Elevance Health : Q3 2022 Earnings Release

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

ELEVANCE HEALTH REPORTS THIRD QUARTER 2022 RESULTS,

RAISES FULL YEAR OUTLOOK

• Third quarter GAAP net income was $6.68 per share, including net negative adjustment items of $0.85 per share. Adjusted net income was $7.53* per share.
• Operating revenue grew 11.5% over the prior year quarter to $39.6 billion.
• Operating gain grew 10.2% over the prior year quarter to $2.3 billion.
• Medical enrollment increased 2.2 million members year-over-year and 232 thousand members during the quarter to 47.3 million members.
• Fourth quarter 2022 dividend of $1.28 per share declared to shareholders.

Indianapolis, Ind. - October 19, 2022 - Elevance Health, Inc. (NYSE: ELV) reported third quarter 2022 results reflecting strong financial performance, including double-digit growth in revenue, operating earnings, and adjusted earnings per share.

"Broad based momentum across Elevance Health continued in the third quarter, driven by the focused execution of our strategy and the dedication of our over 100,000 associates," said Gail K. Boudreaux, President and CEO. "We are united in our purpose to improve the health of humanity, and I am proud of the work our associates are doing to support their colleagues and communities so tragically impacted by the recent hurricanes in Florida and Puerto Rico. It's in times such as these that our culture shines through."

As a result of stronger than expected results for the first nine months of the year, the Company now expects GAAP net income to be greater than $25.33 per share, including approximately $3.62 per share of net unfavorable adjustment items. The Company now expects full-year adjusted net income to be greater than $28.95 per share.

*Refer to GAAP reconciliation tables on page 13.

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CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $6.68 per share in the third quarter, including net negative adjustment items of $0.85 per share. Adjusted net income was $7.53* per share, reflecting growth of 10.9% from $6.79 in the same period a year ago.

*Please refer to the GAAP reconciliation tables on page 13.

Membership: Medical membership totaled approximately 47.3 million as of September 30, 2022, an increase of 2.2 million, or 4.9 percent year-over-year. Commercial & Specialty Business membership increased by 1.2 million year-over-year driven by strong sales to fee-based employers. Government Business membership increased by 1.0 million compared to the prior year quarter, driven primarily by growth in the Medicaid business, the acquisitions of Paramount Advantage and Integra Managed Care, and organic growth in Medicare Advantage.

During the third quarter of 2022, medical membership increased by 232 thousand driven by organic growth in Medicaid, which we attribute primarily to the suspension of eligibility recertification, and organic growth in our commercial fee-based membership.

Operating Revenue: Operating revenue was $39.6 billion in the third quarter of 2022, an increase of $4.1 billion, or 11.5 percent year-over-year. The increase was driven by higher premium revenue due to membership growth in Medicaid, including the acquisitions of Integra Managed Care and Paramount Advantage, growth in Medicare Advantage and commercial risk-based membership, as well as premium rate increases to cover overall cost trends. The increase in operating revenue was further attributable to the growth in pharmacy product revenue within IngenioRx related to growth in membership and higher utilization of prescription drugs.

Benefit Expense Ratio: The benefit expense ratio was 87.2 percent in the third quarter of 2022, a decrease of 50 basis points year-over-year. The decrease was primarily driven by the realignment of certain quality improvement costs to match recent regulatory clarifications. Excluding the realignment, our benefit expense ratio would have been approximately flat year-over-year.

Medical claims reserves established at December 31, 2021 developed in line with the Company's expectations as of the third quarter of 2022.

Days in Claims Payable: Days in Claims Payable was 47.7 days as of September 30, 2022, a decrease of 0.1 days from June 30, 2022 and an increase of 0.9 days compared to September 30, 2021.

SG&A Expense Ratio: The SG&A expense ratio was 11.4 percent in the third quarter of 2022, an increase of 30 basis points from 11.1 percent in the third quarter of 2021. The increase was primarily driven by increased spend to support growth in operations and the realignment of certain quality improvement expenses out of benefit expense and into SG&A expense, partially offset by operating expense leverage associated with growth in operating revenue.

Operating Cash Flow: Operating cash flow was approximately $4.9 billion, or 3.1 times net income in the third quarter of 2022, an increase of $2.4 billion as compared to the prior year quarter. The year-on- year increase was driven by the timing of CMS payments received in the current quarter, partially offset by the BCBSA litigation settlement payment that occurred in the third quarter of 2022.

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Share Repurchase Program: During the third quarter of 2022, the Company repurchased 1.2 million shares of its common stock for $579 million, at a weighted average price of $476.70. Year-to-date, as of the end of the third quarter, the Company repurchased 3.7 million shares of its common stock for $1.7 billion, at a weighted average price of $473.36. As of September 30, 2022, the Company had approximately $2.4 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the third quarter of 2022, the Company paid a quarterly dividend of $1.28 per share, representing a distribution of cash totaling $306 million.

On October 18, 2022, the Audit Committee of the Company's Board of Directors declared a fourth quarter 2022 dividend to shareholders of $1.28 per share. The fourth quarter dividend is payable on December 21, 2022, to shareholders of record at the close of business on December 5, 2022.

Investment Portfolio & Capital Position: During the third quarter of 2022, the Company recorded net losses of $57 million. During the third quarter of 2021, the Company recorded net losses of $61 million. These amounts are excluded from adjusted earnings per share.

As of September 30, 2022, the Company's net unrealized loss position in the investment portfolio was $2.8 billion, consisting primarily of fixed maturity securities. As of September 30, 2022, cash and investments at the parent company totaled approximately $1.0 billion.

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REPORTABLE SEGMENTS

Elevance Health 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 Carelon companies, formerly known as our Diversified Business Group, and corporate expenses not allocated to our other reportable segments).

Elevance Health, Inc.

Reportable Segment Highlights

(Unaudited)

(In millions)	Three Months Ended September 30		Nine Months Ended September 30
	2022	2021		Change	2022	2021		Change
Operating Revenue
Commercial & Specialty Business	$10,494	$9,863	6.4 %	$31,324	$28,904	8.4 %
Government Business	24,571	21,658	13.4 %	72,164	61,007	18.3 %
IngenioRx	7,249	6,549	10.7 %	21,003	18,630	12.7 %
Other	3,365	2,670	26.0 %	9,884	7,557	30.8 %
Eliminations	(6,054)	(5,192)	16.6 %	(18,382)	(15,173)	21.1 %
Total Operating Revenue1	$39,625		$35,548		11.5 %		$115,993		$100,925		14.9 %
Operating Gain
Commercial & Specialty Business	$785	$620	26.6 %	$2,673	$2,679	(0.2)%
Government Business	868	967	(10.2)%	2,653	2,313	14.7 %
IngenioRx	516	445	16.0 %	1,393	1,257	10.8 %
Other	101	27	274.1 %	365	52	601.9 %
Total Operating Gain1	$2,270		$2,059		10.2 %		$7,084		$6,301		12.4 %
Operating Margin
Commercial & Specialty Business	7.5 %	6.3 %		120 bp	8.5 %	9.3 %		(80) bp
Government Business	3.5 %	4.5 %		(100) bp	3.7 %	3.8 %		(10) bp
IngenioRx	7.1 %	6.8 %		30 bp	6.6 %	6.7 %		(10) bp
Total Operating Margin1	5.7 %	5.8 %		(10) bp	6.1 %	6.2 %		(10) bp

1. See "Basis of Presentation" on page 6 herein.

Commercial & Specialty Business: Operating gain in the Commercial & Specialty Business segment totaled $785 million in the third quarter of 2022, an increase of $165 million from $620 million in the third quarter of 2021. The increase was primarily driven by improved medical underwriting performance in our commercial risk-based business partially offset by an increase in operating expenses in support of growth.

Government Business: Operating gain in the Government Business segment was $868 million in the third quarter of 2022, a decrease of $99 million from $967 million in the third quarter of 2021. The decrease was primarily driven by higher operating costs in support of growth of our government health benefits business partially offset by increased gross profit in the period.

IngenioRx: Operating gain was $516 million in the third quarter of 2022, an increase of $71 million from $445 million in the third quarter of 2021. The increase was driven by out of period fee-based revenue and higher prescription volumes associated with growth in integrated medical and pharmacy members.

Other: The Company reported an operating gain of $101 million in the Other segment for the third quarter of 2022, an increase of $74 million from $27 million in the prior year quarter. The increase was driven by growth in Carelon's affiliated and unaffiliated earnings.

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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 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 13 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 third quarter results and outlook. The conference call should be accessed at least 15 minutes prior to the start of the call with the following numbers:

888-947-9963	(Domestic)	800-813-5525	(Domestic Replay)
312-470-0178	(International)	203-369-3346	(International Replay)

The access code for today's conference call is 3972058. The replay will be available from 11:30 a.m. EDT today, until the end of the day on November 18, 2022. 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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