Elevance Health : Q1 2023 Earnings Release

P R E S S R E L E A S E

ELEVANCE HEALTH REPORTS FIRST QUARTER 2023 RESULTS

• First quarter GAAP net income was $8.30 per share, including net negative adjustment items of $1.16 per share. Adjusted net income was $9.46* per share.
• Operating revenue grew 10.6% year-over-year to $41.9 billion
• Operating gain grew 16.6% year-over-year to $2.8 billion
• Medical enrollment increased 1.3 million members year-over-year to 48.1 million members
• Second quarter 2023 dividend of $1.48 per share declared to shareholders

Indianapolis, Ind. - April 19, 2023 - Elevance Health, Inc. (NYSE: ELV) reported first quarter 2023 results reflecting strong financial performance, including double-digit growth in revenue, operating earnings, and adjusted earnings per share.

"Elevance Health is off to a strong start in 2023, driven by our continued focus on whole health and advancing health beyond healthcare," said Gail K. Boudreaux, President and CEO. "Through our diverse and expanding offering of products and solutions, and our alignment with high- performing, value-based care providers, we continue to meet the needs of consumers, customers and the communities we serve, advancing our strategy of becoming a lifetime, trusted health partner."

Given the strong start to the year and the momentum in each of our primary businesses, we now expect GAAP net income to be greater than $29.50 per share in 2023, and adjusted net income to be greater than $32.70 per share.

*Refer to GAAP reconciliation tables on page 12.

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CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $8.30 per share in the first quarter, including net negative adjustment items of $1.16 per share. Adjusted net income was $9.46* per share.

*Please refer to the GAAP reconciliation tables on page 12.

Membership: Medical membership totaled approximately 48.1 million as of March 31, 2023, an increase of 1.3 million, or 2.9 percent year-over-year, driven primarily by growth in Medicaid, commercial fee-based, Medicare Advantage and ACA health plan members, partially offset by attrition in our employer group risk-based business.

During the first quarter of 2023, medical membership increased by 593 thousand driven by organic growth in Medicaid and commercial fee-based members.

Operating Revenue: Operating revenue was $41.9 billion in the first quarter of 2023, an increase of $4.0 billion, or 10.6 percent year-over-year. The increase was primarily driven by higher premium revenue due to membership growth in Medicaid and Medicare Advantage, as well as premium rate increases in our Health Benefits business. The increase in operating revenue was further attributable to growth in pharmacy product revenue within CarelonRx driven by growth in members served and script volume.

Benefit Expense Ratio: The benefit expense ratio was 85.8 percent in the first quarter of 2023, a decrease of 30 basis points year-over-year. The decrease was driven by our commercial risk-based health plans.

Medical claims reserves established at December 31, 2022 developed in line with the Company's expectations as of the first quarter of 2023.

Days in Claims Payable: Days in Claims Payable was 46.0 days as of March 31, 2023, a decrease of 1.5 days from December 31, 2022 and a decrease of 0.9 days compared to March 31, 2022.

Operating Expense Ratio: The operating expense ratio was 11.5 percent in the first quarter of 2023, unchanged from 11.5 percent in the first quarter of 2022.

Operating Cash Flow: Operating cash flow was approximately $6.5 billion, including the early receipt of April's premium payments from CMS. Excluding that item, operating cash flow would have been $3.5 billion, or 1.7 times net income in the first quarter of 2023, an increase of $963 million as compared to the prior year quarter. The year-over-year increase was driven by favorable working capital changes and growth in net income.

Share Repurchase Program: During the first quarter of 2023, the Company repurchased 1.3 million shares of its common stock for $622 million, at a weighted average price of $476.66. As of March 31, 2023, the Company had approximately $6.3 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the first quarter of 2023, the Company paid a quarterly dividend of $1.48 per share, representing a distribution of cash totaling $351 million.

On April 18, 2023, the Audit Committee of the Company's Board of Directors declared a second quarter 2023 dividend to shareholders of $1.48 per share. The second quarter dividend is payable on June 23, 2023, to shareholders of record at the close of business on June 9, 2023.

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Investment Portfolio & Capital Position: During the first quarter of 2023, the Company recorded net losses of $113 million. During the first quarter of 2022, the Company recorded net losses of $151 million. These amounts are excluded from adjusted earnings per share.

As of March 31, 2023, the Company's net unrealized loss position in the investment portfolio was $1.8 billion, consisting primarily of fixed maturity securities. As of March 31, 2023, cash and investments at the parent company totaled approximately $1.1 billion.

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REPORTABLE SEGMENTS

Elevance Health has four reportable segments: Health Benefits, the aggregation of our Commercial & Specialty Business and Government Business (comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard businesses, Medicaid, Medicare, and Federal Health Products & Services businesses); CarelonRx (formerly IngenioRx); Carelon Services (formerly known as Diversified Business Group); and Corporate & Other (comprised of businesses that do not individually meet the quantitative thresholds for an operating division as well as corporate expenses not allocated to our other reportable segments).

Elevance Health, Inc.

Reportable Segment Highlights

(Unaudited)

(In millions)	Three Months Ended March 31
	2023	2022		Change
			(Restated)
Operating Revenue
Health Benefits	$37,280	$34,027	9.6 %
Carelon1	11,336	9,631	17.7 %
Corporate & Other	251	273	(8.1)%
Eliminations	(6,969)		(6,045)		15.3 %
Total Operating Revenue2	$41,898	$37,886	10.6 %
Operating Gain (Loss)
Health Benefits	$2,159	$1,851	16.6 %
Carelon1	721	598	20.6 %
Corporate & Other	(49)		(22)		NM3
Total Operating Gain2	$2,831	$2,427	16.6 %
Operating Margin
Health Benefits	5.8 %	5.4 %		40 bp
Carelon1	6.4 %	6.2 %		20 bp
Total Operating Margin2	6.8 %	6.4 %		40 bp

1. Operating Revenue and Operating Gain for Carelon for the three months ended March 31, 2023 included $8,024 and $512 for CarelonRx; $3,312 and $209 for Carelon Services, respectively. Operating Revenue and Operating Gain for Carelon for the three months ended March 31, 2022 included $6,683 and $398 for CarelonRx; $2,948 and $200 for Carelon Services, respectively.
2. See "Basis of Presentation" on page 5 herein.
3. "NM" = calculation not meaningful.

Health Benefits: Operating gain in the Health Benefits segment totaled $2,159 million in the first quarter of 2023, an increase of $308 million from $1,851 million in the first quarter of 2022. The increase was primarily driven by premium rate adjustments to more accurately reflect our post-pandemic cost structure and membership growth in Medicaid.

Carelon: Operating gain in the Carelon segment was $721 million in the first quarter of 2023, an increase of $123 million from $598 million in the first quarter of 2022. The increase was primarily driven by higher prescription volumes associated with growth in integrated medical and standalone pharmacy customers, improved performance in our care delivery business, and the expansion of our post-acute care business.

Corporate & Other: The Company reported an operating loss of $49 million in the Corporate & Other segment for the first quarter of 2023, a decrease of $27 million from an operating loss of $22 million in the first quarter of 2022, driven by an increase in unallocated corporate expenses.

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Basis of Presentation

1. Operating revenue and operating gain/loss are the key measures used by management to evaluate performance in each of its reporting segments, allocate resources, set incentive compensation targets and to forecast future operating performance. Operating gain/loss is calculated as total operating revenue less benefit expense, cost of products sold and operating expense. It does not include net investment income, net gains/losses on financial instruments, interest expense, amortization of other intangible assets, gains/losses on extinguishment of debt or income taxes, as these items are managed in a corporate shared service environment and are not the responsibility of operating segment management. Refer to page 12 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 Daylight Time ("EDT") to discuss the company's first quarter results and outlook. The conference call should be accessed at least 15 minutes prior to the start of the call with the following numbers:

888-947-9963	(Domestic)	866-361-4942	(Domestic Replay)
312-470-0178	(International)	203-369-0190	(International Replay)

The access code for today's conference call is 3972058. There is no access code for the replay. The replay will be available from 11:30 a.m. EDT today, until the end of the day on May 19, 2023. The call will also be available through a live webcast at www.elevancehealth.comunder the "Investors" link. A webcast replay will be available following the call.

Elevance Health Contacts:
Investor Relations	Media
Stephen Tanal	Leslie Porras
[e-mail]	[e-mail]

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