Anthem, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Anthem's first quarter earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session where participants are encouraged to present a single question. If you wish to ask a question, please press star then 1 on your telephone keypad. You will hear a prompt that you have been queued. You may withdraw your question at any time by pressing star then 2. These instructions will be repeated prior to the question and answer portion of this call. As a reminder, today's conference is being recorded. I would now like to turn the conference over to the company's management. Please go ahead.

Good morning, and welcome to Anthem's first quarter 2022 earnings call. This is Steve Tunnell, Vice President of Investor Relations, and with us this morning on the earnings call are Gail Boudreau, our President and CEO, John Galena, our CFO, Peter Haitayan, President of our Diversified Business Group and IngenioRx, Morgan Kendrick, President of our Commercial and Specialty Business Division, and Felicia Norwood, President of our Government Business Division. Gail will begin the call with a brief discussion of the quarter, recent progress against our strategic initiatives, and close on Anthem's proposal to change our holding company name to Elevance Health. John will then discuss our financial results and outlook in greater detail. After our prepared remarks, the team will be available for Q&A. During the call, we will reference certain non-GAAP measures, Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available on our website, antheminc.com. We will also be making some forward-looking statements on this call. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of Anthem. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to carefully review the risk factors discussed in today's press release and in our quarterly filings with the SEC. I will now turn the call over to Gail.

Thanks, Steve, and good morning, everyone. Today, we're pleased to share that Anthem is off to a strong start in 2022. In the first quarter, we delivered gap earnings per share of $7.39 and grew adjusted earnings per share by 18% to $8.25. exceeding our expectations. Based on the strong start to the year and the momentum in our business, we have increased confidence in our ability to deliver another year of growth in line with our long-term 12 to 15 percent annual adjusted earnings per share growth target. As a result, we've increased our full-year outlook to greater than $28.40 per share, representing growth of at least 12.7 percent off the adjusted baseline we provided last quarter. It's the ongoing momentum in every one of our businesses, driven by the disciplined execution of the strategy we shared with you at last year's investor conference, coupled with the balance and resilience of our core benefits business that is allowing us to produce this level of growth. We ended the first quarter with medical membership of 7.5% year-over-year to 46.8 million members, widening Anthem's lead as the largest insurer by U.S. medical membership. In recent years, Anthem has been on a journey to transform from a traditional health insurance company to a lifetime trusted health partner by focusing on whole health, addressing the physical, behavioral, and social drivers that we know are critical to achieving optimal health. Our results demonstrate that our employer, consumer, and state partners are universally looking for solutions that address underlying drivers of cost while enhancing and simplifying the consumer experience. We are delivering in these areas and it's propelling strong organic membership growth in each of our benefits businesses, in addition to creating opportunities to scale our service divisions. Last quarter, we shared that Anthem produced its strongest national account selling season in the history of the company. Today, you can see in our results that commercial group fee-based enrollment grew by over 750,000 members in the first quarter alone. with a meaningful proportion of that growth driven by existing large employer clients consolidating their business with Anthem after working with us on a piece of their business in the past. Cost of care is paramount for self-funded groups, and the success we're seeing underscores our confidence in our leading cost of care position. Employers have come to expect more, notably in the way of enhanced experiences. and we continue to innovate to meet their needs. In the first quarter, we expanded virtual primary care capabilities to reach 5 million commercial members and expect to reach 10 million members by year end. We're excited about the potential to expand access to care, especially in underserved and rural areas, while offering convenient, personalized solutions. We also continue to advance client advocacy solutions and elevate our consumer engagement platform, Sydney Health, which has been core to our success in the employer market. Last year, we launched Sydney Preferred, a version of our Sydney Health app that allows employers to customize our engagement platform for their unique benefits and needs. Today, nearly 1.2 million members are on Sydney Preferred, and we closed the first quarter with more than 12 million registered users on Sydney, up approximately 40% year-over-year. Our commitment to whole health is also driving growth in our government business, where we are focused on health equity and meeting the needs of vulnerable members. Last quarter, we shared how our Whole Health Index helps us better understand and address local, social, and physical drivers of health. We're leveraging the tool to identify members with diabetes who may benefit from one-on-one virtual coaching, supplies, and preemptive notifications to help better manage their health. In our diversified business group, new behavioral health programs launched by Beacon address family therapy, suicide prevention, and offer a concierge model for members with comorbid conditions. All of these efforts support our focus on community health. Through our Whole Health Index, we've been measuring Anthem's impact on health outcomes and are seeing encouraging, albeit early, trends. Our health equity and community health initiatives that targeted vaccine outreach, community health worker readiness, housing stability, and diabetes management during COVID-19. Programs made possible by our deep roots in our communities were recognized recently by the Institute of Medicaid Innovation. All of this work keeps Anthem uniquely well positioned to serve the needs of our state partners and directly ties to our 100% Medicaid RFP win rate that we extended into 2022 with renewal awards in Indiana and Louisiana. Personalized whole health solutions are also resonating with seniors. notably dual eligible members with complex and chronic needs and driving strong growth for Anthem and Medicare Advantage. For example, supplemental health plan benefits, like those offered by Simply Healthcare, address food insecurity issues by delivering food shipments directly to our most vulnerable members. Benefit packages, like our Everyday Extras, provides members the flexibility to choose which supplemental benefits matter most to them from menu of options. We remain on track to produce double-digit organic growth in our individual MA business, led by growth and duals. We also remain opportunistic in terms of driving inorganic growth through acquisitions. MMM has performed well since we acquired them last year, and we look forward to adding Integra a high performing plan serving high needs Medicaid members in New York to our portfolio when we close our purchase later this year. Across our organization, we're committed to accelerating value-based care, both in context of benefit expense for our health plans and growth of our diversified services businesses. We know that value-based care leads to higher quality outcomes, better patient and provider satisfaction, more predictable costs for our health plans, and by extension, more stability in our benefit packages. All of these factors can lead to higher star ratings and Medicare Advantage, which is a key strategic priority for Anthem. Over the last year, we significantly advanced our care provider strategy with investments and risk-bearing primary care providers and aggregators. This drive toward value-based care is one of the most important strategic imperatives inside of our organization. In 2021, more than 60 percent of our consolidated medical expenses were paid under value-based care arrangements, with roughly a fifth of that or a low double-digit percentage of total spend in arrangements with downside risk. In the coming years, our primary focus will be to increase the penetration of downside risk sharing, including via global capitation. We expect to make significant strides in the coming years, targeting more than a third of overall spend arrangements with downside risk in 2025, with significant increases in penetration in Medicaid, commercial, and Medicare. In addition to the benefits our health plans derive from value-based care, We see significant pull-through opportunities for our diversified business group in the areas of provider enablement and carve-outs of specialized care management, including behavioral and home health. Beacon and MyNexus are leaders in these areas with the proven ability to generate high-quality outcomes and solid profitability in risk-based arrangements. Notably, 100% of MyNexus's affiliated revenue earned from Anthem's health plans, and 99% of beacons will flow through risk-based contracts in 2022. Guided by our enterprise strategy, we are making significant investments in our digital capabilities and platforms. We see three distinct benefits, elevating consumer and provider experiences, improving the cost and quality of care, and improving administrative efficiency by automating manual processes. Adoption of our digital tools, combined with strong and rising customer satisfaction surveys, suggests that our consumers and care providers are finding value in our digital channels. Less than two years ago, we implemented live chat and AI messaging capabilities for our consumers and care providers. to provide more choice and convenience. Today, chat is our best performing channel for issue resolution and consumer experience metrics. Consumer chat usage grew by nearly 40 percent year over year in the first quarter and now represents 24 percent of the contact mix. For care provider chat, usage grew by nearly 50 percent year over year and now represents 20 percent of our provider contacts. Meanwhile, Anthem is benefiting from improved efficiency, having reduced an estimated 1.2 million calls from members and another 1 million from care providers in the first quarter alone. Year to date, we've also made significant progress advancing our HealthOS digital platform, which is now utilizing clinical data from providers and health systems for more than 20 million members. We use this data to advance clinical quality and elevate experiences by sharing more comprehensive data and insights with care providers and value-based care arrangements in order to facilitate better care management and personalized member interventions. We're also leveraging the platform to advance our cost-of-care analytics and streamline data collection for risk adjustment. all while automating processes that reduce administrative burden for our associates and providers. We're rolling this tool out rapidly with a goal of covering another 4.5 million members by the end of this year. In conclusion, we're continuing on our journey to transform from a traditional health benefits organization to become a lifetime trusted health partner, and our proposed name change to Elevance Health marks an important milestone. Bringing together the ideas of Elevate in Advance, Elevance Health will reflect our position as a health leader committed to elevating the importance of whole health and advancing health beyond healthcare for our consumers, their families, and communities. Grounded in our mission and fueled by our bold and ambitious purpose to improve the health of humanity, Elevance Health represents the company that we are today and will continue to be in the future. I would like to thank our nearly 100,000 associates for the important work they do every day on behalf of the members who we are privileged to serve. Our passion to improve lives and communities is inspiring, and it extends to our own associates. We were pleased to once again be recognized as one of Fortune's 100 best companies to work for, with a ranking of 57, up from 71 last year, on this year's list of America's leading employers and workplaces. Now I'd like to turn the call over to John for more on our operating results. John?