership, and growth in pharmacy product revenue within IngenioRx, partially offset by the repeal of the health insurance tax.
Benefit Expense Ratio: The benefit expense ratio was 89.5 percent in the fourth quarter of 2021, an increase of 60 basis points versus the prior year quarter and a decrease of 90 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 the timing of Medicaid rate actions and reduced costs associated with COVID-related care. The benefit expense ratio was 87.5 percent for the full year of 2021, an increase of 290 basis points year-over-year and an increase of 140 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 increase was primarily driven by a smaller reduction in non-COVID healthcare utilization as compared to the prior year and an increase in costs associated with COVID-related care.
Medical claims reserves established at December 31, 2020 developed better than the Company’s expectations as of December 31, 2021, with the majority offset by rebates, risk-corridors and other related mechanisms.
Days in Claims Payable: Days in Claims Payable was 45.2 days as of December 31, 2021, a decrease of 1.6 days from September 30, 2021 and an increase of 1.8 days as compared to December 31, 2020.
SG&A Expense Ratio: The SG&A expense ratio was 11.7 percent in the fourth quarter of 2021, a decrease of 200 basis points from 13.7 percent in the fourth quarter of 2020. The decrease was primarily driven by growth in operating revenue and the repeal of the health insurance tax in 2021, partially offset by increased spend to support growth and business optimization charges taken in the fourth quarter of 2021. For the full year of 2021, the SG&A expense ratio was 11.6 percent, a decrease of 280 basis points from 14.4 percent in 2020. The decrease was primarily driven by growth in operating revenue, the repeal of the health insurance tax in 2021, and the absence of charges in 2021 for the BCBSA litigation accrual recognized in 2020 and reduced business optimization charges in 2021, partially offset by increased spend to support growth.
Operating Cash Flow: Operating cash flow was $1.7 billion, or 1.5 times net income in the fourth quarter of 2021, a decrease of $2.1 billion as compared to the prior year quarter. The year-on-year decrease was primarily driven by an increase in medical claims payable in the fourth quarter of 2020 compared with a slight decrease in the fourth quarter of 2021, and an increase in receivables. For the full year 2021, operating cash flow was $8.4 billion, or 1.4 times net income.
Share Repurchase Program: During the fourth quarter of 2021, the Company repurchased 1.3 million shares of its common stock for $522 million, at a weighted average price of $417.92. As of December 31, 2021, the Company had approximately $4.2 billion of Board-approved share repurchase authorization remaining.
Cash Dividend: During the fourth quarter of 2021, the Company paid a quarterly dividend of $1.13 per share, representing a distribution of cash totaling $274 million.
On January 25, 2022, the Audit Committee of the Company's Board of Directors declared a first quarter 2022 dividend to shareholders of $1.28 per share, an increase of over 13 percent from the quarterly dividend payment in the fourth quarter. On an annualized basis, the new quarterly dividend equates to $5.12 per share. The first quarter dividend is payable on March 25, 2022, to shareholders of record at the close of business on March 10, 2022.
Investment Portfolio & Capital Position: During the fourth quarter of 2021, the Company recorded net gains of $211 million. During the fourth quarter of 2020, the Company recorded net gains of $5 million. These amounts are excluded from adjusted earnings per share.
As of December 31, 2021, the Company’s net unrealized gain position in the investment portfolio was $648 million, consisting primarily of fixed maturity securities. As of December 31, 2021 cash and investments at the parent company totaled approximately $1.2 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).
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Anthem, Inc. |
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Reportable Segment Highlights |
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(Unaudited) |
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(In millions) |
Three Months Ended December 31 |
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Twelve Months Ended December 31 |
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2021 |
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2020 |
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Change |
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2021 |
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2020 |
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Change |
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Operating Revenue |
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Commercial & Specialty Business |
$9,905 |
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$9,223 |
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7.4 % |
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$38,809 |
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$36,699 |
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5.7 % |
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Government Business |
21,912 |
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18,763 |
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16.8 % |
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82,919 |
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71,572 |
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15.9 % |
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IngenioRx |
6,801 |
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5,863 |
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16.0 % |
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25,431 |
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21,911 |
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16.1 % |
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Other |
2,693 |
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1,780 |
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51.3 % |
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10,250 |
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6,057 |
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69.2 % |
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Eliminations |
(5,293) |
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(4,096) |
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29.2 % |
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(20,466) |
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(15,431) |
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32.6 % |
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Total Operating Revenue1 |
$36,018 |
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$31,533 |
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14.2 % |
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$136,943 |
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$120,808 |
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13.4 % |
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Operating Gain (Loss)3 |
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Commercial & Specialty Business |
$74 |
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$123 |
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(39.8) % |
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$2,753 |
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$2,681 |
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2.7 % |
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Government Business |
748 |
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169 |
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342.6 % |
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3,061 |
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2,444 |
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25.2 % |
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IngenioRx |
427 |
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363 |
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17.6 % |
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1,684 |
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1,361 |
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23.7 % |
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Other |
(61) |
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(50) |
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NM2 |
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(9) |
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(126) |
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NM2 |
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Total Operating Gain1 |
$1,188 |
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$605 |
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96.4 % |
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$7,489 |
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$6,360 |
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17.8 % |
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Operating Margin |
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Commercial & Specialty Business |
0.7 % |
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1.3 % |
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(60) bp |
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7.1 % |
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7.3 % |
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(20) bp |
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Government Business |
3.4 % |
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0.9 % |
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250 bp |
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3.7 % |
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3.4 % |
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30 bp |
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IngenioRx |
6.3 % |
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6.2 % |
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10 bp |
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6.6 % |
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6.2 % |
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40 bp |
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Total Operating Margin1 |
3.3 % |
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1.9 % |
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140 bp |
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5.5 % |
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5.3 % |
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20 bp |
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1. |
See “Basis of Presentation.” |
2. |
"NM" = calculation not meaningful. |
3. |
Operating gain for the three and twelve months ended December 31, 2021 included $187 of charges related to business optimization plans; including $106 for Commercial & Specialty Business; $47 for the Government Business; $2 for IngenioRx; and $32 for the Other segment. Operating gain for the three months ended December 31, 2020 included $46 of charges related to business optimization; including $12 for Commercial & Specialty Business; $22 for the Government Business; $1 for IngenioRx; and $11 for the Other segment. Operating gain for the twelve months ended December 31, 2020 included $653 of charges related to business optimization; including $311 for Commercial & Specialty Business; $205 for the Government Business; $4 for IngenioRx; and $133 for the Other segment. Operating gain for the three months ended December 31, 2020 included a ($46) benefit related to the adjustment of a prior accrual for the BCBSA litigation settlement; including ($42) for Commercial and Specialty Business; and ($4) for the Government Business Division. Operating Gain for the twelve months ended December 31, 2020 included a $548 charge related to the BCBSA litigation settlement accrual; $524 for Commercial & Specialty Business; and $24 for the Government Business. |
Commercial & Specialty Business: Operating gain in the Commercial & Specialty Business segment totaled $74 million in the fourth quarter of 2021, a decrease of $49 million from $123 million in the fourth quarter of 2020. The decrease was driven by higher business optimization expenses in the fourth quarter of 2021, and the impact of the BCBSA litigation settlement accrual adjustment in the fourth quarter of 2020. Absent these items, which are excluded from our adjusted earnings, operating gain increased $87 million due to reduced net costs associated with COVID.
Government Business: Operating gain in the Government Business segment was $748 million in the fourth quarter of 2021, an increase of $579 million from $169 million in the fourth quarter of 2020. The increase was primarily attributable to the timing of Medicaid rate actions and membership growth in the Medicaid and Medicare businesses, including growth resulting from the acquisition of MMM.
IngenioRx: Operating gain was $427 million in the fourth quarter of 2021, an increase of $64 million, or 17.6 percent, from $363 million in the fourth quarter of 2020. The increase was driven by growth in members served by IngenioRx.
Other: The Company reported an operating loss of $61 million in the Other segment for the fourth quarter of 2021, compared with an operating loss of $50 million in the prior year quarter.
OUTLOOK
Full Year 2022:
- GAAP net income is expected to be greater than $26.75 per share, including approximately $1.50 per share of net unfavorable items. Excluding these items, adjusted net income is expected to be greater than $28.25* per share.
- Medical membership is expected to be in the range of 45.6 - 46.2 million. Risk-based membership is expected to be in the range of 19.5 - 19.9 million. Fee-based membership is expected to be in the range of 26.1 - 26.3 million.
- Operating revenue is expected to be approximately $152 billion, including premium revenue of approximately $130 billion.
- Benefit expense ratio is expected to be in the range of 88.0% plus or minus 50 basis points.
- SG&A ratio is expected to be 10.8% plus or minus 50 basis points.
- Operating cash flow is expected to be greater than $6.9 billion.
- Investment income is expected to be $1.1 billion.
- Interest expense is expected to be $840 million.
- Effective tax rate is expected to be between 22.0 - 24.0%.
- Share count is expected to be between 243 - 244 million.
* Refer to the GAAP reconciliation tables.
Basis of Presentation
- Operating revenue and operating gain/loss are the key measures used by management to evaluate performance in each of its reporting segments, allocate resources, set incentive compensation targets and to forecast future operating performance. Operating gain/loss is calculated as total operating revenue less benefit expense, cost of products sold and selling, general and administrative expense. It does not include net investment income, net gains/losses on financial instruments, interest expense, amortization of other intangible assets, gains/losses on extinguishment of debt or income taxes, as these items are managed in a corporate shared service environment and are not the responsibility of operating segment management. Refer to the GAAP reconciliation tables.
- 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 Standard Time (“EST”) to discuss the company’s fourth 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) |
800-570-8796 (Domestic Replay) |
312-470-0178 (International) |
203-369-3293 (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 February 25, 2022. 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 company dedicated to improving lives and communities, and making healthcare simpler. Through its affiliated companies, Anthem serves more than 118 million people, including more than 45 million within its family of health plans. Delivering health beyond healthcare, Anthem is expanding from being a partner in health benefits to a lifetime, trusted health partner. For more information, please visit www.antheminc.com or follow @AnthemInc on Twitter.
Anthem, Inc. |
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Membership Summary |
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(Unaudited and in Thousands) |
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Change from |
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Medical Membership |
December 31, 2021 |
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December 31, 2020 |
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September 30, 2021 |
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December 31,2020 |
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September 30, 2021 |
Commercial & Specialty Business |
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Individual |
759 |
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680 |
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769 |
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11.6 % |
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(1.3) % |
Group Risk-Based |
4,006 |
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3,799 |
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3,946 |
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5.4 % |
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1.5 % |
Commercial Risk-Based |
4,765 |
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4,479 |
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4,715 |
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6.4 % |
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1.1 % |
BlueCard® |
6,178 |
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6,059 |
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6,166 |
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2.0 % |
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0.2 % |
Group Fee-Based |
19,395 |
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19,551 |
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19,370 |
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(0.8) % |
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0.1 % |
Commercial Fee-Based |
25,573 |
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25,610 |
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25,536 |
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(0.1) % |
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0.1 % |
Total Commercial & Specialty Business |
30,338 |
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30,089 |
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30,251 |
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0.8 % |
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0.3 % |
Government Business |
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Medicare Advantage |
1,859 |
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1,428 |
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1,853 |
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30.2 % |
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0.3 % |
Medicare Supplement |
952 |
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933 |
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947 |
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2.0 % |
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0.5 % |
Total Medicare |
2,811 |
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2,361 |
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2,800 |
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19.1 % |
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0.4 % |
Medicaid |
10,600 |
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8,852 |
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10,391 |
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19.7 % |
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2.0 % |
Federal Employees Health Benefits |
1,625 |
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1,623 |
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1,629 |
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0.1 % |
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(0.2) % |
Total Government Business |
15,036 |
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12,836 |
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14,820 |
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17.1 % |
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1.5 % |
Total Medical Membership |
45,374 |
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42,925 |
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45,071 |
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5.7 % |
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0.7 % |
Other Membership |
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Life and Disability Members |
4,782 |
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5,064 |
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4,695 |
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(5.6) % |
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1.9 % |
Dental Members |
6,674 |
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6,385 |
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6,637 |
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4.5 % |
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0.6 % |
Dental Administration Members |
1,491 |
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1,316 |
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1,486 |
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13.3 % |
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0.3 % |
Vision Members |
8,031 |
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7,536 |
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7,974 |
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6.6 % |
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0.7 % |
Medicare Part D Standalone Members |
438 |
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413 |
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438 |
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6.1 % |
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— % |
Anthem, Inc. |
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Consolidated Statements of Income |
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(Unaudited) |
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(In millions, except per share data) |
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Three Months Ended December 31 |
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2021 |
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2020 |
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Change |
Revenues |
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Premiums |
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$ 30,769 |
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$ 27,108 |
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13.5 % |
Product revenue |
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3,525 |
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2,899 |
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21.6 % |
Administrative fees and other revenue |
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1,724 |
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1,526 |
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13.0 % |
Total operating revenue |
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36,018 |
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31,533 |
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14.2 % |
Net investment income |
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352 |
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286 |
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23.1 % |
Net gains on financial instruments |
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211 |
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5 |
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NM |
Total revenues |
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36,581 |
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31,824 |
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14.9 % |
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Expenses |
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Benefit expense |
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27,538 |
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24,088 |
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14.3 % |
Cost of products sold |
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3,070 |
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2,522 |
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21.7 % |
Selling, general and administrative expense |
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4,222 |
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4,318 |
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(2.2) % |
Interest expense |
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200 |
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191 |
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4.7 % |
Amortization of other intangible assets |
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135 |
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92 |
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46.7 % |
Loss on extinguishment of debt |
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16 |
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2 |
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NM |
Total expenses |
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35,181 |
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31,213 |
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12.7 % |
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Income before income tax expense |
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1,400 |
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611 |
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129.1 % |
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Income tax expense |
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275 |
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60 |
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358.3 % |
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Net income |
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1,125 |
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551 |
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104.2 % |
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Net loss attributable to noncontrolling interests |
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12 |
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— |
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NM |
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Shareholders' net income |
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$ 1,137 |
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$ 551 |
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106.4 % |
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Shareholders' net income per diluted share |
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$ 4.63 |
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$ 2.19 |
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111.4 % |
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Diluted shares |
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245.5 |
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251.1 |
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(2.2) % |
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Benefit expense as a percentage of premiums |
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89.5 % |
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88.9 % |
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60 bp |
Selling, general and administrative expense as a percentage of total operating revenue |
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11.7 % |
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13.7 % |
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(200) bp |
Income before income tax expense as a percentage of total revenue |
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3.8 % |
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1.9 % |
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190 bp |
"NM" = calculation not meaningful |
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Anthem, Inc. |
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Consolidated Statements of Income |
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(Unaudited) |
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(In millions, except per share data) |
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Twelve Months Ended December 31 |
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2021 |
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2020 |
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Change |
Revenues |
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Premiums |
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$ 117,373 |
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$ 104,109 |
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12.7 % |
Product revenue |
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12,657 |
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10,384 |
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21.9 % |
Administrative fees and other revenue |
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6,913 |
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6,315 |
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9.5 % |
Total operating revenue |
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136,943 |
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120,808 |
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13.4 % |
Net investment income |
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1,378 |
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877 |
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57.1 % |
Net gains on financial instruments |
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318 |
|
182 |
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74.7 % |
Total revenues |
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138,639 |
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121,867 |
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13.8 % |
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Expenses |
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Benefit expense |
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102,645 |
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88,045 |
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16.6 % |
Cost of products sold |
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10,895 |
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8,953 |
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21.7 % |
Selling, general and administrative expense |
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15,914 |
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17,450 |
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(8.8) % |
Interest expense |
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798 |
|
784 |
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1.8 % |
Amortization of other intangible assets |
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441 |
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361 |
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22.2 % |
Loss on extinguishment of debt |
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21 |
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36 |
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(41.7) % |
Total expenses |
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130,714 |
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115,629 |
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13.0 % |
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Income before income tax expense |
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7,925 |
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6,238 |
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27.0 % |
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Income tax expense |
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1,830 |
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1,666 |
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9.8 % |
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Net income |
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6,095 |
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4,572 |
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33.3 % |
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Net loss attributable to noncontrolling interests |
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9 |
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— |
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NM |
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Shareholders' net income |
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$ 6,104 |
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$ 4,572 |
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33.5 % |
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Shareholders' net income per diluted share |
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$ 24.73 |
|
$ 17.98 |
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37.5 % |
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Diluted shares |
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246.8 |
|
254.3 |
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(2.9) % |
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Benefit expense as a percentage of premiums |
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87.5 % |
|
84.6 % |
|
290 bp |
Selling, general and administrative expense as a percentage of total operating revenue |
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11.6 % |
|
14.4 % |
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(280) bp |
Income before income tax expense as a percentage of total revenue |
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5.7 % |
|
5.1 % |
|
60 bp |
"NM" = calculation not meaningful |
||||||
Anthem, Inc. |
|||
Consolidated Balance Sheets |
|||
|
|||
(In millions) |
December 31,
|
|
December 31,
|
Assets |
(Unaudited) |
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 4,880 |
|
$ 5,741 |
Fixed maturity securities |
26,267 |
|
23,433 |
Equity securities, current |
1,881 |
|
1,559 |
Premium receivables |
5,681 |
|
5,279 |
Self-funded receivables |
4,010 |
|
2,849 |
Other receivables |
3,749 |
|
2,830 |
Other current assets |
4,603 |
|
4,060 |
Total current assets |
51,071 |
|
45,751 |
|
|
|
|
Long-term investments: |
|
|
|
Fixed maturity securities |
632 |
|
562 |
Other invested assets |
5,225 |
|
4,285 |
Property and equipment, net |
3,919 |
|
3,483 |
Goodwill |
24,228 |
|
21,691 |
Other intangible assets |
10,615 |
|
9,405 |
Other noncurrent assets |
1,617 |
|
1,438 |
Total assets |
$ 97,307 |
|
$ 86,615 |
|
|
|
|
Liabilities and equity |
|
|
|
Liabilities |
|
|
|
Current liabilities: |
|
|
|
Medical claims payable |
$ 13,518 |
|
$ 11,359 |
Other policyholder liabilities |
5,521 |
|
4,590 |
Unearned income |
1,153 |
|
1,259 |
Accounts payable and accrued expenses |
4,970 |
|
5,493 |
Short-term borrowings |
275 |
|
— |
Current portion of long-term debt |
1,599 |
|
700 |
Other current liabilities |
7,849 |
|
6,052 |
Total current liabilities |
34,885 |
|
29,453 |
|
|
|
|
Long-term debt, less current portion |
21,157 |
|
19,335 |
Reserves for future policy benefits |
802 |
|
794 |
Deferred tax liabilities, net |
2,652 |
|
2,019 |
Other noncurrent liabilities |
1,683 |
|
1,815 |
Total liabilities |
61,179 |
|
53,416 |
|
|
|
|
Shareholders’ equity |
|
|
|
Common stock |
2 |
|
3 |
Additional paid-in capital |
9,148 |
|
9,244 |
Retained earnings |
27,088 |
|
23,802 |
Accumulated other comprehensive (loss) income |
(178) |
|
150 |
Total shareholders’ equity |
36,060 |
|
33,199 |
Noncontrolling interests |
68 |
|
— |
Total equity |
36,128 |
|
33,199 |
Total liabilities and equity |
$ 97,307 |
|
$ 86,615 |
Anthem, Inc. |
|||
Consolidated Statements of Cash Flows |
|||
(Unaudited) |
|||
|
|
|
|
(In millions) |
Twelve Months Ended December 31 |
||
|
2021 |
|
2020 |
Operating activities |
|
|
|
Net income |
$6,095 |
|
$4,572 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
Net gains on financial instruments |
(318) |
|
(182) |
Depreciation and amortization |
1,302 |
|
1,154 |
Deferred income taxes |
173 |
|
(540) |
Impairment of property and equipment |
73 |
|
198 |
Share-based compensation |
255 |
|
283 |
Changes in operating assets and liabilities: |
|
|
|
Receivables, net |
(2,138) |
|
(256) |
Other invested assets |
(70) |
|
(32) |
Other assets |
190 |
|
(283) |
Policy liabilities |
2,597 |
|
3,528 |
Unearned income |
(113) |
|
202 |
Accounts payable and other liabilities |
719 |
|
1,978 |
Income taxes |
140 |
|
72 |
Other, net |
(541) |
|
(6) |
Net cash provided by operating activities |
8,364 |
|
10,688 |
|
|
|
|
Investing activities |
|
|
|
Purchases of investments |
(18,669) |
|
(19,492) |
Proceeds from sale of investments |
10,269 |
|
11,318 |
Maturities, calls and redemptions from investments |
4,344 |
|
4,741 |
Changes in securities lending collateral |
(956) |
|
(849) |
Purchases of subsidiaries, net of cash acquired |
(3,476) |
|
(1,976) |
Purchases of property and equipment |
(1,087) |
|
(1,021) |
Other, net |
(63) |
|
(45) |
Net cash used in investing activities |
(9,638) |
|
(7,324) |
|
|
|
|
Financing activities |
|
|
|
Net proceeds from (repayments of) commercial paper borrowings |
50 |
|
(150) |
Net proceeds from (repayments of) short-term borrowings |
275 |
|
(700) |
Net proceeds from long-term borrowings |
2,394 |
|
552 |
Changes in securities lending payable |
956 |
|
849 |
Repurchase and retirement of common stock |
(1,900) |
|
(2,700) |
Cash dividends |
(1,104) |
|
(954) |
Proceeds from issuance of common stock under employee stock plans |
203 |
|
176 |
Taxes paid through withholding of common stock under employee stock plans |
(102) |
|
(128) |
Other, net |
(349) |
|
488 |
Net cash provided by (used in) financing activities |
423 |
|
(2,567) |
|
|
|
|
Effect of foreign exchange rates on cash and cash equivalents |
(10) |
|
7 |
|
|
|
|
Change in cash and cash equivalents |
(861) |
|
804 |
Cash and cash equivalents at beginning of period |
5,741 |
|
4,937 |
|
|
|
|
Cash and cash equivalents at end of period |
$4,880 |
|
$5,741 |
Anthem, Inc. |
|||||
Reconciliation of Medical Claims Payable |
|||||
|
|||||
|
Years Ended December 31 |
||||
|
2021 |
|
2020 |
|
2019 |
(In millions) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Gross medical claims payable, beginning of year |
$ 11,135 |
|
$ 8,647 |
|
$ 7,266 |
Ceded medical claims payable, beginning of year |
(46) |
|
(33) |
|
(34) |
Net medical claims payable, beginning of year |
11,089 |
|
8,614 |
|
7,232 |
|
|
|
|
|
|
Business combinations and purchase adjustments |
420 |
|
339 |
|
— |
|
|
|
|
|
|
Net incurred medical claims: |
|
|
|
|
|
Current year |
100,440 |
|
85,094 |
|
78,695 |
Prior years redundancies(1) |
(1,703) |
|
(637) |
|
(500) |
Total net incurred medical claims |
98,737 |
|
84,457 |
|
78,195 |
|
|
|
|
|
|
Net payments attributable to: |
|
|
|
|
|
Current year medical claims |
88,156 |
|
74,629 |
|
70,294 |
Prior years medical claims |
8,829 |
|
7,692 |
|
6,519 |
Total net payments |
96,985 |
|
82,321 |
|
76,813 |
|
|
|
|
|
|
Net medical claims payable, end of year |
13,261 |
|
11,089 |
|
8,614 |
Ceded medical claims payable, end of year |
21 |
|
46 |
|
33 |
Gross medical claims payable, end of year* |
$ 13,282 |
|
$ 11,135 |
|
$ 8,647 |
|
|
|
|
|
|
Current year medical claims paid as a percentage of current year net incurred medical claims |
87.8 % |
|
87.7 % |
|
89.3 % |
|
|
|
|
|
|
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 |
18.1 % |
|
8.0 % |
|
7.4 % |
|
|
|
|
|
|
Prior year redundancies in the current year as a percentage of prior year net incurred medical claims |
2.0 % |
|
0.8 % |
|
0.7 % |
|
|
|
|
|
|
(1) Negative amounts reported for net incurred medical claims related to prior years result from claims being settled for
|
|||||
* Excludes insurance lines other than short duration. |
|
|
|
|
|
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 December 31 |
|
|
|
Twelve Months Ended December 31 |
|
|
||||
(In millions, except per share data) |
2021 |
|
2020 |
|
Change |
|
2021 |
|
2020 |
|
Change |
Shareholders' net income |
$ 1,137 |
|
$ 551 |
|
106.4 % |
|
$ 6,104 |
|
$ 4,572 |
|
33.5 % |
Add / (Subtract): |
|
|
|
|
|
|
|
|
|
|
|
Net gains on financial instruments |
(211) |
|
(5) |
|
|
|
(318) |
|
(182) |
|
|
Amortization of other intangible assets |
135 |
|
92 |
|
|
|
441 |
|
361 |
|
|
Loss on extinguishment of debt |
16 |
|
2 |
|
|
|
21 |
|
36 |
|
|
Business optimization charges |
187 |
|
46 |
|
|
|
187 |
|
653 |
|
|
BCBSA litigation settlement |
— |
|
(46) |
|
|
|
— |
|
548 |
|
|
Transaction and integration related costs |
19 |
|
22 |
|
|
|
54 |
|
49 |
|
|
Litigation expenses |
27 |
|
6 |
|
|
|
42 |
|
40 |
|
|
Tax impact of non-GAAP adjustments |
(49) |
|
(31) |
|
|
|
(120) |
|
(360) |
|
|
Net adjustment items |
124 |
|
86 |
|
|
|
307 |
|
1,145 |
|
|
Adjusted shareholders' net income |
$ 1,261 |
|
$ 637 |
|
98.0 % |
|
$ 6,411 |
|
$ 5,717 |
|
12.1 % |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' net income per diluted share |
$ 4.63 |
|
$ 2.19 |
|
111.4 % |
|
$ 24.73 |
|
$ 17.98 |
|
37.5 % |
Add / (Subtract): |
|
|
|
|
|
|
|
|
|
|
|
Net gains on financial instruments |
(0.86) |
|
(0.02) |
|
|
|
(1.29) |
|
(0.72) |
|
|
Amortization of other intangible assets |
0.55 |
|
0.37 |
|
|
|
1.79 |
|
1.42 |
|
|
Loss on extinguishment of debt |
0.07 |
|
0.01 |
|
|
|
0.09 |
|
0.14 |
|
|
Business optimization charges |
0.76 |
|
0.18 |
|
|
|
0.76 |
|
2.57 |
|
|
BCBSA litigation settlement |
— |
|
(0.18) |
|
|
|
— |
|
2.15 |
|
|
Transaction and integration related costs |
0.08 |
|
0.09 |
|
|
|
0.22 |
|
0.19 |
|
|
Litigation expenses |
0.11 |
|
0.02 |
|
|
|
0.17 |
|
0.16 |
|
|
Tax impact of non-GAAP adjustments |
(0.20) |
|
(0.12) |
|
|
|
(0.49) |
|
(1.42) |
|
|
Rounding impact |
— |
|
— |
|
|
|
— |
|
0.01 |
|
|
Net adjustment items |
0.51 |
|
0.35 |
|
|
|
1.25 |
|
4.50 |
|
|
Adjusted shareholders' net income per diluted share |
$ 5.14 |
|
$ 2.54 |
|
102.4 % |
|
$ 25.98 |
|
$ 22.48 |
|
15.6 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year 2022 Outlook |
|
|
||||
Shareholders' net income per diluted share |
|
|
|
|
Greater than $26.75 |
|
|
||||
Add / (Subtract): |
|
|
|
|
|
|
|
||||
Amortization of other intangible assets |
|
|
|
|
Approximately $2.15 |
|
|
||||
Tax impact of non-GAAP adjustments |
|
|
|
|
Approximately $(0.65) |
|
|
||||
Net adjustment items |
|
|
|
|
Approximately $1.50 |
|
|
||||
Adjusted shareholders' net income per diluted share |
|
|
|
|
Greater than $28.25 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31 |
|
|
|
Twelve Months Ended December 31 |
|
|
||||
(In millions) |
2021 |
|
2020 |
|
Change |
|
2021 |
|
2020 |
|
Change |
Reportable segments operating gain |
$ 1,188 |
|
$ 605 |
|
96.4 % |
|
$ 7,489 |
|
$ 6,360 |
|
17.8 % |
Net investment income |
352 |
|
286 |
|
|
|
1,378 |
|
877 |
|
|
Net gains on financial instruments |
211 |
|
5 |
|
|
|
318 |
|
182 |
|
|
Interest expense |
(200) |
|
(191) |
|
|
|
(798) |
|
(784) |
|
|
Amortization of other intangible assets |
(135) |
|
(92) |
|
|
|
(441) |
|
(361) |
|
|
Loss on extinguishment of debt |
(16) |
|
(2) |
|
|
|
(21) |
|
(36) |
|
|
Income before income tax expense |
$ 1,400 |
|
$ 611 |
|
129.1 % |
|
$ 7,925 |
|
$ 6,238 |
|
27.0 % |
Anthem, Inc. |
||||||
Financial Guidance Summary |
||||||
(Unaudited) |
||||||
|
|
|
|
|
|
|
|
|
Full Year 2021 Actual |
|
Full Year 2022 Outlook |
|
Approximate Change |
Year-End Medical Enrollment |
|
|
|
|
|
|
Fee-Based |
|
25,586 |
|
26,100 - 26,300 |
|
514k -714k |
Risk-Based |
|
19,788 |
|
19,500 - 19,900 |
|
(288k)-112k |
Total |
|
45,374 |
|
45,600 - 46,200 |
|
226k - 826k |
|
|
|
|
|
|
|
Operating Revenue |
|
$136.9 billion |
|
$152 billion |
|
Approximately $15.1 billion or 11.0% |
|
|
|
|
|
|
|
Premium Revenue |
|
$117.4 billion |
|
$130 billion |
|
Approximately $12.6 billion or 10.7% |
|
|
|
|
|
|
|
Benefit Expense Ratio |
|
87.5% |
|
88.0% +/- 50 bps |
|
50 bps +/- 50 bps |
|
|
|
|
|
|
|
SG&A Expense Ratio |
|
11.6% |
|
10.8% +/- 50 bps |
|
(80) bps +/- 50 bps |
|
|
|
|
|
|
|
Operating Gain |
|
$7.5 billion |
|
Greater than $8.4 billion |
|
Greater than $900 million or 12.0% |
|
|
|
|
|
|
|
Other Pre-Tax Items: |
|
|
|
|
|
|
Net Investment income |
|
$1,378 million |
|
$1,100 million |
|
($278) million |
Interest Expense |
|
($798) million |
|
($840) million |
|
($42) million |
Amortization of Intangible Assets |
|
($441) million |
|
($522) million |
|
($81) million |
Net Pre-Tax Expense |
|
$139 million |
|
($262) million |
|
($401) million |
|
|
|
|
|
|
|
Effective Tax Rate |
|
23.1% |
|
22.0% - 24.0% |
|
(1.1%) - 0.9% |
|
|
|
|
|
|
|
GAAP EPS |
|
$24.73 |
|
Greater than $26.75 |
|
8.2% or better |
|
|
|
|
|
|
|
Adjusted EPS |
|
$25.98 |
|
Greater than $28.25 |
|
8.8% or better |
|
|
|
|
|
|
|
Diluted Shares |
|
246.8 million |
|
243 - 244 million |
|
(1.5%) - (1.1%) |
|
|
|
|
|
|
|
Operating Cash Flow |
|
$8.4 billion |
|
Greater than $6.9 billion |
|
($1.5) billion or better |
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, state and international law and 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; the impact of a cyber-attack or other cyber security breach resulting in 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 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; 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.