Elevance Health, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Anthem's fourth quarter earnings conference call. At this time, all participants are in listen-only mode. During the Q&A session, if you'd like to ask a question, you press star 1 on your phone. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Companies Management. Please go ahead. Good morning.

This is Chris Rigg, and welcome to Anthem's fourth quarter 2020 earnings call. As many of you know, I've transitioned out of Investor Relations to be the Chief Financial Officer of our Commercial and Specialty Business Division. Steve Fennel will be joining Anthem as the new Vice President of Investor Relations, and we look forward to welcoming him next week. With us this morning on the earnings call are Gail Boudreau, President and CEO, John Galena, our CFO, Pete Haitayan, President of our Commercial and Specialty Business Division, and Felicia Norwood, President of our Government Business Division. 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.

Good morning, and thank you for joining us for Anthem's fourth quarter 2020 earnings call. Despite a year challenged by COVID-19 and significant economic uncertainty, we delivered strong growth across all of our businesses. This morning, Anthem reported fourth quarter 2020 gap earnings per share of $2.19 and adjusted earnings per share of $2.54. For the full year, Anthem reported gap earnings per share of $17.98 and adjusted earnings per share of $22.48. Our four-year results reflect the ongoing impact of COVID-19 treatment costs and more normal utilization patterns in the second half of the year. Consistent with our expectations, fourth quarter utilization is above baseline, reflecting higher costs attributable to the recent surge of COVID-19 cases, coupled with the return of non-COVID-19 care utilization. and incredibly proud of what we've accomplished in 2020 and the strength and resiliency shown by our enterprise amidst the global pandemic. We met our financial commitments, delivered strong growth, and we stepped up as a business and through the commitment and compassion of our associates to support our members, partners, and communities when they needed us most to address the new increasing and urgent needs. Our growth in 2020 was powered by strategic investments we've made in recent years to streamline and simplify our business and enhance the member and customer experience. Membership trends during the year exceeded expectations on all fronts. Medical enrollment finished the year strong at 42.9 million members, representing growth of 1.9 million members over the prior year. We're pleased that our commercial business has continued to grow even in this challenging economic environment. In addition to the Meribent acquisition, growth has been fueled by strong customer retention and a steady pipeline of new account sales. In fact, sales in our large group risk business have outpaced lapses in 14 of the last 16 months, reflecting the market-leading performance of our new virtual strategies and tools as well as the benefit of our innovative products such as Total Health Total U and further integration of our pharmacy offerings from IngenioRx. Total commercial membership was flat sequentially in the fourth quarter, reflecting growth in our risk-based group business offset by in-group change in our fee-based business as a result of the economic environment. Our risk-based business has been incredibly resilient as we've deepened talent, enhanced our products, and improved sales execution across our markets. In addition, sales of our large group specialty dental and vision products outperformed 2019 results, demonstrating that employers value the affordability and simplicity of Anthem's integrated medical and specialty offerings. It's clear the actions we've taken to focus on the consumer and their unique needs are garnering a strong market response. Medicaid membership grew by roughly 1.6 million consumers during the year and nearly 300,000 lives in the fourth quarter, marked by strong organic growth aided by the pause on re-verifications and two strategic acquisitions in Nebraska and Missouri. Medicare Advantage membership ended the year at nearly 18% compared to 2019, continuing our meaningful growth in senior business. Our essential extra suite of benefit options are resonating with seniors, as we saw a greater than 300% increase in the selection of benefits, such as personal home helper services, transportation benefits, and access to personal home safety devices. We're pleased with our continued growth in this important segment for Anthem and the demonstrated resilience of our diversified portfolio. Our AEP performance is in line with expectations, and we expect another year of double-digit growth, once again outperforming the industry average growth rate. Over the past year, Anthem stepped up as a trusted health partner to support our stakeholders as they navigated the pandemic. We adapted and accelerated our digital innovations, enhanced our focus on community health, transformed many of our products and solutions, and simplified our processes in the context of COVID-19. We recognize our critical role in ensuring safe access to care in COVID-19 vaccinations and have launched a nationwide partnership with Lyft to support universal access to vaccines. We are leveraging Anthem's local market strength, provider relationships, and data assets in combination with this on-demand transportation network to serve at-risk communities disproportionately affected by COVID-19. Our goal is to provide 60 million free rides to and from vaccination sites for low-income, uninsured, and at-risk communities. Further, we recently launched a new online C-19 vaccine tracker to provide personalized vaccination insights for Anthem members. This web-based dashboard aggregates vaccine-related data from public and private sources to give consumers a real-time view of vaccine distribution progress and help to inform our members when they might be eligible to receive the vaccine. We recognize the increased social and health needs of our members and communities during this pandemic. With each of our Medicaid states, we're performing detailed community needs assessments to create localized solutions with our partners to support issues with housing, job training, and free internet for underserved children. And our Medicare members are providing access to foundation social workers to help coordinate local resources and services to support their needs around food insecurity, transportation, and more. For members with complex conditions such as cancer, receiving care has become even more difficult during this pandemic. In response, we've launched Anthem's Concierge Cancer Care Program. From diagnosis to recovery, members receive personalized 24 by 7 guidance and support through Life Health Online and remote monitoring technology with access to top tier cancer facilities across the country. This unique program has more than tripled since its launch in 2020. It is now available to nearly 900,000 members. Throughout the course of this past year, our deeply committed associates have stepped up and shown great compassion and care to those we serve and to one another With more than 100,000 volunteer hours logged in our local communities through in-person and virtual giving, our associates have embodied our values and culture, reflecting the fabric of who we are. As we move into 2021, we will continue to modernize our business to drive growth. Efforts to transform our business are not new, and in fact, our focus was sharpened and investments accelerated in light of the pandemic. Today, we are continuing to consolidate our systems, automate and streamline processes, and embed digital and AI across the enterprise to simplify and improve the customer experience and deepen engagement with all those we serve. We recognize the power of digital technologies to reach more of our stakeholders, particularly as part of our community health efforts. Sydney Health is personalizing care for consumers, helping to bridge gaps in care and improve outcomes for underserved populations. In fact, Sydney Health recently received several awards, including Corporate Insights Gold Medal for Virtual Care, recognizing our ability to give members more options in how they engage with care providers, whether it be via chat, email, phone, or video. We're excited to be introducing the first-of-its-kind digital nutrition assistant. Through the use of AI, our Sydney Nutrition App will be able to automatically recognize food and log meals in real time, providing users with personalized information and progress on nutrition goals. This integrated tool is currently available to Anthem Associates and will be available more broadly later this year to provide our members with a fully connected health and wellness experience. We know consumers are experiencing healthcare more digitally. So we focused on creating greater access to care via telehealth. Particularly in the behavioral health space, the usage has gone up from single-digit pre-pandemic percentage levels to as much as 60% of all visits. And that level has stayed consistent over the past four months. Our AI-based CareFinder is now live for all segments of our business and differentiates Anthem with its fully integrated approach to using predictive tools and AI to help guide members to the right care at the right time and place for them, which could mean via text, phone, video, in-person, or chat. Additionally, through our AI-based predictive service and chat functionality, We were able to redirect 5 million member calls last year to on-demand digital channels to provide members with information they needed quickly and efficiently. Today, we're delivering on consumer demands for simplicity and affordability, and we're helping to restore hope while making positive and sustainable change for our local communities. Grounded by our mission and driven by our purpose to improve the health of humanity, We move into 2021 with a bold agenda as we continue to grow and transform our business and fundamentally improve the healthcare experience for those we serve. Our 2021 adjusted EPS guidance of greater than $24.50 reflects challenges unforeseen when we reported third quarter results, specifically Adjusted net income guidance reflects the passage of the Consolidated Appropriations Act, which includes a one-year increase in Medicare physician rates, as well as other COVID-19-related impacts on the Medicare business. All in, we estimate these items equate to a 50 to 70 cent net negative headroom. Importantly, these factors are transient and should diminish as we move into 2022. Looking ahead, We are poised to deliver membership growth of nearly 1.5 million members at the midpoint, driven predominantly by our risk-based businesses. Our outlook reflects our ability to deliver solid enrollment growth despite the uncertainties in 2021. We remain confident in our ability to achieve long-term 12% to 15% earnings growth and look forward to our March 3rd Virtual Investor Day. We will provide a more detailed look into our strategy, including the transformative digital and community health initiatives that are driving real growth across our business. And now I'll turn it over to John Galena for a detailed look at our performance numbers. John? Thank you, Gail, and good morning.