Anthem, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Elevents Health Second 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 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 Elevance Health's second quarter 2023 earnings call. This is Steve Tennell, Vice President of Investor Relations, and with us this morning on the earnings call are Gail Boudreau, President and CEO, John Galina, our CFO, Peter Haitayan, President of Carillon, Morgan Kendrick, President of our Commercial and Specialty Health Benefits Division, and Felicia Norwood, President of our Government Health Benefits Division. Gail will begin the call with a brief discussion of the quarter and recent progress against our strategic initiatives. 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, elevancehealth.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 Elevance Health. 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 are pleased to share that Elevance Health delivered strong second quarter results driven by solid execution and continued progress towards our strategy of becoming a lifetime trusted health partner focused on the whole health needs of the consumers we are privileged to serve. Second quarter GAAP earnings per share was $7.79, and adjusted earnings per share was $9.04, reflecting double digit growth year over year. As a result of the strong performance in the first half of the year and momentum across Elevance Health, we are increasing our adjusted earnings per share outlook for the year to be greater than $32.85. The balance and resilience of our diverse businesses provides confidence in our near-term outlook while the earnings power of our health benefits and Carillon businesses position us to deliver on our long-term growth commitments. With respect to the second quarter, our health benefits business delivered particularly strong results as we continued to optimize our products, pricing, and operations. We are successfully executing against the planned margin recovery of our commercial risk and Medicare Advantage businesses back toward pre-pandemic levels, and we are pleased with the performance of our Medicaid business. With Medicaid eligibility redeterminations now underway, our teams are working tirelessly to promote continuity of coverage for consumers through an omnichannel approach, working closely with our state partners Our Medicaid and commercial colleagues are collaborating to educate members and communities on the process through in-person and online events, ensuring members know how to renew their Medicaid coverage when eligible or enroll in other forms of coverage, including our own individual ACA plans. To date, we have contacted more than 1.5 million of our Medicaid members. Meanwhile, our web-based digital decision support tool is seeing healthy utilization. The tool assesses eligibility for a wide variety of federal and state programs beyond health insurance to support consumers' whole health journey, including the Federal Supplemental Nutrition Assistance Program, state-based programs that assist with food insecurity, housing and childcare programs, and more. with links that can route consumers to websites where they can enroll in these programs. More than half of the people using our support tool who qualify for commercial or Medicare coverage are clicking through embedded links to shop for plans, and more than 60% of consumers eligible for Medicaid are clicking through to their state site for recertification. This body of work is especially important since many of the people who have lost access to Medicaid so far are losing it for administrative reasons. We expect many of these consumers will re-enroll in Medicaid over time. Transitions of coverage are not typically immediate, but emerging data points suggest consumers losing Medicaid are starting to transition onto ACA exchange plans. It's still early in the process, and our expectations for coverage transitions remain unchanged, our deep local roots and diversified product portfolio positions us uniquely well to meet consumers' needs regardless of age or socioeconomic status. Caroline continued to advance its strategy of integrating physical, behavioral, social, and pharmacy services to deliver whole health affordably. with ongoing investments and capabilities focused on serving people across their entire healthcare journey, connecting them to the care, support, and resources they need. Carillon services delivered solid organic growth, led by the expansion of post-acute care management solutions with our Medicare health plans, while Carillon Behavioral Health extended its leadership position through multiple external business wins with new and existing customers. New business awards and successful execution in these fast-growing, high-cost areas of trend underscore the value Carillon provides to health plans and the expanding earnings power and attractive growth profile of the Carillon services business. CarolineRx also continued to grow nicely while investing in key value drivers, specifically specialty pharmacy and advanced home delivery. Revenue grew nearly 20% year over year, and we posted solid operating earnings while absorbing investments in support of our long-term strategy. The integration of the BioPlus specialty pharmacy is now tracking ahead of schedule and we expect to begin migrating scripts early next year. Additionally, we remain on track to launch advanced home delivery by the end of 2023. Together, these capabilities will create additional shareholder value while allowing us to deliver even better consumer experiences in specialty and maintenance pharmacy. Expanding and more deeply integrating value-based care across the care continuum is foundational to our enterprise strategy. We are making significant progress in many key areas, including maternal health. We have continued to expand our obstetrics practice consultants and quality incentive programs to additional markets given outstanding early results. These programs have helped improve timeliness to an adequacy of prenatal care and increased postpartum visit compliance, contributing to a reduction in preterm births of 12% and low birth weight deliveries of 20% in participating Medicaid populations. These programs have driven cost savings per delivery and first year mom and baby costs of 5 to 10%. and we are now offering them in 24 Medicaid and 11 commercial markets across the country. We are also working with care provider partners to enable acute care in the home, a patient-centered care alternative to traditional care in the hospital that improves cost, quality, and patient experiences. For select patients, acute care at home is safe, improves patient satisfaction, and provides high-value care, resulting in approximately a 20% reduction in cost, a 25% decrease in readmissions, and a 50% reduction in time spent in bed. We have partnerships with a number of major health systems in our markets with strong results and have significant interest from other health systems to expand this work. Connectivity with care provider partners is crucial to supporting our value-based care strategy and to enabling personalized hybrid and virtual care. We are continuing to expand bidirectional data exchanges between our systems and care providers EMRs. Across 24 markets, we are now connected with over 1,700 hospitals. In addition to enabling physicians to practice value-based care more effectively, these arrangements have simplified common business practices, resulting in more than 60% fewer requests for clinical information and more than 80% less provider appeals. This has not only enhanced operating efficiency for our clinicians and care provider partners, it has also accelerated care approval processes for consumers. Automation remains an area of focus and opportunity across Elevance Health and deep data sets like ours are foundational for generative artificial intelligence. Our data is centralized and cleansed and we are in the process of scaling digital solutions for greater impact and testing the application of new technologies. We're harnessing our adaptive artificial intelligence solution to promote identification and access to whole health services during physical health procedures like surgery. Our approach allows us to cast a broad net to perform initial screenings for depression and other social drivers of health to ensure we are addressing our members' whole health needs. Our digital chronic concierge care program is a cloud-based care management platform that connects the patient's entire care management team to triage, monitor, and engage with patients through convenient digital channels. Fully digital enrollment, engagement, and support alongside key behavioral health components provides members with highly personalized, proactive, concierge-like experiences while reducing the overall cost of care for members with chronic conditions. We're also using large language models to assist our call center agents improving their efficiency, accuracy, and quality. We're excited about these opportunities and the positive impact they will have on consumers, care provider partners, and the operating efficiency of Elevance Health. Guided by our enterprise strategy, we are fueled by a passion for making a positive difference in the world. Accordingly, environmental, social, and governance frameworks are embedded in our enterprise strategy. We continue to lead our sector with respect to ESG ratings from three of the most prominent corporate governance research, ratings, and analytics firms. And we were pleased that USA Today recently ranked Elevance Health fifth out of 400 organizations and its inaugural America's Climate Leaders, based on core emissions reductions year over year and core greenhouse gas reduction. Before I turn the call over to John, I'd like to thank our more than 100,000 associates for the work that they do every day on behalf of the members we are privileged to serve. Their dedication is what allows us to advance our strategy and deliver strong operating results service of our bold purpose to improve the health of humanity collectively our passion to improve lives and communities is unwavering now I'd like to turn the call over to John for more on our operating results John Thank You Gail and good morning to everyone on the line as Gail mentioned earlier