Item 7.01 Regulation FD Disclosure.
Members of
Full-Year 2021 Enrollment Projections
Based on final annual enrollment period ("AEP") results, the Company is
increasing its net membership growth estimate for its individual Medicare
Advantage products for the year ended
In addition, the Company is updating its estimate for group Medicare Advantage net membership losses for the same period, now projecting a decrease of approximately 50,000 members year over year, compared to its previous estimate of a loss of approximately 45,000 members. This update results from slightly fewer members expected in a newly acquired large account.
For PDP, the Company now estimates a net membership decline of approximately
300,000 members for the year ended
Full Year 2020 Adjusted EPS Guidance
For the year ended
The Company has included Adjusted EPS in this current report, a financial measure that is not in accordance with Generally Accepted Accounting Principles ("GAAP"). Management believes that this measure, when presented in conjunction with the comparable measure of GAAP EPS, is useful to both management and its investors in analyzing the Company's ongoing business and operating performance. Consequently, management uses Adjusted EPS as an indicator of the Company's business performance, as well as for operational planning and decision making purposes. Adjusted EPS should be considered in addition to, but not as a substitute for, or superior to, GAAP EPS. A reconciliation of GAAP EPS to Adjusted EPS follows:
Diluted earnings per common share FY 2020 Guidance 4Q 2020 Guidance GAAP
$24.70 -$24.95 ($2.55 ) Amortization of identifiable intangibles ~0.51 ~0.15 Put/call valuation adjustments associated with the 0.37 - Company's non-consolidating minority interest investments Change in fair market value of publicly-traded (3.73) - equity securities Receipt of commercial risk corridor receivables (3.35) -
previously written off, net
Adjusted (non-GAAP) - FY 2020 and 4Q 2020
Revenue, Medical Costs and Full Year 2021 Adjusted EPS Guidance Discussion
The Company also intends to reiterate its 2021 Adjusted EPS guidance midpoint
representing percentage growth modestly above its targeted long-term EPS growth
rate of 11-15 percent, off of the
Beginning in the latter half of November and accelerating throughout the month
of December, the Company experienced a significant increase in COVID admissions
in nearly all of the markets in which it operates across its Medicare Advantage,
Medicaid, and group commercial insurance business lines. This recent surge in
COVID admissions has resulted in an increased estimate of full year 2020 COVID
testing and treatment costs, now expected to be approximately
As communicated since the pandemic began, the Company expects a revenue growth headwind in 2021 as a result of the decreased utilization experienced in 2020. While the Company worked tirelessly throughout 2020 to ensure members had access to and were receiving the appropriate level of care, including by significantly increasing in-home and video telehealth clinician visits, the meaningful drop in non-COVID medical utilization in recent months was not anticipated and, as such, the Company will likely experience a greater reduction in expected 2021 revenue growth than previously assumed, which could be material.
However, the Company now also expects that potentially meaningful lower non-COVID medical utilization compared to baseline may continue through at least the first few months of 2021. This is anticipated to result in lower medical costs (net of COVID related expenses) for 2021 than the Company had previously projected, which, like the revenue growth headwind discussed above, could be material.
As utilization levels return to a normal baseline and members engage in more routine non-COVID interactions with their providers, the related revenue impact is expected to normalize for the following plan year. The Company currently anticipates that utilization will return to baseline levels throughout 2021, assuming successful rollout of COVID-19 vaccines in 2021, resulting in more normalized medical costs and revenue expectations for 2022.
Finally, the Company notes that it faces a headwind resulting from the recent
increase to the Physician Fee Schedule rates for 2021, which will be partially
offset by the Medicare sequester relief extension through
The Company plans to host a conference call and announce its financial results
for the fourth quarter and year ended
Cautionary Statement
This Current Report on Form 8-K includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, generally
including the words or phrases like "expects," "believes," "anticipates,"
"intends," "likely will result," "estimates," "projects" or variations of such
words and similar expressions that are intended to identify such forward-looking
statements. These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and assumptions, including,
among other things, information set forth in the "Risk Factors" section of the
Company's
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