Elevance health reports second quarter 2022 results, raises full year outlook
Indianapolis--(business wire)--elevance health, inc. (nyse: elv) reported second quarter 2022 results reflecting strong financial performance, including double-digit growth in revenue, operating earnings, and adjusted earnings per share. "the disciplined execution of our strategy, and the balance and resilience of our diversified portfolio of businesses has enabled us to deliver another quarter of strong organic growth, and we have raised our outlook for 2022 earnings per share as a result," said gail k. boudreaux, president and ceo. "our recent name change to elevance health and the broader rebranding strategy underscores our transformation to a lifetime, trusted health partner and our diversified set of businesses that lend resilience in any business environment. we are uniquely well-positioned for growth in the future as we remain focused on meeting the needs of our clients and customers." the company now expects gaap net income to be greater than $25.28 per share, including approximately $3.42 per share of net unfavorable items. the company now expects full-year adjusted net income to be greater than $28.70 per share, based on stronger than expected results year-to-date. *refer to gaap reconciliation tables. consolidated highlights earnings per share: gaap net income was $6.79 per share in the second quarter, including net negative adjustment items of $1.25 per share. adjusted net income was $8.04* per share, up 14.4% from $7.03 in the same period a year ago. *please refer to the gaap reconciliation tables. membership: medical enrollment totaled approximately 47.1 million members as of june 30, 2022, an increase of 2.7 million, or 6.1 percent from the prior year quarter. government business enrollment increased by 1.6 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 launch of healthy blue in north carolina, the acquisitions of paramount advantage and integra managed care and organic growth in medicare advantage. commercial & specialty business enrollment increased by 1.2 million year over year primarily driven by strong sales in both fee-based and risk-based businesses. during the second quarter of 2022, medical enrollment increased by 276 thousand lives driven by organic growth in medicaid due to suspension of eligibility recertification, higher bluecard activity and the acquisition of integra managed care, which added 43 thousand members. operating revenue: operating revenue was $38.5 billion in the second quarter of 2022, an increase of $5.2 billion, or 15.6 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 advantage, as well as premium rate increases to cover overall cost trends and growth in medicare advantage and commercial risk-based membership. the increase in operating revenue was further attributable to the growth in pharmacy product revenue within ingeniorx, the acquisition of integra managed care and the launch of healthy blue in north carolina. benefit expense ratio: the benefit expense ratio was 87.0 percent in the second quarter of 2022, an increase of 20 basis points over the prior year quarter. the increase was primarily driven by a shift in mix of business driven by faster growth in government programs, which have a higher benefit expense ratio, as compared to growth in the commercial & specialty risk business, which represented 27% of premium revenue in the second quarter, down from 29% in the prior year quarter. medical claims reserves established at december 31, 2021 developed in line with the company’s expectations as of the second quarter of 2022. days in claims payable: days in claims payable was 47.8 days as of june 30, 2022, an increase of 0.9 days from march 31, 2022 and a decrease of 0.3 days compared to june 30, 2021. the timing of certain provider pass-through payments and corresponding reserves set in the current year had the effect of increasing days in claims payable by 1.8 days, which we expect will reverse in the third quarter, while the timing of the acquisitions of mmm and mynexus increased days in claims payable by 1.6 days in the second quarter of 2021. sg&a expense ratio: the sg&a expense ratio was 11.1 percent in the second quarter of 2022, a decrease of 40 basis points from 11.5 percent in the second 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 1.5 times net income in the second quarter of 2022, an increase of $769 million as compared to the prior year quarter. the year-on-year increase was driven by the impact of working capital changes, including the timing of certain provider pass-through payments. share repurchase program: during the second quarter of 2022, the company repurchased 1.3 million shares of its common stock for $624 million, at a weighted average price of $489.07. year-to-date, as of the end of the second quarter, the company repurchased 2.5 million shares of its common stock for $1.2 billion, at a weighted average price of $471.72. as of june 30, 2022, the company had approximately $3.0 billion of board-approved share repurchase authorization remaining. cash dividend: during the second quarter of 2022, the company paid a quarterly dividend of $1.28 per share, representing a distribution of cash totaling $309 million. on july 19, 2022, the audit committee of the company's board of directors declared a third quarter 2022 dividend to shareholders of $1.28 per share. the third quarter dividend is payable on september 23, 2022, to shareholders of record at the close of business on september 9, 2022. investment portfolio & capital position: during the second quarter of 2022, the company recorded net losses of $231 million. during the second quarter of 2021, the company recorded net gains of $172 million. these amounts are excluded from adjusted earnings per share. as of june 30, 2022, the company’s net unrealized loss position in the investment portfolio was $2.0 billion, consisting primarily of fixed maturity securities. as of june 30, 2022 cash and investments at the parent company totaled approximately $948 million. reportable segments elevance health 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 carelon companies, formerly known as our diversified business group, and corporate expenses not allocated to our other reportable segments). elevance health, inc. reportable segment highlights (unaudited) (in millions) three months ended june 30 six months ended june 30 2022 2021 change 2022 2021 change operating revenue commercial & specialty business $ 10,561 $ 9,550 10.6 % $ 20,830 $ 19,041 9.4 % government business 23,835 20,066 18.8 % 47,593 39,349 21.0 % ingeniorx 7,071 6,219 13.7 % 13,754 12,081 13.8 % other 3,298 2,517 31.0 % 6,519 4,887 33.4 % eliminations (6,283 ) (5,073 ) 23.9 % (12,328 ) (9,981 ) 23.5 % total operating revenue1 $ 38,482 $ 33,279 15.6 % $ 76,368 $ 65,377 16.8 % operating gain commercial & specialty business $ 806 $ 791 1.9 % $ 1,888 $ 2,059 (8.3 )% government business 996 868 14.7 % 1,785 1,346 32.6 % ingeniorx 479 405 18.3 % 877 812 8.0 % other 86 17 405.9 % 264 25 956.0 % total operating gain1 $ 2,367 $ 2,081 13.7 % $ 4,814 $ 4,242 13.5 % operating margin commercial & specialty business 7.6 % 8.3 % (70) bp 9.1 % 10.8 % (170) bp government business 4.2 % 4.3 % (10) bp 3.8 % 3.4 % 40 bp ingeniorx 6.8 % 6.5 % 30 bp 6.4 % 6.7 % (30) bp total operating margin1 6.2 % 6.3 % (10) bp 6.3 % 6.5 % (20) bp 1. see “basis of presentation.” 2. "nm" = calculation not meaningful. commercial & specialty business: operating gain in the commercial & specialty business segment totaled $806 million in the second quarter of 2022, an increase of $15 million from $791 million in the second quarter of 2021. the increase was primarily driven by the positive contribution from growth in risk- and fee-based membership, partially offset by the net unfavorable effect of covid. government business: operating gain in the government business segment was $996 million in the second quarter of 2022, an increase of $128 million from $868 million in the second quarter of 2021. the increase was primarily attributable to premium rates in medicare that better reflect the acuity of our members and membership growth in medicaid. ingeniorx: operating gain was $479 million in the second quarter of 2022, an increase of $74 million from $405 million in the second quarter of 2021. the increase was driven by an in-year out of period favorable adjustment and the impact of higher prescription volume associated with growth in integrated medical and pharmacy members. other: the company reported an operating gain of $86 million in the other segment for the second quarter of 2022, an increase of $69 million from $17 million in the prior year quarter. the increase was driven by improved performance in carelon's affiliated and unaffiliated earnings. basis of presentation 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 second 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) 866-430-8797 (domestic replay) 312-470-0178 (international) 203-369-0943 (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 august 20, 2022. the call will also be available through a live webcast at www.elevancehealth.com under the “investors” link. a webcast replay will be available following the call. about elevance health, inc. elevance health is a lifetime, trusted health partner fueled by its purpose to improve the health of humanity. the company supports consumers, families, and communities across the entire care journey – connecting them to the care, support, and resources they need to lead healthier lives. elevance health’s companies serve more than 118 million people through a diverse portfolio of industry-leading medical, digital, pharmacy, behavioral, clinical, and complex care solutions. for more information, please visit www.elevancehealth.com or follow us @elevancehealth on twitter and elevance health on linkedin. elevance health, inc. membership summary (unaudited and in thousands) change from medical membership june 30, 2022 june 30, 2021 march 31, 2022 june 30, 2021 march 31, 2022 commercial & specialty business individual 803 738 818 8.8 % (1.8 )% group risk-based 4,020 3,851 4,028 4.4 % (0.2 )% commercial risk-based 4,823 4,589 4,846 5.1 % (0.5 )% bluecard® 6,445 6,235 6,370 3.4 % 1.2 % group fee-based 20,086 19,372 20,148 3.7 % (0.3 )% commercial fee-based 26,531 25,607 26,518 3.6 % — % total commercial & specialty business 31,354 30,196 31,364 3.8 % — % government business medicare advantage 1,946 1,824 1,921 6.7 % 1.3 % medicare supplement 942 936 939 0.6 % 0.3 % total medicare 2,888 2,760 2,860 4.6 % 1.0 % medicaid 11,181 9,754 10,919 14.6 % 2.4 % federal employees health benefits 1,628 1,631 1,632 (0.2 )% (0.2 )% total government business 15,697 14,145 15,411 11.0 % 1.9 % total medical membership 47,051 44,341 46,775 6.1 % 0.6 % other membership life and disability members 4,779 4,732 4,679 1.0 % 2.1 % dental members 6,620 6,606 6,649 0.2 % (0.4 )% dental administration members 1,589 1,497 1,588 6.1 % 0.1 % vision members 9,385 7,819 9,211 20.0 % 1.9 % medicare part d standalone members 276 433 279 (36.3 )% (1.1 )% elevance health, inc. consolidated statements of income (unaudited) (in millions, except per share data) three months ended june 30 2022 2021 change revenues premiums $ 33,076 $ 28,533 15.9 % product revenue 3,568 3,042 17.3 % administrative fees and other revenue 1,838 1,704 7.9 % total operating revenue 38,482 33,279 15.6 % net investment income 381 400 (4.8 )% net (losses) gains on financial instruments (231 ) 172 (234.3 )% total revenues 38,632 33,851 14.1 % expenses benefit expense 28,777 24,763 16.2 % cost of products sold 3,069 2,614 17.4 % selling, general and administrative expense 4,269 3,821 11.7 % interest expense 208 205 1.5 % amortization of other intangible assets 166 90 84.4 % loss on extinguishment of debt — 5 (100.0 )% total expenses 36,489 31,498 15.8 % income before income tax expense 2,143 2,353 (8.9 )% income tax expense 493 552 (10.7 )% net income 1,650 1,801 (8.4 )% net loss/(income) attributable to noncontrolling interests 3 (8 ) nm shareholders' net income $ 1,653 $ 1,793 (7.8 )% shareholders' net income per diluted share $ 6.79 $ 7.25 (6.3 )% diluted shares 243.4 247.4 (1.6 )% benefit expense as a percentage of premiums 87.0 % 86.8 % 20 bp selling, general and administrative expense as a percentage of total operating revenue 11.1 % 11.5 % (40) bp income before income tax expense as a percentage of total revenue 5.5 % 7.0 % (150) bp "nm" = calculation not meaningful elevance health, inc. consolidated statements of income (unaudited) (in millions, except per share data) six months ended june 30 2022 2021 change revenues premiums $ 65,861 $ 56,209 17.2 % product revenue 6,869 5,779 18.9 % administrative fees and other revenue 3,638 3,389 7.3 % total operating revenue 76,368 65,377 16.8 % net investment income 741 691 7.2 % net (losses) gains on financial instruments (382 ) 168 (327.4 )% total revenues 76,727 66,236 15.8 % expenses benefit expense 56,992 48,462 17.6 % cost of products sold 5,952 4,927 20.8 % selling, general and administrative expense 8,610 7,746 11.2 % interest expense 409 397 3.0 % amortization of other intangible assets 295 170 73.5 % loss on extinguishment of debt — 5 (100.0 )% total expenses 72,258 61,707 17.1 % income before income tax expense 4,469 4,529 (1.3 )% income tax expense 1,024 1,061 (3.5 )% net income 3,445 3,468 (0.7 )% net loss/(income) attributable to noncontrolling interests 13 (10 ) nm shareholders' net income $ 3,458 $ 3,458 — % shareholders' net income per diluted share $ 14.18 $ 13.95 1.6 % diluted shares 243.9 247.8 (1.6 )% benefit expense as a percentage of premiums 86.5 % 86.2 % 30 bp selling, general and administrative expense as a percentage of total operating revenue 11.3 % 11.8 % (50) bp income before income tax expense as a percentage of total revenue 5.8 % 6.8 % (100) bp "nm" = calculation not meaningful elevance health, inc. consolidated balance sheets (in millions) june 30, 2022 december 31, 2021 assets (unaudited) current assets: cash and cash equivalents $ 6,456 $ 4,880 fixed maturity securities 25,765 26,267 equity securities, current 1,572 1,881 premium receivables 6,757 5,681 self-funded receivables 3,844 4,010 other receivables 3,600 3,749 other current assets 5,661 4,654 total current assets 53,655 51,122 long-term investments: fixed maturity securities 603 632 other invested assets 5,398 5,225 property and equipment, net 4,090 3,919 goodwill 24,367 24,228 other intangible assets 10,762 10,615 other noncurrent assets 2,002 1,719 total assets $ 100,877 $ 97,460 liabilities and equity liabilities current liabilities: medical claims payable $ 15,127 $ 13,518 other policyholder liabilities 5,577 5,521 unearned income 971 1,153 accounts payable and accrued expenses 5,850 4,970 short-term borrowings 175 275 current portion of long-term debt 2,248 1,599 other current liabilities 9,360 7,849 total current liabilities 39,308 34,885 long-term debt, less current portion 21,165 21,157 reserves for future policy benefits 822 802 deferred tax liabilities, net 2,021 2,805 other noncurrent liabilities 1,694 1,683 total liabilities 65,010 61,332 shareholders’ equity common stock 2 2 additional paid-in capital 9,134 9,148 retained earnings 28,825 27,088 accumulated other comprehensive loss (2,149 ) (178 ) total shareholders’ equity 35,812 36,060 noncontrolling interests 55 68 total equity 35,867 36,128 total liabilities and equity $ 100,877 $ 97,460 elevance health, inc. consolidated statements of cash flows (unaudited) (in millions) six months ended june 30 2022 2021 operating activities net income $ 3,445 $ 3,468 adjustments to reconcile net income to net cash provided by operating activities: net losses (gains) on financial instruments 382 (168 ) equity in net earnings of other invested assets (258 ) (309 ) depreciation and amortization 751 591 deferred income taxes (172 ) (8 ) share-based compensation 122 133 changes in operating assets and liabilities: receivables, net (662 ) (1,632 ) other invested assets 32 (44 ) other assets (419 ) (247 ) policy liabilities 1,514 1,912 unearned income (182 ) (180 ) accounts payable and other liabilities 632 560 income taxes (159 ) 106 other, net (33 ) 6 net cash provided by operating activities 4,993 4,188 investing activities purchases of investments (13,253 ) (11,221 ) proceeds from sale of investments 7,140 6,345 maturities, calls and redemptions from investments 4,347 2,246 changes in securities lending collateral (620 ) (642 ) purchases of subsidiaries, net of cash acquired (609 ) (3,442 ) purchases of property and equipment (549 ) (489 ) other, net (58 ) (29 ) net cash used in investing activities (3,602 ) (7,232 ) financing activities net proceeds from commercial paper borrowings 250 300 net proceeds from (repayments of) short-term borrowings (100 ) 175 net proceeds from long-term borrowings 357 2,510 changes in securities lending payable 620 642 changes in bank overdrafts 817 364 repurchase and retirement of common stock (1,169 ) (927 ) cash dividends (618 ) (555 ) proceeds from issuance of common stock under employee stock plans 116 141 taxes paid through withholding of common stock under employee stock plans (88 ) (93 ) other, net 10 11 net cash provided by financing activities 195 2,568 effect of foreign exchange rates on cash and cash equivalents (10 ) (7 ) change in cash and cash equivalents 1,576 (483 ) cash and cash equivalents at beginning of period 4,880 5,741 cash and cash equivalents at end of period $ 6,456 $ 5,258 elevance health, inc. reconciliation of medical claims payable six months ended june 30 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 133 420 420 339 — net incurred medical claims: current year 55,737 48,343 100,440 85,094 78,695 prior years redundancies(1) (972 ) (1,772 ) (1,703 ) (637 ) (500 ) total net incurred medical claims 54,765 46,571 98,737 84,457 78,195 net payments attributable to: current year medical claims 42,882 37,533 88,156 74,629 70,294 prior years medical claims 10,401 7,767 8,829 7,692 6,519 total net payments 53,283 45,300 96,985 82,321 76,813 net medical claims payable, end of period 14,876 12,780 13,261 11,089 8,614 ceded medical claims payable, end of period 13 41 21 46 33 gross medical claims payable, end of period $ 14,889 $ 12,821 $ 13,282 $ 11,135 $ 8,647 current year medical claims paid as a percentage of current year net incurred medical claims 76.9 % 77.6 % 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 7.9 % 19.0 % 18.1 % 8.0 % 7.4 % prior year redundancies in the current year as a percentage of prior year net incurred medical claims 1.0 % 2.1 % 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. elevance health, inc. gaap reconciliation (unaudited) elevance health, 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 elevance health, 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 june 30 six months ended june 30 (in millions, except per share data) 2022 2021 change 2022 2021 change shareholders' net income $ 1,653 $ 1,793 (7.8 )% $ 3,458 $ 3,458 — % add / (subtract): net losses (gains) on financial instruments 231 (172 ) 382 (168 ) amortization of other intangible assets 166 90 295 170 loss on extinguishment of debt — 5 — 5 transaction and integration related costs 14 12 23 21 litigation expenses 4 6 5 12 tax impact of non-gaap adjustments (111 ) 6 (189 ) (19 ) net adjustment items 304 (53 ) 516 21 adjusted shareholders' net income $ 1,957 $ 1,740 12.5 % $ 3,974 $ 3,479 14.2 % shareholders' net income per diluted share $ 6.79 $ 7.25 (6.3 )% $ 14.18 $ 13.95 1.6 % add / (subtract): net losses (gains) on financial instruments 0.95 (0.70 ) 1.57 (0.68 ) amortization of other intangible assets 0.68 0.36 1.21 0.69 loss on extinguishment of debt — 0.02 — 0.02 transaction and integration related costs 0.06 0.05 0.09 0.08 litigation expenses 0.02 0.02 0.02 0.05 tax impact of non-gaap adjustments (0.46 ) 0.02 (0.77 ) (0.08 ) rounding impact — 0.01 (0.01 ) 0.01 net adjustment items 1.25 (0.22 ) 2.11 0.09 adjusted shareholders' net income per diluted share $ 8.04 $ 7.03 14.4 % $ 16.29 $ 14.04 16.0 % full year 2022 outlook shareholders' net income per diluted share greater than $25.28 add / (subtract): net losses on financial instruments $1.57 transaction and integration related costs $0.09 litigation expenses $0.02 amortization of other intangible assets approximately $3.07 tax impact of non-gaap adjustments approximately $(1.33) net adjustment items approximately $3.42 adjusted shareholders' net income per diluted share greater than $28.70 three months ended june 30 six months ended june 30 (in millions) 2022 2021 change 2022 2021 change income before income tax expense $ 2,143 $ 2,353 (8.9 )% $ 4,469 $ 4,529 (1.3 )% net investment income (381 ) (400 ) (741 ) (691 ) net losses (gains) on financial instruments 231 (172 ) 382 (168 ) interest expense 208 205 409 397 amortization of other intangible assets 166 90 295 170 loss on extinguishment of debt — 5 — 5 reportable segments operating gain $ 2,367 $ 2,081 13.7 % $ 4,814 $ 4,242 13.5 % 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 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.
