Michael Neidorff

Chairman, President, and Chief Executive Officer



In 2020, 福利视频 demonstrated our agility through our ability to meet the unparalleled challenges that defined the year. The global magnitude of the COVID-19 pandemic touched every aspect of our business as we shifted operations to address employee health and safety, while continuing to meet the needs of our members. The global pandemic served as a wake-up call for many, exposing vulnerabilities in healthcare and government infrastructures in addition to systemic disparities that impact underserved communities. The pandemic also showed the courage and selflessness of individuals, as healthcare professionals and essential workers around the globe met the virus's many challenges with a consistent outpouring of compassion, dedication, and commitment.

At 福利视频, we are proud of the new and enhanced initiatives we implemented to protect and serve our members, employees, and the nation鈥檚 frontline healthcare workers. I believe purpose-driven organizations have the greatest longevity because they deliver tangible value to the people they serve. We have a long track record of supporting our communities 鈥 a commitment that only intensified in 2020 as America confronted serious issues of racial equity and social justice. 福利视频 embraced the opportunity to engage in courageous conversations with employees and community partners. Across the organization, our commitment to the value of diversity was as strong as ever.

In a year defined by a healthcare crisis and social unrest, our ability to deliver value to our stakeholders served as a testament to the strength of our capabilities and talents, as well as our adaptability to the ever-changing world in which we operate. As we move into 2021, we continue to prove why 福利视频 is a leader in the evolving healthcare industry.

CLEAR GROWTH DRIVERS

福利视频 has transformed from a health insurer that originally served customers in just three counties across two states to a $111 billion diversified international healthcare enterprise with leadership positions across multiple products and geographic markets. The diversification and scale of our business today are critical elements of our future long-term success, and provide us with attractive opportunities for growth.

During 2020, we grew our membership by approximately 10.3 million members to serve over 25.5 million members at the end of the year, which exceeded our initial expectations and drove incremental revenue growth. Furthermore, in 2020 overall we delivered revenue and adjusted diluted EPS growth of 49% and 13%, respectively.

We completed the acquisition of WellCare in January 2020, executing the integration of our companies throughout the year while meeting all business and financial expectations. The addition of WellCare added scale to Medicare, pharmacy, and key Medicaid markets. We now operate in all 50 states, and we are beginning to see the benefits of that addition in our performance. As part of our multiyear strategy, we'll continue to expand into new markets and go deeper in each of our existing markets through further product development.

In Medicaid, we feel we are positioned for continued success. We expect COVID-related membership growth to peak in April 2021, with over 1.9 million new members, primarily in Medicaid. We look forward to serving our new members in North Carolina and Oklahoma and continue to participate in an active request-for-proposal pipeline.

In the Marketplace business, we saw meaningful membership growth in 2020 across our broad geographic footprint. However, as a result of aggressive price competition, we are forecasting membership losses in select counties for 2021. We have experienced these dynamics before, and we believe the best strategy is to take a disciplined approach. We remain the leader in the Marketplace, and we are confident in our strategy and in the continued growth of our business.

As the industry leader in government-sponsored healthcare, we have unique insights into the events of 2020. We provide healthcare to 1 in 15 Americans and have seen firsthand how the pandemic has affected millions of individuals from every walk of life, but especially the most underserved and complex communities. This view of the healthcare landscape drives 福利视频 to innovate and imagine new ways to better serve our members.

CONTINUED INVESTMENTS IN OUR BUSINESS

At 福利视频, technology propels everything we do, and over the next 10 years, we believe the evolution of digital infrastructure will transform the healthcare industry. In order to remain a leader, we are strategically investing in innovative, organic initiatives and acquisitions that are intended to enhance our technological resources as well as our broader, whole-health capabilities.

It is time for a fundamental shift in healthcare, moving away from paper-based charts and fax machines toward digital infrastructure and integrated systems with tools that support the needs of the modern customer. To create a delightful experience for our members and providers, we are committed to removing barriers and roadblocks that have been built over time. We believe our experience in providing healthcare to vulnerable populations, combined with our investments in automation and technology, uniquely positions 福利视频 to power this new generation of healthcare management.

福利视频鈥檚 2020 acquisition of Apixio highlights our focus on ensuring that technology is enabling everything we do. Apixio's proprietary artificial intelligence platform renders data from clinical notes, administrative forms, and other clinical text that are then fed into health profiles to be analyzed. In combination with Interpreta, 福利视频's powerful analytics engine, Apixio will help physicians improve quality of care. Furthermore, this technology will enrich 福利视频 applications and services in an effort to create better outcomes for our members and lessen the burden on our providers, allowing us to operate more efficiently.

This transformative work would not be possible without a world-class team of talented professionals. On July 1, 2020, 福利视频 announced our establishment of a new East Coast headquarters in Charlotte, North Carolina. This technology hub is expected to create 6,000 new jobs, and 福利视频 will invest $1 billion in the Charlotte community over time.

Technology will play a key role in our growth and continued innovation, allowing us to become an even more efficient organization through our highly disciplined approach. We are confident in our ability to continue investing in new products, operational systems, and technologies that will deliver better health outcomes and lower costs for our customers and members.

We will continue to invest in new products, systems, and technologies
to deliver better health outcomes and lower costs for our customers and members.

COMMITMENT TO SOCIAL RESPONSIBILITY AND REMOVING BARRIERS TO HEALTH

Given our experience in serving at-risk populations, we believe we are in a unique position to address the environmental, social, and health barriers that affect underserved individuals and families, particularly as we consider the impact of COVID-19. Additionally, we remain committed to a culture of sound corporate governance and the secure and responsible management of information and data.

In 2020, we made environmental, social, and governance outcomes an enterprise-wide priority. Our multifaceted approach included the establishment of an Environmental and Social Responsibility Committee of the Board of Directors, enhanced governance, and a renewed focus on employee engagement.

Throughout 2020, 福利视频 and our subsidiaries took action to address the social determinants of health that contribute to an individual鈥檚 health and wellness beyond access to medical care. These important investments include a multilayered partnership with Feeding America庐 and the launch of the Workforce Innovation Care Coordination Model, which has increased access and success for our members enrolled in workforce programs.

GROWTH AND INNOVATION

On December 30, 2020, we completed our acquisition of PANTHERx, a leader in rare disease pharmacy, bringing unique capability to our comprehensive pharmacy portfolio. PANTHERx will continue to operate independently as part of 福利视频鈥檚 Envolve Pharmacy Solutions, our total drug management program focusing on Pharmacy Benefit Manager (PBM) services and specialty pharmacy solutions.

Looking ahead to 2021, we announced our intent to acquire Magellan Health, which we feel represents attractive growth opportunities as we integrate behavioral health capabilities with physical health services. The transaction will make 福利视频 one of the nation鈥檚 largest behavioral health platforms, offering behavioral health services for 41 million unique members, nearly half of whom will be new to 福利视频.

The transaction also advances our growing Health Care Enterprises group, an independent group that serves as a vehicle for companies building innovative technologies and service models. Magellan Health will sit independently within Health Care Enterprises and will be focused on serving new and existing customers as well as 福利视频 members.

As we reflect on 2020, I want to thank the more than 70,000 employees across the enterprise who remained committed to our mission, continued to support our providers and state partners, and ensured continuity of care for our members during a challenging year.

We look forward to building on 福利视频鈥檚 growth and innovation as we enhance our ability to deliver value to our stakeholders. Increasing access to high-quality healthcare takes many forms, and I challenge those working within the healthcare industry and those outside to consider how we can innovate, inform, and invest in the health of those in need. From increasing our investments in Federally Qualified Health Centers (FQHC) to modernizing our digital infrastructure, advances must be made while keeping the needs of vulnerable populations top of mind. We are proud to have earned the trust of those who support us in our purpose of transforming the health of the communities we serve.

Michael Neidorff's signature

MICHAEL F. NEIDORFF

Chairman, President, and Chief Executive Officer