Form 8-K/A Anthem, Inc. For: Apr 20

April 22, 2022 4:33 PM EDT

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Exhibit 99.1

PRESS RELEASE

 

LOGO

ANTHEM REPORTS FIRST QUARTER 2022 RESULTS,

REFLECTING STRONG MOMENTUM ACROSS ALL DIVISIONS

 

   

First quarter GAAP net income was $7.39 per share, including net negative adjustment items of $0.86 per share. Adjusted net income was $8.25* per share.

 

   

Operating revenue grew by 18.0% over the prior year quarter to $37.9 billion.

 

   

Operating gain grew by 13.2% over the prior year quarter to $2.4 billion.

 

   

Medical enrollment increased by 3.3 million members year-over-year and 1.4 million members sequentially to 46.8 million members.

 

   

Second quarter 2022 dividend of $1.28 per share declared to shareholders.

Indianapolis, Ind. - April 20, 2022 - Anthem, Inc. (NYSE: ANTM) reported first quarter 2022 results reflecting strong financial performance, including double-digit top and bottom line growth.

“Our strong momentum across all our businesses is evidence that our transformation to become a lifetime, trusted health partner continues to drive our growth and accelerate our capabilities focused on whole person health,” said Gail K. Boudreaux, President and CEO. “The shared commitment of our more than 98,000 associates to our purpose to improve the health of humanity, is both profound and powerful, and inspires a culture of performance that remains focused on customers and communities we serve.”

The Company now expects GAAP net income to be greater than $26.43 per share, including approximately $1.97 per share of net unfavorable items. The Company now expects full-year adjusted net income to be greater than $28.40 per share, based on stronger than expected first quarter results.

 

*

Refer to GAAP reconciliation tables on page 13.

 

1


CONSOLIDATED HIGHLIGHTS

Earnings Per Share: GAAP net income was $7.39 per share in the first quarter, including net negative adjustment items of $0.86 per share. Adjusted net income was $8.25* per share, up 17.7% from $7.01 in the same period a year ago.

 

*

Please refer to the GAAP reconciliation tables on page 13.

Membership: Medical enrollment totaled approximately 46.8 million members as of March 31, 2022, an increase of 3.3 million, or 7.5 percent from the prior year quarter. Government Business enrollment increased by 2.1 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 acquisitions of MMM and Paramount Advantage, the launch of HealthyBlue in North Carolina, and organic growth in Medicare Advantage. Commercial & Specialty Business enrollment increased by 1.1 million year over year primarily driven by strong sales in both fee-based and risk-based businesses.

During the first quarter of 2022, medical enrollment increased by 1.4 million lives driven by organic growth in our Commercial fee-based business, the acquisition of Paramount Advantage’s Medicaid members in Ohio, and growth in Individual Medicare Advantage enrollment.

Operating Revenue: Operating revenue was $37.9 billion in the first quarter of 2022, an increase of $5.8 billion, or 18.0 percent, from the prior year quarter. The increase was driven by higher premium revenue due to membership growth in Medicaid, the acquisitions of MMM and Paramount, growth in Medicare Advantage and Commercial risk-based membership, and premium rate increases to cover overall cost trends. The increase was further attributable to growth in pharmacy product revenue within IngenioRx.

Benefit Expense Ratio: The benefit expense ratio was 86.1 percent in the first quarter of 2022, an increase of 50 basis points versus the prior year quarter. The increase was primarily driven by the continued shift in mix of business, as Anthem has grown Government Business, which has a higher benefit expense ratio, faster than the Commercial & Specialty risk business.

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

Days in Claims Payable: Days in Claims Payable was 46.9 days as of March 31, 2022, an increase of 1.7 days from December 31, 2021 and unchanged compared to March 31, 2021.

SG&A Expense Ratio: The SG&A expense ratio was 11.5 percent in the first quarter of 2022, a decrease of 70 basis points from 12.2 percent in the first quarter of 2021. The decrease was primarily driven by operating expense leverage associated with growth in operating revenue, partially offset by increased spend to support growth.

Operating Cash Flow: Operating cash flow was approximately $2.5 billion, or 1.4 times net income in the first quarter of 2022, an increase of $36 million as compared to the prior year quarter. The year-on-year increase was driven by an increase in net income, partially offset by the impact of working capital changes.

Share Repurchase Program: During the first quarter of 2022, the Company repurchased 1.2 million shares of its common stock for $545 million, at a weighted average price of $453.32. As of March 31, 2022, the Company had approximately $3.6 billion of Board-approved share repurchase authorization remaining.

 

2


Cash Dividend: During the first quarter of 2022, the Company paid a quarterly dividend of $1.28 per share, representing a distribution of cash totaling $309 million.

On April 19, 2022, the Audit Committee of the Company’s Board of Directors declared a second quarter 2022 dividend to shareholders of $1.28 per share. The second quarter dividend is payable on June 24, 2022, to shareholders of record at the close of business on June 10, 2022.

Investment Portfolio & Capital Position: During the first quarter of 2022, the Company recorded net losses of $151 million. During the first quarter of 2021, the Company recorded net losses of $4 million. These amounts are excluded from adjusted earnings per share.

As of March 31, 2022, the Company’s net unrealized loss position in the investment portfolio was $755 million, consisting primarily of fixed maturity securities. As of March 31, 2022 cash and investments at the parent company totaled approximately $1.4 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 March 31  
     2022     2021     Change  

Operating Revenue

      

Commercial & Specialty Business

   $ 10,269     $ 9,491       8.2%  

Government Business

     23,758       19,283       23.2%  

IngenioRx

     6,683       5,862       14.0%  

Other

     3,221       2,370       35.9%  

Eliminations

     (6,045     (4,908     23.2%  
  

 

 

   

 

 

   

 

 

 

Total Operating Revenue1

   $ 37,886     $ 32,098       18.0%  

Operating Gain

      

Commercial & Specialty Business

   $ 1,082     $ 1,268       (14.7)%  

Government Business

     789       478       65.1%  

IngenioRx

     398       407       (2.2)%  

Other

     178       8       NM  
  

 

 

   

 

 

   

 

 

 

Total Operating Gain1

   $ 2,447     $ 2,161       13.2%  

Operating Margin

      

Commercial & Specialty Business

     10.5     13.4     (290) bp  

Government Business

     3.3     2.5     80 bp  

IngenioRx

     6.0     6.9     (90) bp  

Total Operating Margin1

     6.5     6.7     (20) bp  

 

1.

See “Basis of Presentation” on page 6 herein.

2.

“NM” = calculation not meaningful.

Commercial & Specialty Business: Operating gain in the Commercial & Specialty Business segment totaled $1,082 million in the first quarter of 2022, a decrease of $186 million from $1,268 million in the first quarter of 2021. The decrease was primarily driven by the net unfavorable effect of COVID and increased spend to support growth and innovation. These impacts were partially offset by the positive contribution from growth in risk-based and fee-based membership.

Government Business: Operating gain in the Government Business segment was $789 million in the first quarter of 2022, an increase of $311 million from $478 million in the first quarter of 2021. The increase was primarily attributable to the acquisition of MMM, membership growth in Medicaid, improved risk revenue in Medicare, and out-of-period items in Medicaid. These impacts were partially offset by increased spend in support of growth.

IngenioRx: Operating gain was $398 million in the first quarter of 2022, a decrease of $9 million from $407 million in the first quarter of 2021. The decrease was primarily driven by the non-recurrence of a favorable out-of-period adjustment in the first quarter of 2021, partially offset by the impact of higher prescription volume resulting from growth in integrated medical and pharmacy members.

 

4


Other: The Company reported an operating gain of $178 million in the Other segment for the first quarter of 2022, an increase of $170 million from $8 million in the prior year quarter. The increase was driven by improved performance in the Diversified Business Group’s Affiliated and Unaffiliated earnings and the acquisition of myNEXUS in April 2021. This increase in operating gain was further driven by changes in unallocated corporate costs year-over-year.

 

5


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 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)    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 May 20, 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   Leslie Porras
[email protected]   [email protected]

 

6


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 approximately 118 million people, including nearly 47 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.

 

7


Anthem, Inc.

Membership Summary

(Unaudited and in Thousands)

 

                          Change from  

Medical Membership

   March 31,
2022
     March 31,
2021
     December 31,
2021
     March 31,
2021
    December 31,
2021
 

Commercial & Specialty Business

             

Individual

     818        731        759        11.9     7.8

Group Risk-Based

     4,028        3,837        4,006        5.0     0.5
  

 

 

    

 

 

    

 

 

      

Commercial Risk-Based

     4,846        4,568        4,765        6.1     1.7

BlueCard®

     6,370        6,166        6,178        3.3     3.1

Group Fee-Based

     20,148        19,515        19,395        3.2     3.9
  

 

 

    

 

 

    

 

 

      

Commercial Fee-Based

     26,518        25,681        25,573        3.3     3.7
  

 

 

    

 

 

    

 

 

      

Total Commercial & Specialty Business

     31,364        30,249        30,338        3.7     3.4

Government Business

             

Medicare Advantage

     1,921        1,538        1,859        24.9     3.3

Medicare Supplement

     939        930        952        1.0     (1.4 )% 
  

 

 

    

 

 

    

 

 

      

Total Medicare

     2,860        2,468        2,811        15.9     1.7

Medicaid

     10,919        9,172        10,600        19.0     3.0

Federal Employees Health Benefits

     1,632        1,632        1,625        —       0.4
  

 

 

    

 

 

    

 

 

      

Total Government Business

     15,411        13,272        15,036        16.1     2.5
  

 

 

    

 

 

    

 

 

      

Total Medical Membership

     46,775        43,521        45,374        7.5     3.1
  

 

 

    

 

 

    

 

 

      

Other Membership

             

Life and Disability Members

     4,679        4,766        4,782        (1.8 )%      (2.2 )% 

Dental Members

     6,649        6,599        6,674        0.8     (0.4 )% 

Dental Administration Members

     1,588        1,488        1,491        6.7     6.5

Vision Members

     9,211        7,798        8,031        18.1     14.7

Medicare Part D Standalone Members

     279        450        438        (38.0 )%      (36.3 )% 

 

8


Anthem, Inc.

Consolidated Statements of Income

(Unaudited)

 

(In millions, except per share data)    Three Months Ended
March 31
       
     2022     2021     Change  

Revenues

      

Premiums

   $ 32,785     $ 27,676       18.5%  

Product revenue

     3,301       2,737       20.6%  

Administrative fees and other revenue

     1,800       1,685       6.8%  
  

 

 

   

 

 

   

Total operating revenue

     37,886       32,098       18.0%  

Net investment income

     360       291       23.7%  

Net losses on financial instruments

     (151     (4     NM  
  

 

 

   

 

 

   

Total revenues

     38,095       32,385       17.6%  

Expenses

      

Benefit expense

     28,215       23,699       19.1%  

Cost of products sold

     2,883       2,313       24.6%  

Selling, general and administrative expense

     4,341       3,925       10.6%  

Interest expense

     201       192       4.7%  

Amortization of other intangible assets

     129       80       61.3%  
  

 

 

   

 

 

   

Total expenses

     35,769       30,209       18.4%  
  

 

 

   

 

 

   

Income before income tax expense

     2,326       2,176       6.9%  

Income tax expense

     531       509       4.3%  
  

 

 

   

 

 

   

Net income

     1,795       1,667       7.7%  

Net loss/(income) attributable to noncontrolling interests

     10       (2     NM  
  

 

 

   

 

 

   

Shareholders’ net income

   $ 1,805     $ 1,665       8.4%  
  

 

 

   

 

 

   

Shareholders’ net income per diluted share

   $ 7.39     $ 6.71       10.1%  
  

 

 

   

 

 

   

Diluted shares

     244.4       248.2       (1.5)%  

Benefit expense as a percentage of premiums

     86.1     85.6     50bp  

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

     11.5     12.2     (70)bp  

Income before income tax expense as a percentage of total revenue

     6.1     6.7     (60)bp  

“NM” = calculation not meaningful

 

9


Anthem, Inc.

Consolidated Balance Sheets

 

(In millions)    March 31,
2022
    December 31,
2021
 
     (Unaudited)        

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 6,161     $ 4,880  

Fixed maturity securities

     26,219       26,267  

Equity securities, current

     1,662       1,881  

Premium receivables

     7,349       5,681  

Self-funded receivables

     3,979       4,010  

Other receivables

     3,334       3,749  

Other current assets

     5,193       4,654  
  

 

 

   

 

 

 

Total current assets

     53,897       51,122  

Long-term investments:

    

Fixed maturity securities

     596       632  

Other invested assets

     5,365       5,225  

Property and equipment, net

     3,986       3,919  

Goodwill

     24,251       24,228  

Other intangible assets

     10,588       10,615  

Other noncurrent assets

     1,803       1,719  
  

 

 

   

 

 

 

Total assets

   $ 100,486     $ 97,460  
  

 

 

   

 

 

 

Liabilities and equity

    

Liabilities

    

Current liabilities:

    

Medical claims payable

   $ 14,713     $ 13,518  

Other policyholder liabilities

     5,396       5,521  

Unearned income

     1,210       1,153  

Accounts payable and accrued expenses

     5,493       4,970  

Short-term borrowings

     275       275  

Current portion of long-term debt

     3,097       1,599  

Other current liabilities

     9,549       7,849  
  

 

 

   

 

 

 

Total current liabilities

     39,733       34,885  

Long-term debt, less current portion

     19,883       21,157  

Reserves for future policy benefits

     811       802  

Deferred tax liabilities, net

     2,349       2,805  

Other noncurrent liabilities

     1,679       1,683  
  

 

 

   

 

 

 

Total liabilities

     64,455       61,332  
  

 

 

   

 

 

 

Shareholders’ equity

    

Common stock

     2       2  

Additional paid-in capital

     9,151       9,148  

Retained earnings

     28,058       27,088  

Accumulated other comprehensive loss

     (1,236     (178
  

 

 

   

 

 

 

Total shareholders’ equity

     35,975       36,060  

Noncontrolling interests

     56       68  
  

 

 

   

 

 

 

Total equity

     36,031       36,128  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 100,486     $ 97,460  
  

 

 

   

 

 

 

 

10


Anthem, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

(In millions)    Three Months Ended
March 31
 
     2022     2021  

Operating activities

    

Net income

   $ 1,795     $ 1,667  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Net losses on financial instruments

     151       4  

Equity in net earnings of other invested assets

     (153     (108

Depreciation and amortization

     358       282  

Deferred income taxes

     (92     31  

Share-based compensation

     50       64  

Changes in operating assets and liabilities:

    

Receivables, net

     (1,348     (1,258

Other invested assets

     7       (20

Other assets

     (353     (288

Policy liabilities

     1,075       1,455  

Unearned income

     57       (119

Accounts payable and other liabilities

     428       358  

Income taxes

     568       438  

Other, net

     (2     (1
  

 

 

   

 

 

 

Net cash provided by operating activities

     2,541       2,505  

Investing activities

    

Purchases of investments

     (5,050     (6,978

Proceeds from sale of investments

     3,047       4,650  

Maturities, calls and redemptions from investments

     1,209       998  

Changes in securities lending collateral

     (441     (731

Purchases of subsidiaries, net of cash acquired

     (61     (27

Purchases of property and equipment

     (254     (204

Other, net

     (28     (15
  

 

 

   

 

 

 

Net cash used in investing activities

     (1,578     (2,307

Financing activities

    

Net proceeds from (repayments of) commercial paper borrowings

     225       (250

Net (repayments of) proceeds from long-term borrowings

     (14     3,462  

Changes in securities lending payable

     441       731  

Repurchase and retirement of common stock

     (545     (447

Cash dividends

     (309     (277

Proceeds from issuance of common stock under employee stock plans

     76       89  

Taxes paid through withholding of common stock under employee stock plans

     (86     (91

Other, net

     534       171  
  

 

 

   

 

 

 

Net cash provided by financing activities

     322       3,388  

Effect of foreign exchange rates on cash and cash equivalents

     (4     (1
  

 

 

   

 

 

 

Change in cash and cash equivalents

     1,281       3,585  

Cash and cash equivalents at beginning of period

     4,880       5,741  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 6,161     $ 9,326  
  

 

 

   

 

 

 

 

11


Anthem, Inc.

Reconciliation of Medical Claims Payable

 

     Three Months Ended
March 31
    Years Ended December 31  
     2022     2021     2021     2020     2019  
(In millions)    (Unaudited)     (Unaudited)                    

Gross medical claims payable, beginning of period

   $ 13,282     $ 11,135     $ 11,135     $ 8,647     $ 7,266  

Ceded medical claims payable, beginning of period

     (21     (46     (46     (33     (34
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net medical claims payable, beginning of period

     13,261       11,089       11,089       8,614       7,232  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Business combinations and purchase adjustments

     3       —         420       339       —    

Net incurred medical claims:

          

Current year

     28,064       24,215       100,440       85,094       78,695  

Prior years redundancies(1)

     (933     (1,488     (1,703     (637     (500
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net incurred medical claims

     27,131       22,727       98,737       84,457       78,195  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net payments attributable to:

          

Current year medical claims

     17,116       15,031       88,156       74,629       70,294  

Prior years medical claims

     8,826       6,748       8,829       7,692       6,519  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net payments

     25,942       21,779       96,985       82,321       76,813  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net medical claims payable, end of period

     14,453       12,037       13,261       11,089       8,614  

Ceded medical claims payable, end of period

     17       39       21       46       33  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross medical claims payable, end of period

   $ 14,470     $ 12,076     $ 13,282     $ 11,135     $ 8,647  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Current year medical claims paid as a percentage of current year net incurred medical claims

     61.0     62.1     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

     7.6     15.5     18.1     8.0     7.4

Prior year redundancies in the current year as a percentage of prior year net incurred medical claims

     0.9     1.8     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.

 

12


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
March 31
        
(In millions, except per share data)    2022      2021      Change  

Shareholders’ net income

   $ 1,805      $ 1,665        8.4

Add / (Subtract):

        

Net losses on financial instruments

     151        4     

Amortization of other intangible assets

     129        80     

Transaction and integration related costs

     9        9     

Litigation expenses

     1        6     

Tax impact of non-GAAP adjustments

     (78      (25   
  

 

 

    

 

 

    

Net adjustment items

     212        74     
  

 

 

    

 

 

    

Adjusted shareholders’ net income

   $ 2,017      $ 1,739        16.0
  

 

 

    

 

 

    

Shareholders’ net income per diluted share

   $ 7.39      $ 6.71        10.1

Add / (Subtract):

        

Net losses on financial instruments

     0.62        0.02     

Amortization of other intangible assets

     0.53        0.32     

Transaction and integration related costs

     0.04        0.04     

Litigation expenses

     —          0.02     

Tax impact of non-GAAP adjustments

     (0.32      (0.10   

Rounding impact

     (0.01      —       
  

 

 

    

 

 

    

Net adjustment items

     0.86        0.30     
  

 

 

    

 

 

    

Adjusted shareholders’ net income per diluted share

   $ 8.25      $ 7.01        17.7
  

 

 

    

 

 

    

 

     Full Year 2022 Outlook  

Shareholders’ net income per diluted share

   Greater than $ 26.43  

Add / (Subtract):

  

Net losses on financial instruments

   $ 0.61  

Transaction and integration related costs

   $ 0.04  

Amortization of other intangible assets

   Approximately $ 2.11  

Tax impact of non-GAAP adjustments

   Approximately $ (0.79
  

 

 

 

Net adjustment items

   Approximately $ 1.97  
  

 

 

 

Adjusted shareholders’ net income per diluted share

   Greater than $ 28.40  
  

 

 

 

 

     Three Months Ended
March 31
        
(In millions)    2022      2021      Change  

Income before income tax expense

   $ 2,326      $ 2,176        6.9

Net investment income

     (360      (291   

Net losses on financial instruments

     151        4     

Interest expense

     201        192     

Amortization of other intangible assets

     129        80     

Reportable segments operating gain

   $ 2,447      $ 2,161        13.2
  

 

 

    

 

 

    

 

13


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.

 

14



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