Ladies and gentlemen, thank you for standing by and welcome to the Anthem Fourth Quarter Results Conference Call. At this time, all lines are in a listen-only mode. Later, there will be a question-and-answer session. Instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to the company’s management.

Good morning and welcome to Anthem’s fourth quarter 2017 earnings call. This is Doug Simpson and with us this morning are Gail Boudreaux, President and CEO; John Gallina, our CFO; Pete Haytaian, President of our Government Business Division; Brian Griffin, President of our Commercial Specialty Business Division; and Tom Zielinski, our General Counsel. Gail will begin the call by giving an overview of our first few months at Anthem and her vision for the company. John will then discuss our financial results for 2017 and the fourth quarter, our business unit performance and our key financial metrics performance. Finally, Gail will go over our initial 2018 outlook. We will then 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 at 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 advice listeners to review the risk factors discussed in today’s press release and in our quarterly and annual filings with the SEC. I will now turn the call over to Gail.

Good morning, everyone. Thank you for joining us as we review Anthem’s fourth quarter and year end 2017 performance and our plans for continued growth in 2018 and beyond. This morning, we reported fourth quarter 2017 GAAP earnings per share of $4.67 and adjusted earnings per share of $1.29, which were ahead of our expectations driven by balanced performance across our businesses. Operating revenues in 2017 grew by 5.8% to over $89 billion. Our medical loss ratio came in at a better than expected 86.4% for the year and operating cash flow exceeded $4.2 billion for the year growth of 28% over 2016. We are pleased with our improved business momentum in the quarter and our continued traction in the marketplace as evidenced by solid membership trends in key parts of our business, including our fully insured large and small group commercial markets and the completion of the HealthSun transaction, which added approximately 40,000 new consumers to our Medicare Advantage business. We finished 2017 slightly ahead of expectations serving the benefit needs of more than 40.2 million consumers, representing growth of 325,000 members during the year. Also medical costs were well managed for the year and our full year medical loss ratio came in better than expected. Our continued focus on cost of care improvements drove improved medical expense trends, specifically in our Medicaid individual and local group insured businesses and resulted in a medical loss ratio of 88.6% in the fourth quarter. As a result of our solid fourth quarter 2017 results, we entered 2018 with operating momentum and are well positioned for sustainable long-term high-quality earnings growth. One of my key priorities since joining Anthem a little more than 2 months ago has been to perform a thorough review of the business and to quickly gain a deep…

Thank you, Gail and good morning. As Gail mentioned, our strong fourth quarter 2017 results came in ahead of expectations and we entered 2018 with positive operating momentum. Fourth quarter 2017 GAAP earnings per share was $4.67 and adjusted earnings per share was $1.29. During the fourth quarter, we recorded $1.1 billion one-time non-cash deferred tax benefit as a result of the recently passed tax reform legislation. For the full year 2017, GAAP earnings per share, was $14.35 and adjusted earnings per share was $12.04 representing growth of 9.5% over 2016. The results are within our longer term targeted range and we are optimistic that we can build on this performance and drive towards the upper end of our targeted range. Membership came in slightly ahead of expectations primarily driven by our fully insured business as we finished the year with over 40.2 million members representing growth of 325,000 members during 2017. Fully insured membership finished 2017 with 15.3 million lives, a slight increase over the prior year and a little ahead of our latest projections. The better-than-expected enrollment was primarily driven by higher membership gains in the Medicaid business and approximately 40,000 HealthSun members, which closed at the end of the fourth quarter. Year end 2017 self-funded membership totaled $25 million representing growth of $278,000 or 1.1% versus the end of 2016. The increase over the last 12 months was mainly driven by growth in our local group business as our market leading medical cost value proposition continues to drive new account wins in the marketplace. Our 2017 operating revenue of $89.1 billion grew by $4.9 billion or 5.8% during the year. The increase is reflective of our enrollment growth, especially in Medicare and local group as well as premium increases across their business to cover overall cost trends.…

Thanks John. Before I begin, it’s important to note that our 2018 outlook does not include any impact from the pending acquisition of America’s 1st Choice, which we continue to expect to close during the first quarter. We expect operating revenues to grow to a range of $90.5 billion to $91.5 billion in 2018, reflecting the impact of the return of the health insurer fee in 2018. Premium rate increases to cover overall medical cost trends and growth in higher revenue PMPM insured membership in the government business. These will be partially offset by the impact of reducing our footprint in the individual ACA compliant marketplace. In total, we expect our enrollment in 2018 to be relatively flat to down a little more than 200,000. In government, we expect another year of solid growth with membership expected to increase by more than 600,000 consumers served. However, we expect commercial membership to decrease by about 700,000 members, because of our reduced individual ACA compliant footprint. We expect Medicaid to add about 500,000 lives reflecting the recently announced Minnesota partnership as well as organic growth from existing contracts. During the year, we also expect to be active participants in various RFPs. With our Medicare business, we are projecting growth of approximately 125,000 members, primarily, in our individual Medicare advantage product offering to an increasing percentage of enrollment in 4-star plans. This represents individual Medicare advantage growth in the mid double-digits and has fast driven the overall market average of 6% to 9%. In commercial insured, we project our enrollment will decline by a little more than 1 million members over the next 12 months. Our individual ACA and non-ACA compliant enrollment is expected to decline by approximately 950,000, reflecting the actions we took to only participate in rating regions where we have…

Thank you. [Operator Instructions] Your first question comes from the line of A.J. Rice from Credit Suisse. Please go ahead.

Hi, everybody. Welcome to Board Gail. Best wishes in the new role there. I was going to jump off of some of your comments about strategy in two quick areas to ask about. First, you touched a little bit on the IngenioRx stand up. I wondered if you would highlight what you are looking for in terms of milestones to know that is on track, any opportunities or challenges, which you see in that or maybe looking at it with fresh eyes would highlight and then aspect about it with the selling season for 2019 to 2020, I know most of it happens in 2020, 2021, but I am wondering given 3-year contracting, how fast do you think you guys would get engaged in actually marketing the capabilities to try to win outside accounts?

Well, great. Good morning, A.J. and thank you for the comment. First, let me address your overall comments on IngenioRx and my thoughts, but then I am going to ask Brian Griffin who leads that area to also add his commentary on it. First and foremost, as I think about the Ingenio contract with CBS, it’s quite frankly great value creator for us. As I shared in my opening comments, our ability to deliver greater than $4 billion of gross savings with 20% of that on a pretax basis incurring to our shareholders just really incredible opportunity for us. Our opportunity here is really first and foremost to focus on execution. We have got a lot of optionality in that contract and I remain very confident in our ability to execute on that across our book of business. We have been very focused on that. We want to see a flawless execution. But I think I will do that was ask Brian maybe to comment a little bit more about how the team has been working together and our outlook for the future on that.

Thanks very much Gail. Good morning A.J. At this point, I would just – I am very impressed with where the level of commitment that we are seeing out of the CVS relationship. They have been very engaged with us. They have had their senior leadership team directly engaged in the planning process. And I have been also very impressed with the dedicated resources that they are putting into IngenioRx dedicated division. Relative to the implementation itself, in terms of success factors as you can appreciate, we are building out a very detailed implementation plan that will to Gail’s point put us in a position to realize the value that we have discussed starting 1120. And in terms of key metrics, obviously we are going to be looking at things like the testing environments ensuring that we have got interfaces across our systems and doing the appropriate user testing to ensure our claims adjudication is well-positioned, well in advance of the implementation itself, including parallel processing, etcetera. So without getting too detailed in terms of the implementation process itself that detailed implementation plan where we are going to be finalizing over the next several quarters and then we will start to look at metrics against that implementation plan, but with a very heavy focus on testing itself.

Thanks Brian. I would just add A.J. we have been also building our own PBM capabilities here. So we are standing up our own model in addition to working very closely with them on the execution of the transition of the membership. So overall feel that things are progressing very well and we feel very confident about this.

Your next question comes from the line of Christine Arnold from Cowen. Please go ahead.

Hi there, welcome back Gail. Could you talk a little bit about these partnerships with the Blues and I am particularly interested in how the economics might work for that particularly on the Medicaid side and then separately how are you thinking about association health plans and the impact they might have on your small group business? Thanks.

Good morning Christine. Let me address the first question around the partnerships that we have with the – our Blue partners, strategic partnership. As I have come back to the Blues, one of the things that clearly I have seen in my time with a healthcare service company is understanding the strength of the Blues overall and the partnerships and strategic opportunities we have. We have a very, very strong Medicaid platform in our Amerigroup presence. And we have formed over five of these partnerships not only with Blue with other health plans and basically what we are doing is leveraging the strength of our platform in Medicaid with the local market expertise and their relationships in the provider network. So that’s been a really strong opportunity for us. It allows us to leverage our investments and quite frankly our return on capital for an investment that that we think gives us greater presence and depth in the marketplace. We also have some other capabilities and I have been really impressed by some of the other assets that we have inside of Anthem for example our AIM subsidiary that I shared with you is another great opportunity that I see an ability to package that, to continue to scale it and invest in capabilities. And we already do a lot of that work with other Blues across the system. And again that’s another great opportunity for us to have I think very strong strategic partnership. In terms of the association health plan, I think quite frankly there is a positive for expanding access for consumers across the space and so we are very supportive of that. We do have expertise in working in different types of association businesses across our book, so it’s something that will continue to innovate our products, but overall I feel pretty positively about our small book of group of business because we are doing quite a bit of work on affordability, obviously our brand presence and also offering new products in that marketplace. So overall I think it gives us another option for consumers and it gives us an option to continue to put additional products in the market with association health plans.

Your next question comes from the line of Chris Rigg from Deutsche Bank. Please go ahead.

Good morning, just wanted to touch on the tax reform investment spending and then tax reform generally, I guess first I think you are saying you are going to spend about $260 million-ish on investment spending this year, I was just wondering is that something you see in the base line over the long-term or something you would expect to dial back. And then separately with the tax reform you heard some chatter out of New York and California about seeking ways to potentially claw back some of the benefit over time, would love to just get your thoughts on that? Thanks.

Thanks for the question Chris. Just a couple things first is as John I think and I shared about 25% of the tax benefit is going into acceleration of investments that are predominantly focused on growth. I see some pretty significant opportunities to one simplify our business in terms of system migrations and getting us to our destination platforms plus investing in digital capabilities and product development modularization. And those are things that we had started already and that we are continuing to accelerate. But I will let John maybe give a little bit more color on the overall picture and how we are thinking about the tax.

Yes. Thank you and good morning Chris. So in terms of the tax reform maybe I will just spend a minute going through some of the dynamics associated with it. It’s really a good thing when you have lower taxes that can really help drive affordability in the marketplace and share that with the members and the consumers. And of the gross benefit that we will receive from the tax reform in 2018. About 25% of that is going to go back to the customers directly either through MR rebates or just the true up of how the health history works and things like that. And then as you said maybe another 25% associated with accelerating investments as Gail talked about. And then the remaining 50% I guess return to the shareholders. Your question specifically associated with is our investment strategic priority to the new model, tax reform has allowed us to accelerate our investment spending and growth initiatives. And we will continue to have an ongoing focus in investing in growth and adding to our market leading capabilities. As we look at our uses of capital reinvesting in the business is always something that’s a very, very high on the list and something that we believe we need to continue to do.

Your next question comes from the line of Josh Raskin from Nephron Research. Please go ahead.

Hi. Thanks. Good morning. And I will Echo the comments, welcome to the new role Gail as well. I wanted to ask just first on the Medicare advantage acquisitions just looking at the cash flow statement it looks like you did about $2 billion for HealthSun maybe there is some other true up type of stuff in there, but obviously that screens as a big number for 40,000 lives, so could you talk a little about more of the capabilities, I assume there is some provider business in their, etcetera. And then just I would be curious I know it’s hard to say explicitly on a call like this, but from your perspective on the management side, do you think there is a need for augmentation or more changes and I would be interested to get your sense on the Anthem team working together, historically it’s been geographically diverse management team, I am curious if there is thoughts to get people closer together?

Well, good morning and thank you. Two questions in there. Let me start with the management team and then I will touch on HealthSun NFP also to provide some commentary. First, I have spent the last 75 days since joining Anthem really meeting with our leaders and our managers across the country and my assessment is we have a strong leadership team with a deep understanding of the business. I’ve had the opportunity to meet many of them and I look forward quite frankly to engaging with all of our leaders, that’s something that I am going to continue to do over the next several months and through the course of time. Part of that is we are going to continue to invest in our leaders as we build the new capabilities that I have discussed and we will also be adding talent in those areas as we are going to be investing in some areas around consumer focused and digital capabilities and we will add talent to those areas. But overall I do feel that we have a strong team in place today. In terms of how they work together, I think we have a really unique opportunity and that’s why I am pretty excited actually about the opportunity to focus on execution and growth. And as I think about the strong brand our local market presence part of bringing that together, which actually has begun already and leveraging that with some scale opportunity. So, I see that as really a blending of taking advantage of our market presence and our leadership in those markets with also bringing scale and discipline from our corporate offices and our segment leadership. So I actually see a nice balance there and I think we have got a real opportunity on continuing to…

Thanks a lot, Gail and good morning Josh. Yes, I will just reiterate what Gail said in large part we are really excited about this transaction and a key geography for us Florida, which we think is a really important Medicare Advantage market. Don’t think about this transaction in isolation of 40,000 members as Gail talked about and you mentioned Josh in terms of capabilities included in the HealthSun transaction are 19 wholly-owned care centers. We are very focused on managing the chronically ill. We talked about that being a very important part of our business going forward managing the chronically ill effectively as well as managing dual eligibles. And then I will add obviously a high-quality asset, one of the few companies nationally that have a 5-star plan. So, we are really excited about this transaction and also the growth opportunities that exist down in South Florida. And with the combination of America’s 1st Choice, we are talking about spanning a lot of the state of Florida both in the central part of the state as well as in southern part of the state.

Your next question comes from the line of Kevin Fischbeck from Bank of America. Please go ahead.

Okay, thanks. Just want to go back to taxes for a minute do you have any thoughts today as to the sustainability of the $2 per share into the future years? And then I guess the HIF in coming back in 2018, but not in 2019 I guess one of your competitors talked about that actually being a headwind in 2018, I was wondering if you factor that into this guidance as well?

Yes, thank you, Kevin, this is John. I will answer the first question – or the second question first on the 2019 HIF being waived and of course we are pleased with the waiver for 2019. As I stated earlier, whenever taxes and regulations decreased and helps with the affordability of healthcare through those premiums and so two pieces on the HIF, so coming into 2018, the HIF came back. And as we had stated, that’s about $0.40 to $0.45 headwind on our growth rate in 2017 and 2018 given how the midyear renewals work and now that’s all processed in. So then when you get into 2018 you do the mid-year renewals from 2018 and 2019 that can actually create a tailwind associated with 2019. So again it’s something that we are going to manage through. And yes all of those things are already included in the guidance that we provided to all comparing in the greater than $15 earnings per share number that Gail had mentioned. In terms of the sustainability of how much of the tax reform can be maintained, it’s really premature to speculate on that at this point in time. We believe we are in a very competitive marketplace that we believe with competition and really the need to drive more affordable products that the savings from the tax reform will help address that in some regards. And we will continue to be opportunistic in terms of reinvesting it in the business associated with accelerating our growth opportunities. And at this point in time, we really can’t put a percentage or a number on a run rate sustainability associated with tax reform.

Your next question comes from the line of Ana Gupte from Leerink Partners. Please go ahead.

Yes, thanks. Good morning. Hey, congrats Gail, great to see you back. My question is near-term and long-term both on the medical cost trends, in near-term it looks like your guidance is 50 basis points higher apples-to-apples relative to 2017 and is this conservatism or are there any components either pricing or utilization that you are beginning to see pressure we had one of the larger public hospital yesterday to put pretty strong volumes. And then on the medium-term strategically you have had this competitive advantage for a while on cost of care the local market share, there do you think you could go relative to your competition and would that be a pricing advantage, would that be on beds per thousand and might you consider buying doc, so we are starting the three centers is the likely just market share good enough to get to get the leg up?

There is a lot of questions in there Ana. So thank you. I will try to parse through them and hopefully we will get to each of them. Let me first start with where our trend finished and then a little bit of our guidance or actually ask John to give his commentary to. We finished 2017 at 5.5% under our – under the new methodology which essentially was at the low end of our guidance range. And we put in a intense focus on managing costs overall. So cost of care initiatives across investments in those across our business. But I think more than just specific cost of care, we have had a big commitment to integrated care and really moving value based payments along across our continuum of care providers and that has been a differential for us. And I believe Anthem has been a leader in that front and that’s an area that we continue to invest in across our business. As we think about our forward view of trend we are always obviously very prudent about how we think about the forward view of trend. And we have given you a trend of 6% plus or minus 50 basis points taking into consideration this year we obviously have a more intense flu season than we have had in the past, so that’s baked into our assumptions. And as we look at trend overall, basically placing it we do have very detailed drill down of each of the components of inpatient and outpatient pharmacy, etcetera. And at this stage what we are seeing is roughly at the midpoint about a 50 basis point increase and obviously we – that’s something that we continue to watch across all of our businesses. In terms of your other question about…

Yes, thank you, Gail and good morning, Ana. In terms of the trend, I do want to just clarify we changed the metric in terms of how we calculated from a paid basis to an allowed basis. That has no impact on our pricing methodologies. It has no impact on our reserving. It has no impact on our financial statement issues. It is really a metric that is utilized to discuss healthcare trend and we believe that this change really provides a better view of healthcare trend overall to look at it on allowed basis versus paid basis. But with that as Gail said, we are at the very low end of our range in 2017 really driven by lower than expected increases in AWP with the cognizant effort to tighten up our formulary during the year, lower than expected hepatitis C spending and lower utilization trends overall. Of course, we did have the bump of the flu here at the end of the fourth quarter and then we are heading into 2018 really the single biggest drivers for the 50 basis points that we are looking at raising it at the midpoint of our range. Really the AWP pricing is going up a little bit faster than the overall trend and taken the flu into consideration. Now, all in though, everything else we believe is a very well controlled trend and we are really returning to a more of a normalization process. Thank you for the question.

Your next question comes from the line of Lance Wilkes from Sanford Bernstein. Please go ahead.

Yes, good morning. Congratulations Gail on the role. Great to speak with you again. Just I have two quick questions really strategic in nature. One is further on the care delivery side and just thinking about your value-based care strategy and trying to understand if your market share makes it easier and more attractive or less attractive to own providers in those markets? And then the second question is really related to your cross-selling efforts and focus in particular in the self-insured market and trying to understand where you think the biggest opportunities there are and what are some other capabilities that you need to add to be able to sell into that market? So thanks a lot.

Great, Lance. Thanks again for the question. Again two questions. Let me take the first one around our capabilities and market share, which you appropriately referenced. Absolutely, that market share has an impact on our ability to drive best-in-class medical costs and I think that’s actually a very important component of it. And we have had I think fairly comprehensive approach of value-based incentives all the way from gain shares through full risk-sharing and our primary approach is enablement with the providers and partnership, because we feel that’s the right approach in the marketplace. Another market as I have mentioned we also are augmenting that certainly in the Florida market with the clinics now that is the more standard of how things are done and then with our CareMore model across the country. So, I think it’s a combination for us of what best fits the marketplace as opposed to one stated strategy. We do have an overarching strategy around moving to more value-based payment. We are over 60% now and we would expect to move to over 70% going forward and continue to work with providers. In terms of your second question, specialty penetration, we have been investing in the capabilities and have seen a nice improvement in the penetration rates of our dental and vision business, in particular. I shared that on my opening prepared remarks. Our investments there are really on product, product positioning, technology, broker support sales effectiveness. Obviously even with the penetration rate improvements we have had we think that there is a significant upside there that we can continue by different businesses to increase that penetration rate significantly. I will ask Brian Griffin who leads again that area maybe to give a little bit of commentary about the kinds of things that we have been working on and what he is seeing in the marketplace. Brian?

Thanks, Gail. Good morning. In terms of the – Lance, your question around the specialty, to Gail’s point, we’ve had significant success in really driving specialty penetration across all of our key products. I think you have seen that and we have talked about that in previous calls relative to dental and vision. To Gail’s point, I do believe that there is incremental opportunity specifically around our life and disability products, I think that there is more that we can do there. Obviously, we talked earlier about pharmacy and we are seeing significant interest in the integrated value proposition in medical and RX together, particularly in our large group and national account marketplace. That message seems to be resonating significantly in those markets. And I think we have a unique value proposition that we can bring to market up. Obviously, you have heard me talk about that, but we are seeing at this point given where we are in the implementation of our own PBM significant interest there in that value proposition. I think actually that will help us more broadly across all of our products, because we can then begin to think about integrated value propositions across dental vision and pharmacy altogether in a single package. So, I think to Gail’s point there is quite a bit that we can do in terms of the repackaging of our value proposition to drive that penetration rate. The other key investment the Gail alluded to is we made a really significant investment in our broker portal, which is really designed to allow the brokers to more efficiently compare plan designs, various products. It brings in our specialty products into that evaluation and it just makes it candidly easier to do business with us in that regard and allows them to look at the full product suite that we bring to both small group and large group. So, that was an investment that we see paying off. We are getting great reaction from the broker community and I think we will get deeper penetration rates as a result of it.

Thanks for your questions. Next please.

Your next question comes from the line of Ralph Giacobbe from Citi. Please go ahead.

Thanks. Good morning. Gail, can you maybe talk about the competitive landscape obviously big vertical deal in the space, maybe just broad thoughts about opportunity maybe near-term during potential disruption there and maybe longer term sort of the comfort with the margin profile, particularly within commercial risk? And then just your position again as we sort of see models evolve that seemed to offer a lot more than largely an insurance product in terms of your position or where you would like to be positioned there? Thanks.

Thanks, Ralph. Let me try to get through the different parts of your question in terms of the landscape and I will go back to where I started I think again in my remarks and then I think we have significant opportunity for growth across all of our businesses. And as I think about the competitive landscape, I think we are actually fairly well positioned. I am going to be intensely focused on the execution of the capabilities we are investing in growth, we are investing in product modularization, so we can get product to market more quickly and that we can be simpler in terms of how we face off externally to our clients and brokers and customers and more agile. In terms of the overall market space, I will start with what where I think we have a significant opportunity is the Medicare space. We have been historically underpenetrated in the Medicare Advantage individual market. Our acquisitions give us some nice scale and we had a very strong open enrollment and we will continue I think to do very well in the dual eligible market. We have got strong capabilities, a strong star rating and those will help position us well and so we see that as the significant growth. The other area that I haven’t talked about is the group Medicare market. That’s an area that we really have not participated in that extensively in the past. We have been investing in that area to build our capabilities. And I think that we are going to see very strong enrollment going forward because of quite frankly the strong Blue brand resonates very well with that marketplace and we do think we have an opportunity to also have agents from our current book of business or commercial book…

Your next question comes from the line of Steve Tanal from Goldman Sachs. Please go ahead.

Good morning, guys. Thanks – thanks for the question and congrats Gail on the new role. Just wanted follow-up on sort of discussion around value-based contract being and kind of thoughts and the opportunity moving forward. So 60% penetration so it sounds like a high number, it also sounded like the mix maybe those arrangements are bit lower on the risk factor. I was wondering, if you could kind of frame the opportunity from sort of earnings perspective and then what inning you would say were in overall and I guess just relatedly, but little bit separate here. Should we expect to see you guys moving into the provider space in a bigger way and maybe the localities are states where were your shares highest?

Thanks for the question, Steve. In terms of it’s a great way to frame what inning when I think – we think about that a lot and I would say it’s probably early innings and truth across the entire industry. We’re all looking for ways to find greater affordability and drive I think more integrated care. And so we have as you can imagine a breath of relationships across our market and we try to meet the care provider community where they are, we would love to see them be willing to take a more risk and part of where we’re investing is also in provider enablement capability. So I would say, we’re going to continue to focus on a building those relationships and moving them from you maybe just to gain share to taking more upside downside risk to more fully participation. But again we also realize that some that – that’s not going to be perfect for each of the – the care providers that we work with and they have to come along and feel comfortable about the relationship. In terms of our focus on where we are focused on our best use of capital to drive value and we do think the partnership model makes sense, again we do own some assets ready and we feel good about those, we’ll continue to invest in those, because we see the real return that they aren’t but some overall, we’re going to look to leverage the best use of capital in the markets, where we are and one of the advantages that we have is our deep market share. So partnerships can work because, we have deep market share across all of the businesses, we serve in we see that as a real opportunity.

And your final question today comes from the line of Justin Lake from Wolfe Research. Please go ahead.

Thanks for squeezing me and I’ll add my welcome and congratulations to Gail as well. First to follow-up on the PBM, Gail, the company has done a good job of laying out the earnings benefit from retaining the 20% of savings to the bottom line, but you also going to be returning $3 billion or more here to customers. And I was hoping you could flush out your view of how your top line could benefit from the significant improvement in competitive positioning that should come here? And then my core question is what are the 2 or 3 areas that we should be focused on that are going to drive the shift at the higher end of your earnings target that you talked about and over what time period? Thank you.

Let me take your second half of your question first, Justin and then I’ll start with the PBM and I’ll ask Brian also to give his commentary. In terms of what will drive, where we look to be at the top end of our earnings per share guidance, I think it’s the growth opportunities that I’ve outlined that the opportunity in Medicare both group and individual, the opportunity in partnerships to leverage our capital effectively in Medicaid. And I also see opportunities in commercial. The other area that I think has really been underleveraged is of the existing assets. So, the assets that we have a name in CareMore to leverage those in the marketplace across other Blues and form real strategic partnerships, so I see that giving us the lift and I think just much more detailed execution on the initiatives that we have had I think give us a really nice pathway to the type of growth that we are looking for across our business. In terms of the PBM questions, I am going to ask Brian maybe to comment on those directly, because I know he has been very directly involved in all of this.

Good morning, Justin. Just I guess tied back to my commentary on Lance’s question, I think with us launching our new PBM and really as a result of that taking full control over all the key financial levers, I think that really puts us in a very different competitive position moving forward. Our focus through Ingenio is really on better overall health outcomes. And I think that’s very different than the way that the PBM industry has looked at that. I think that there has been a focus on driving pure rebate optimization as opposed to a focus on total healthcare costs. But I think as I mentioned earlier, our integrated value proposition is really resonating out in the market. And I think as a result of that that positions us really nicely for growth both in terms of our local business, but our national ASO business. My vision for Ingenio is really to become a utility within the Blue system as well and we have seen interest in that regard that’s already developing. And I think we are building our own platform that really meets the needs of other Blue plans. So, I see that as a great new opportunity. We have just in executing against our strategy already, we have made significant progress in terms of driving improved values in terms of new formulary designs as well as new network strategies. That will continue to be a focus for us as we launch Ingenio 1120 more broadly. And I think as a result we will be in a better overall competitive position. So, expect us to really focus on growth outside of both within our local markets, local small group and large group and our national account business, but really looking at new ASO standalone pharmacy business as a new market for us as well as that Blue opportunity. And in addition to that additional sets of clinical services that we will be offering through Ingenio that have been developed here at Anthem over the last several years, so we are excited about what the new growth opportunities mean in terms of to your point, obviously, we are going to see significant savings as a result of our new contract position that will flow through to our customers, but then the expanded growth opportunities in these new markets, where historically we haven’t participated.

Thank you, Brian. And I will put a fine point on maybe Justin, just the three things that will really drive volume we see has granted success in our new RX-only RFPs, increasing the penetration rates in our existing medical book of business and being the PBM for other health plans. Those will be three key drivers for us going forward.

Well, thank you very much everyone for all of your thoughtful questions. As I hope you can tell I am excited to be here at Anthem and the opportunity to advance our strategic priorities to create a healthcare system that’s more affordable and simpler. As I outlined earlier, we will be focused on optimizing execution across our business and ensuring that we leverage our unique assets to strategically position the company for sustainable high-quality earnings growth. I want to thank each of our associates for their commitment to Anthem and for living our values each and every day to deliver on the promises to our consumers. Thank you for your interest in Anthem and I look forward to speaking with you at future events.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T executive teleconference. You may now disconnect.