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Anthem, Inc. (ANTM) SEC Filing 8-K Material Event for the period ending Wednesday, January 26, 2022

Anthem, Inc.

CIK: 1156039 Ticker: ANTM

Exhibit 99.1

 

LOGO

 

LOGO

ANTHEM REPORTS FOURTH QUARTER AND FULL YEAR 2021 RESULTS

 

   

Fourth quarter GAAP net income was $4.63 per share, 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.

 

   

Fourth quarter operating revenue grew by 14.2% over the prior year quarter to $36.0 billion. Full year operating revenue grew 13.4% year-over-year to $136.9 billion.

 

   

Medical enrollment increased by 2.4 million members year-over-year and 303 thousand members in the fourth quarter to 45.4 million members.

 

   

Full year 2022 GAAP net income is expected to be greater than $26.75 per share. Adjusted net income is expected to be greater than $28.25* per share.

 

   

Quarterly dividend increased by greater than 13% to $1.28 per share.

Indianapolis, Ind. - January 26, 2022 - 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 on page 15.

 

1


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 on page 15.

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.

 

2


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.

 

3


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 December 31     Twelve Months Ended December 31  
     2021     2020     Change     2021     2020     Change  

Operating Revenue

            

Commercial & Specialty Business

   $ 9,905     $ 9,223       7.4   $ 38,809     $ 36,699       5.7

Government Business

     21,912       18,763       16.8     82,919       71,572       15.9

IngenioRx

     6,801       5,863       16.0     25,431       21,911       16.1

Other

     2,693       1,780       51.3     10,250       6,057       69.2

Eliminations

     (5,293     (4,096     29.2     (20,466     (15,431     32.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Revenue1

   $ 36,018     $ 31,533       14.2   $ 136,943     $ 120,808       13.4

Operating Gain (Loss)3

            

Commercial & Specialty Business

   $ 74     $ 123       (39.8 )%    $ 2,753     $ 2,681       2.7

Government Business

     748       169       342.6     3,061       2,444       25.2

IngenioRx

     427       363       17.6     1,684       1,361       23.7

Other

     (61     (50     NM 2      (9     (126     NM 2 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Gain1

   $ 1,188     $ 605       96.4   $ 7,489     $ 6,360       17.8

Operating Margin

            

Commercial & Specialty Business

     0.7     1.3     (60)  bp      7.1     7.3     (20)  bp 

Government Business

     3.4     0.9     250  bp      3.7     3.4     30  bp 

IngenioRx

     6.3     6.2     10  bp      6.6     6.2     40  bp 

Total Operating Margin1

     3.3     1.9     140  bp      5.5     5.3     20  bp 

 

1.

See “Basis of Presentation” on page 7 herein.

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.

 

4


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.

 

5


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 on page 15.

 

6


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 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 page 15 for 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 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.

 

Anthem Contacts:   
Investor Relations    Media
Stephen Tanal    Michelle Vanstory
Stephen.Tanal@anthem.com    Michelle.Vanstory@anthem.com

 

7


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.

 

8


Anthem, Inc.

Membership Summary

(Unaudited and in Thousands)

 

                          Change from  
     December 31,
2021
     December 31,
2020
     September 30,
2021
     December 31,
2020
    September 30,
2021
 

Medical Membership

             

Commercial & Specialty Business

             

Individual

     759        680        769        11.6     (1.3 )% 

Group Risk-Based

     4,006        3,799        3,946        5.4     1.5
  

 

 

    

 

 

    

 

 

      

Commercial Risk-Based

     4,765        4,479        4,715        6.4     1.1

BlueCard®

     6,178        6,059        6,166        2.0     0.2

Group Fee-Based

     19,395        19,551        19,370        (0.8 )%      0.1
  

 

 

    

 

 

    

 

 

      

Commercial Fee-Based

     25,573        25,610        25,536        (0.1 )%      0.1
  

 

 

    

 

 

    

 

 

      

Total Commercial & Specialty Business

     30,338        30,089        30,251        0.8     0.3

Government Business

             

Medicare Advantage

     1,859        1,428        1,853        30.2     0.3

Medicare Supplement

     952        933        947        2.0     0.5
  

 

 

    

 

 

    

 

 

      

Total Medicare

     2,811        2,361        2,800        19.1     0.4

Medicaid

     10,600        8,852        10,391        19.7     2.0

Federal Employees Health Benefits

     1,625        1,623        1,629        0.1     (0.2 )% 
  

 

 

    

 

 

    

 

 

      

Total Government Business

     15,036        12,836        14,820        17.1     1.5
  

 

 

    

 

 

    

 

 

      

Total Medical Membership

     45,374        42,925        45,071        5.7     0.7
  

 

 

    

 

 

    

 

 

      

Other Membership

             

Life and Disability Members

     4,782        5,064        4,695        (5.6 )%      1.9

Dental Members

     6,674        6,385        6,637        4.5     0.6

Dental Administration Members

     1,491        1,316        1,486        13.3     0.3

Vision Members

     8,031        7,536        7,974        6.6     0.7

Medicare Part D Standalone Members

     438        413        438        6.1     —  

 

9


Anthem, Inc.

Consolidated Statements of Income

(Unaudited)

 

(In millions, except per share data)    Three Months Ended
December 31
       
     2021     2020     Change  

Revenues

      

Premiums

   $ 30,769     $ 27,108       13.5

Product revenue

     3,525       2,899       21.6

Administrative fees and other revenue

     1,724       1,526       13.0
  

 

 

   

 

 

   

Total operating revenue

     36,018       31,533       14.2

Net investment income

     352       286       23.1

Net gains on financial instruments

     211       5       NM  
  

 

 

   

 

 

   

Total revenues

     36,581       31,824       14.9

Expenses

      

Benefit expense

     27,538       24,088       14.3

Cost of products sold

     3,070       2,522       21.7

Selling, general and administrative expense

     4,222       4,318       (2.2 )% 

Interest expense

     200       191       4.7

Amortization of other intangible assets

     135       92       46.7

Loss on extinguishment of debt

     16       2       NM  
  

 

 

   

 

 

   

Total expenses

     35,181       31,213       12.7
  

 

 

   

 

 

   

Income before income tax expense

     1,400       611       129.1

Income tax expense

     275       60       358.3
  

 

 

   

 

 

   

Net income

     1,125       551       104.2

Net loss attributable to noncontrolling interests

     12       —         NM  
  

 

 

   

 

 

   

Shareholders’ net income

   $ 1,137     $ 551       106.4
  

 

 

   

 

 

   

Shareholders’ net income per diluted share

   $ 4.63     $ 2.19       111.4
  

 

 

   

 

 

   

Diluted shares

     245.5       251.1       (2.2 )% 

Benefit expense as a percentage of premiums

     89.5     88.9     60  bp 

Selling, general and administrative expense as a percentage of total operating revenue

     11.7     13.7     (200 )bp 

Income before income tax expense as a percentage of total revenue

     3.8     1.9     190  bp 

“NM” = calculation not meaningful

 

10


Anthem, Inc.

Consolidated Statements of Income

(Unaudited)

 

(In millions, except per share data)    Twelve Months Ended
December 31
       
     2021     2020     Change  

Revenues

      

Premiums

   $ 117,373     $ 104,109       12.7

Product revenue

     12,657       10,384       21.9

Administrative fees and other revenue

     6,913       6,315       9.5
  

 

 

   

 

 

   

Total operating revenue

     136,943       120,808       13.4

Net investment income

     1,378       877       57.1

Net gains on financial instruments

     318       182       74.7
  

 

 

   

 

 

   

Total revenues

     138,639       121,867       13.8

Expenses

      

Benefit expense

     102,645       88,045       16.6

Cost of products sold

     10,895       8,953       21.7

Selling, general and administrative expense

     15,914       17,450       (8.8 )% 

Interest expense

     798       784       1.8

Amortization of other intangible assets

     441       361       22.2

Loss on extinguishment of debt

     21       36       (41.7 )% 
  

 

 

   

 

 

   

Total expenses

     130,714       115,629       13.0
  

 

 

   

 

 

   

Income before income tax expense

     7,925       6,238       27.0

Income tax expense

     1,830       1,666       9.8
  

 

 

   

 

 

   

Net income

     6,095       4,572       33.3

Net loss attributable to noncontrolling interests

     9       —         NM  
  

 

 

   

 

 

   

Shareholders’ net income

   $ 6,104     $ 4,572       33.5
  

 

 

   

 

 

   

Shareholders’ net income per diluted share

   $ 24.73     $ 17.98       37.5
  

 

 

   

 

 

   

Diluted shares

     246.8       254.3       (2.9 )% 

Benefit expense as a percentage of premiums

     87.5     84.6     290  bp 

Selling, general and administrative expense as a percentage of total operating revenue

     11.6     14.4     (280 )bp 

Income before income tax expense as a percentage of total revenue

     5.7     5.1     60  bp 

“NM” = calculation not meaningful

 

11


Anthem, Inc.

Consolidated Balance Sheets

 

(In millions)    December 31,
2021
    December 31,
2020
 
     (Unaudited)        

Assets

    

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  
  

 

 

   

 

 

 

 

12


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  
  

 

 

   

 

 

 

 

13


Anthem, Inc.

Reconciliation of Medical Claims Payable

 

     Years Ended December 31  
(In millions)    2021     2020     2019  
     (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 amounts less than originally estimated.

*

Excludes insurance lines other than short duration.

 

14


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
  

 

 

   

 

 

     

 

 

   

 

 

   

 

15


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

 

16


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.

 

17

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Anthem, Inc. provided additional information to their SEC Filing as exhibits

Ticker: ANTM
CIK: 1156039
Form Type: 8-K Corporate News
Accession Number: 0001193125-22-017585
Submitted to the SEC: Wed Jan 26 2022 6:08:54 AM EST
Accepted by the SEC: Wed Jan 26 2022
Period: Wednesday, January 26, 2022
Industry: Hospital And Medical Service Plans
Events:
  1. Earnings Release
  2. Financial Exhibit

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