Elevance Health, Inc. (ELV) Earnings Call Transcript
June 10, 2020
Earnings Call Speaker Segments
Good morning, everyone, and welcome to the Anthem session. I'm Bob Jones. I cover health care services here at Goldman Sachs. Really excited to have Anthem with us today. I'm sure, as you all know, one of the largest health benefit companies here in the U.S. I'm joined from the company today by Gail Boudreaux, the CEO -- President and CEO. I'm also joined by John Gallina, CFO. And we also have Chris Rigg here, who I'm sure many of you know, he heads up the IR efforts there. So welcome to all of you, and I appreciate you participating this year.
Great. Thank you. Great to be here.
So I thought we would just dive right into questions, if that's okay. And I think probably on the top of everyone's minds is just the health care utilization and how unique a dynamic the COVID situation has created around health care consumption. So I know that you guys had issued the 8-K last night kind of reaffirming the full year and putting a little bit of a finer point on some of the seasonality, to use that word, issues. So I thought maybe just for starters, as we sit here in June and things remain fairly fluid, if you could just provide somewhat of an update on what you're seeing as far as health care trend, health care consumption goes?
Great. Thank you. I'll start, and then I'll ask John maybe to give a little more commentary around utilization and sort of what we've seen heading into the second quarter. First, as you know and we reported in our first quarter earnings, our first quarter results were strong. And as we issued our 8-K, we maintained our guidance of greater than $22.30, just given all the uncertainties. One of the things that was part of the 8-K is really the cadence of earnings. When we originally provided guidance, we estimated roughly 55% or so of our earnings would occur in the first half of the year. Now as we've looked at sort of our business and some of the commitments that we've made to provide -- to write some of the inequities that we're seeing due to utilization drop, we're estimating that roughly 70% of first quarter earnings will now be in the first half of the year. That said, I think we'll be in a much better position after second quarter to really understand all the dynamics going on, but we feel very positive about affirming greater than $22.30. And obviously, that it is greater than $22.30, we expect that to happen. So with that, maybe I'll ask John to give a little more commentary about what we're seeing in terms of the utilization as we headed into the second quarter.
Yes. Thank you, Gail. And as everyone knows, we finished the first quarter very strong. And just as a quick bit of reminder or commentary, the issues that were potentially identified in 2019 with being at the high end of the medical loss ratio guidance a few quarters -- a few different quarters, we believe that they're all behind us. We had a very strong print in the first quarter. We did see a bit of deferred utilization that began at the end of March. But our reported results were really nominally impacted by COVID on a net-net basis because we did things in March, like we relaxed the refill too soon, edits on our prescriptions and had an increase in pharmacy cost. We waived co-pays and deductibles for telehealth-type visits early on in March. And so that obviously had an increase in cost. And then we saw the beginning of the deferred procedures as well as the fact that we moved 75,000 associates from the -- to home and had to have an infrastructure to do that and ensure we had the IT protocols and other security factors well on hand. And so on a net basis, minimal impact in the first quarter. Then you get into April. And actually in April, we saw a significant drop in utilization. Some of the non-emergent procedures, which by definition, non-emergent are things you can pick up the telephone and schedule, they dropped 70% to 80% in the month of April. And then we saw a drop again in May, not as steep as April but certainly, on a year-over-year basis, a drop. And we're also seeing a bit of a decline in June. Again, an increase in utilization from May but less than June of 2019 just from a comparative basis. And then we also saw a drop in emergency room procedures. ER visits were down 30% to 40% in April across the -- across all of our 14 states and actually our 24 states when you include the Medicaid businesses. And as we really looked and evaluated all these things, that's one of the reasons that we sent out our press release the other day prior to the 8-K, talking about the $2.5 billion of value that we're adding to the system since the outset of the COVID-19 crisis. And that $2.5 billion includes a lot of different things. It includes premium credits associated with our commercial membership, even steeper premium credits for vision and dental-type pain. It includes providing $10 of PPE for dentists associated with their visits and say we're not a type of a care provider that had a lot of PPE. We talked about a $15 million contribution to our foundation that will be used for social determinants and health and other things. When you look at that $2.5 billion, a portion of that is expensed in the second quarter, and a portion of it is expensed in the second half of the year based on when these things become reality. And then further, you really have to look at the types of procedures that were deferred or eliminated. And things that were deferred include things like knee and hip surgeries. And knee and hip surgeries, they get deferred. And typically, they will come back either when the member is more comfortable with the health care system or when the pain is so severe that the member really needs to get that procedure done on a very timely basis. And so there's a lot of pent-up demand. And we're expecting that, that pent-up demand will actually come back to fruition in the second half of the year and in some cases bleed into 2021. And then there are other things that some of these procedures that are eliminated that we don't think will ever occur. And a perfect example is with all the stay-at-home orders, there's a lot less people on the roads. There's a lot less automobile accidents. And then as a result of less automobile accidents, there's less folks who had to go to the emergency room or get medical procedures associated with being in an accident, just as one example. And those will be permanent savings. So we had to balance all that in terms of our $2.5 billion to be able to provide really the liquidity and some of the solutions to the system. I think we have been very open about addressing imbalances and inequities in the system that were caused by COVID-19. And our press release really does help address that. And we did it all in such a way that we believe that we could still reaffirm our $22.30 EPS -- of at least $22.33 EPS. But it did cause a shift in the seasonality of our earnings. And we'll continue to reassess it throughout the rest of the year. And -- but we feel very, very good about where we're ending up in the second quarter from a financial perspective and feel really very good about our long-term prospects associated with all this. So that's -- anyway, I don't know, Bob, if you have any follow-up questions on that, but that's really where the seasonality commentary originated.
Yes. No. No, that's really helpful. I guess philosophically, it sounds like there's enough levers as we go through the balance of the year and understanding it sounds very difficult to predict how cost will come back and when. But it sounds like you have the levers in your mind to manage to that full year number. Is that the right way to think about it? Could there be more things like you mentioned with premium credits and other cost waiving or reinvestments in offerings that you feel like you can kind of move real-time with cost trend to manage to that full year number?
That's a great question, Bob. And we have certainly done a multitude of scenarios and sensitivity analyses based on all this. And yes, there's obviously a lot of assumptions in there in terms of the pent-up demand when those procedures will come back, really looking at what the capacity of the health care system is. The capacity of the health care system actually, we think, differs a little bit today than it did several months ago just because people are not congregating in waiting rooms, everything is by appointment. I actually personally had an appointment recently, and I had to sit in my car and call a number and then was told to come in. So basically, my car in the parking lot became proxy for the waiting room. It's just sort of a different scenario. And as we do have a lot of real-time information, we review prior -- we review the authorization-type information on a daily basis. We do a lot of things on a daily basis, obviously, the various claims throughput. And we continue to refine and adjust our sensitivities in our models. I mean, quite honestly, as I said, we are very comfortable reaffirming the $22.30 EPS, which I think is really a way of saying that as we look at the sensitivities, the $2.5 billion that we provided back into the system was probably closer to the low end of the range so that we could ensure that we did deliver to the capital markets simultaneously while we delivered to our customers, really kept everything in balance. And so if trends and results in the second half of the year differ and come out better, there's certainly an opportunity for us to make other management decisions as a result and still do the right thing for the customer and the right thing for the shareholders simultaneously.
Yes. I would just add to John's point, because I think he did a thorough job of explaining that, that as we -- there's still -- obviously, with all of the modeling that we're doing on a daily basis, still a lot of uncertainty as to the what I'll call the trajectory of utilization and what it returns. And our analytics are quite good. We've been able to model on a daily basis. And one thing I think is important despite us, I think, taking off many of the pre-authorization requirements, we still are receiving that data from our systems on a regular basis. So we have very good insight plus some of the AI analytics we put in place around projection of where we think they're going to happen. But given that, we also did withdraw our full year other metrics outside of adjusted EPS mostly because we know that we'll have a lot more insight as we get through the second quarter and I think can provide you with a lot greater detail. And the only other thing I'd add to John's comments is, as part of that $2.5 billion commitment, some of that will also hit in the third quarter. So we factored that into the overall assessment. So a much will be in the second quarter, but we're monitoring this on a daily basis. And our commitment is to ensure, as we go through the cycle, that we're looking at all of our constituents, including our customers and consumers. But we feel, as John said, very good about the reaffirming of our guidance.
No. No, that's helpful. I guess maybe looking forward a little bit and another variable that I can only imagine is extremely hard to factor in would just be around unemployment. Clearly, kind of unprecedented macro environment with the rate at which unemployment spiked and then the expectation for it to return. Any just kind of high level or latest thoughts you can share on how you're thinking about the unemployment picture affecting commercial enrollment?
Sure. Let me -- I'll give a little bit more color on that. Well, again, we're not giving full year enrollment guidance mostly, again, because of the volatility that you said. And I don't think we have perfect insight into the trajectory of the recovery or what's going to ultimately happen. But overall, the last 2 months, I would say, actually are trending probably favorably to what if you just did mathematics. And part of the reason is we are much more diverse at Anthem than I think people have historically thought of us between our Medicare, our Medicaid and our Commercial business. And while I don't normally give updated enrollment mid-quarter, I think it might be helpful to sort of put a point on that. So for the first 2 months of this quarter, we've already seen about 400,000 member growth inside of our Medicaid business, and that's predominantly driven by stopping the reverifications. As you know, from last year, if you looked at our results, we had significant impact on reverification in our Medicaid business. That's reversed itself this year. We are seeing a little bit of the unemployed begin to enter the Medicaid ranks, but it's mostly heavily driven by reverification. On the Commercial side, in the first 2 months, we believe that a lot of the attrition, quite frankly, has been muted through the furloughs. But also, we've put in a number of programs to help our employers maintain coverage to transition individuals to the individual business as well as to the Medicaid business. We shared we thought that 40% to 50% of our enrollment on the Commercial side that potentially could end up being laid off or furloughed could go to the Medicaid side of our house and then another 30% individual exchanges. At this stage, less than -- we've probably -- we've lost less than 200,000 lives in our Commercial business. So if you do the math on that, that's actually a lot more stable than just pen to paper would say. And we believe some of that is the resilience of also our Commercial book. And I touched on this in the first quarter call. As we look at the distribution of our book of business in Commercial, that book of business has fairly small exposure to retail and entertainment, actually much less than 5%. And a heavy percentage of our -- a larger percentage, I should say, of our business is in essential services, emergency workers, municipalities. And so I think that's provided also more resiliency to the Commercial numbers. That said, obviously, we're watching very closely the trajectory of the economic recovery and where employers are. And we, again, will have a whole lot more information and better insight after the second quarter. The other thing that the Patient Protection Act in small business has also, I think, sort of maintained a lot of that membership as well. So that has been a lot more resilient than we've seen in the past, and retention is solid. So overall, I don't have a projection on ultimately where the full year will end up. But our first 2 months of trending look really, I think, positive relative to what may happen. And I think we feel really good about it. So...
Yes. And Gail, just a couple of other data points, if I could, in terms of the overall resilience of our membership. And I know that, Bob, your question specifically was how is unemployment going to impact commercial. But really just to think about just how well balanced our portfolio of products is today, you look at our 2020 results. We have somewhere in the neighborhood of 70% of our earned premium is from government programs between Medicaid and Medicare, which less than 30% is subjected to Commercial. The -- we're in 24 geographies for Medicaid right now, which continues to be a growing line of business, as Gail had mentioned, growing even in a strong economy as we had continued to increase membership and increase the penetration of some of the higher-acuity-type populations. And you compare that to 2008 and 2009, when we were only in 6 or 7 Medicaid states at the point in time, 80% of our earned premium in 2008 related to our Commercial & Specialty lines of business, which is less than 30% now. So we certainly have had a significant shift in the overall balance of our portfolio. We've talked about the largest catcher's mitt. And this is just one of the indications why that we think we're very well positioned to be resilient in a very strong economy and as well as to continue to grow in a weaker economy. So we feel very good about where membership is coming out here in the second quarter based on what's going on within the country and the economy.
Yes. I appreciate all those updates. I mean I guess another tricky thing, I'm sure, to figure out across various lines of business is how to price for next year just given how uneven the expectation is for utilization and health care consumption. So maybe we could start with MA because those bids were already due. Any kind of high-level thought process on how you approached the bids for MA this year? And then similar question on the commercial risk side as you think about predicting an unprecedented resumption of health care consumption, what's the general philosophy or approach to pricing in that book as well?
Sure. Let me take both. Let me start with MA. First of all, as you've seen from our results, we had a very strong AEP. We've had a very consistent process. We feel, as part of MA, that our essential extra benefits, which are things around food, helping seniors in their homes have -- our over-the-counter benefits with Walmart have been incredibly strong especially in this time where seniors are in their home. So as you -- as we think about the big construct, we stayed very consistent over the last few years, and nothing is really different with the way we approached our MA business this year. Well, I won't go into the details of it for competitive purposes. I mean we feel that we obviously did an assessment of where we think forward view of trend is. We looked at our benefits, and we've tried to stay very balanced in terms of overall design and stability of benefits for seniors. And we feel that we're actually positioned in a very good place and, again, very consistent with the historical way we've approached it in addition to the sort of the essential benefits part, where we think actually there's really strong resonance with seniors. The Blue brand is incredibly strong as well. In Medicare Advantage, we think that's also an opportunity. And the other nice thing is we've really had an opportunity with this to reach out and spend a lot more time with our seniors just given people are more at home and our clinical staff has more capacity right now. As I think about Commercial, the Commercial situation is a little different. More than 50% of our business doesn't price until 1/1. So as you appropriately noted, we have time to really assess kind of what's going to happen. And given all of the uncertainty that's going on now, we believe that that's prudent. From a -- how we're pricing now, we're pricing to our forward view of trend. That hasn't changed. We feel, as John said earlier about trend, we're pretty much updating our models daily in terms of what we're seeing on utilization. But given the timing, we feel that we have that time to really take a prudent approach and be able to assess our book of business going into 1/1. So at this stage, we haven't changed our pricing methodology. We're staying disciplined and consistent. But again, we're using -- we're really updating on a real-time basis our pricing and the interplay of our models. I don't know, John, if you want to add any additional thoughts, but that's kind of the overall approach that we've taken.
I totally agree. And then just to sort of think through maybe in a slightly different way. As we look at these deferred procedures and the impacts on utilization and the -- some of the percentages I gave to an earlier answer, those were mostly effect -- impacted in the Commercial area, and then -- which had the most significant impact from the deferred procedures. And then Medicare and Medicaid each had less than Commercial did just because of the type of members, the way they access the system, there's not as many elective procedures in Medicare as there are in Commercial, et cetera. So we're trying to take all those thought processes into consideration as we work on our pricing. But as Gail said, there's no reason for us to come up with a price point any earlier than we need to. And most of our business on Commercial side renews January 1. We're committed to pricing to forward trend, but we don't have to make the decision exactly what that's going to be until several months later. And we'll have a better point of view of how much of the deferred procedures are going to be incurred in the second half of the year versus what might lead into 2021.
Yes. No, thanks for that. I mean maybe just to go back to MA, a lot of things obviously has been disrupted in this environment. But I was curious if you could talk a little bit about the challenges that you might have been facing with properly risk-adjusting the MA population. Just -- I know that CMS has been somewhat flexible with how to do this in the current environment, but just wanted your perspective on how that's been playing out.
Sure. No, I can take -- in terms of the properly risk adjusting, there's obviously challenges associated with the ability to do some of the chart chasing that we have done historically and access the information at the providers' offices. And as I think everyone on the call probably knows, some of the factors utilized in the Star Rating systems have been suspended for a year. And so we'll utilize the prior year information associated with that. But in terms of the information we do have and the data we do have, we feel very, very good about it. We think we have some of the best informatics, some of the best data in the industry. And that's been proven out a few times in terms of our ability to maximize some of the risk score adjustments and things such as that. But the issues in terms of being able to access some of the information from the physician's offices and some of the chart chasing is a bit on hold for a year. And obviously, we'll continue to assess that and try to optimize and maximize how that works its way through the system. But as you know, the CMS recognizes that as well. And so we're sort of in a 1-year holding period in terms of some of the Star Ratings. Gail, I don't know if you want to have a final comment on that.
No. Yes, I think you hit it. I think there's a lot of still uncertainty about it. But I think going into before COVID, we felt good about the position we were in. We've had a strong process of this. But obviously, we can't get into the offices and can't get all of the data. So we're going to have to work with CMS and others to make sure that we're able to get the right information to them. But I think there's a positive ongoing dialogue about that, and everyone is in the same position.
Yes. No, understood. I guess just one quick one as a follow-up to your comment on the Star Ratings, John. Does that create any kind of competitive disadvantage, neutral? How do the lack of updated Star Ratings affect Anthem's ability to go after additional MA lives?
Yes. As Gail just mentioned, everyone is in the same position. We're not negatively impacted any more or less than anyone else in the industry. We do have plans in place and the processes that we've adjusted and changed in order to continue to enhance and improve our Star Ratings position. We ended the year close to 60% of our members in 4-star-rated plans or above. And yes, that's still not good enough. I mean it's dramatically better than where we were 5 to 10 years ago when we had less than 20%. When we really started into the MA arena in a big way, we had less than 20% of our members in 4-star-rated plans or above. We've made some really significant progress over the past handful of years, which includes changing some of the benefit designs, having more focus on HMO products versus PPO products, really contracting with the physicians and ensuring that there's aligned incentives, doing all the other protocols necessary from a customer service perspective. Last year, we were very disappointed. It's -- this is all public information. The single biggest area where we really did not score well was in clinical pharmacy. We believe now with the change from our prior PBM to the Ingenio platform and actually owning it that we can improve that quite substantially over the next couple of years and do all these things and really get to a better future run rate of where stars need to be because we want to make it as absolutely as high as a percentage as possible. But in reflecting on your question specifically, we went from 20% -- less than 20% to about 60% 4-star plans. We think we're very well positioned. We now have a PBM deal that is price competitive. So that's no longer weighing us down in terms of how you price for these products. We continue to enhance our customer service and other aspects associated with it. So MA is a big growth driver for us. And even with the terrible PBM deal we had, we were still growing Medicare Advantage on the retail side in the mid-double-digit percentage ranges over the last several years. And so we think that will continue to occur, if not be able to accelerate. We have the group MA that is really just a significant value proposition for our growth rates for the future. And there's not even a better example of the significance of the PBM deal than to look at our Med Part D membership. Our Med Part D membership the last several years have been sort of a declining very small block of business. And just by having a reasonable price point, coupled with the Blue Cross and Blue Shield brand, take a look at the first quarter earnings release in terms of the significant amount of growth that we saw in Med Part D. So we think we're very well positioned. We do not see ourselves at a competitive disadvantage at all, but we do strive to have a higher percent of our members in 4-star plans for the future.
Yes. I'll put a fine point on that just to reiterate. I know John did a very thorough job. Look, we were disappointed in last year's results, and we retooled our enterprise. Clinical pharmacy was the major driver. Now that we're past the integration of Ingenio, we felt really strongly about our ability to move those measures. But with the suspension of HEDIS and CAHPS and basically holding them flat, that will be -- that will -- we have to wait a year just given the dynamics of what's going on with COVID-19 in terms of realizing the benefit of that. The only thing I would say is from -- exactly to John's point, from a competitive standpoint, we're basically in the same competitive zone. What's positive is we had a very strong AEP. The permanent repeal of the health insurer fee gives us an opportunity next year. And then as I said, we really feel we're extremely well positioned in this environment with our essential extra benefits. They're really popular. When people are at home, that's a big opportunity for them. And it's actually allowed us to do a lot more with our seniors, and that's been a positive. So I think from an overall positioning, competitively, yes, stars will essentially remain flat. But from a positioning, I think we have other levers that we feel good about going into next year. So we're -- same kind of thing, and we felt good about AEP this year. And we actually feel even better positioned for AEP.
Understood. Yes. I do want to get into Ingenio. But maybe before we go there, because you brought it up several times, I wanted to touch off on -- back on Medicaid. I know, John, you talked about enrollment and having a good presence in Medicaid from capturing unemployed perspective. But on the rate side, we get a concern from investors that just given where state budgets are likely to go in the wake of all this, that Medicaid could be a source of funds, if you will, as far as the way rates will be laid out. How are you thinking about that as a risk to Medicaid reimbursement? And then any context on how we should be thinking about that relative to your 2% to 4% margin target range within Medicaid?
Thanks for the question on that. And yes, we feel very good about where we are on Medicaid. And as we exited the first quarter, we were very much on track to deliver on our promises of exiting 2020 squarely at the midpoint of our 2% to 4% target range. About half of our Medicaid states have renewed through the end of the first quarter. And so we had very good line of sight on all those rates. We were -- we're very satisfied with the actuarial justification of each of those and really did feel good about the underlying performance of our Medicaid book of business at that point in time. The one comment I will make in terms of the states looking for Medicaid as a source of funding or savings, states are not allowed to make Medicaid cuts in order to just to hit a budget target. There has to be an actuarially justified rationale associated with any rate actions that are taken. And we feel very good about that and with all the positioning we've done. We talked to our state partners literally on a daily basis associated with all this. And some of the things that are being reviewed, certainly, there's been a couple of states that have talked about a 1.5% clawback retract to beginning of the year. Ohio was one that was very well publicized. I guess the good news is we do not have the Medicaid contract in Ohio, so we weren't actually even part of that issue. But there's been other states that have talked about some clawbacks or changes. But again, many of those are really actuarially justified. If you look at our $2.5 billion value to the industry that was in our press release, one of the things that we talked about was premium credits for commercial customers. We didn't talk about any premium credits for Medicaid customers. That may occur sort of naturally through some of this. But if some of these premium clawbacks just gets us down to target margins, then that's not necessarily a problem. The one thing that I think we've all learned in Medicaid is it's very rare for the premiums that you receive on a Medicaid block of business and the acuity of the population that you serve to be exactly aligned on a quarter-by-quarter-by-quarter basis. And sometimes they're adjusted within the year. Sometimes there's out-of-period adjustments. And we've disclosed those in the past going both directions. I can't guarantee that won't happen in the future. As a matter of fact, it probably will to some extent or not. But all in, we feel very strong that we will continue to be able to operate within our target margin ranges on a sustainable basis for the future. We think it's really a very strong block of business for the future. But the only other comment I'll make is that we are having discussions with many states about risk corridors. We've been in risk corridor situations in the past. And we think that's really a nice way to ensure that if there's a risk corridor, that there's both upside protection as well as downside protection from both the states' perspective as well as our perspective. And if we can get a risk corridor that keeps us within our target margin range from profitability, then that will really help, I think, give a comfort level to a lot of the investors in terms of the stability of the programs. So...
No, no. Thanks for the response. You mentioned the importance of Ingenio as it relates to MA and growing MA. I wanted to maybe transition to the Commercial side. I know we're a fair way through the selling season, early days. But into the PBM selling season for next year, any updates on just how the receptivity has been around Ingenio from your clients? Is there an appetite to switch appetite to carve out to Ingenio on a stand-alone basis? Just any updated thoughts around the progress Ingenio has been able to make in this current environment maybe relative to your original expectations?
Yes. Great question. I'll take that. I mean I think just to sort of level set, last year, Ingenio, we really spent our time of ensuring a seamless transition. And we felt really good getting through the transition and finishing that. So I'd say 100% of our energy was spent on that, moving 16 million pharmacy members over. And we finished that a year ahead. We pivoted this year to growth, and that's really been our focus. And as I think about the categories of where the opportunity in Ingenio comes from, first and foremost, it's penetration into our fee-based business. So we've shared before that only about -- a little bit more than 20% of our fee-based medical customers today have an integrated pharmacy benefit with us. And that's because of years of uncompetitive contract, quite frankly, and a real driver to why we decided to launch and build Ingenio. Going into the first quarter, I will tell you we had an incredibly robust pipeline, and we still have a robust pipeline. So we feel that our story around integration and whole health, particularly in our ASO block, is really one of the core elements of our ability to -- we've talked quite a bit about moving the earnings ratio in our fee-based business from a 5:1 to a 3:1. We were well on track to hit the 4:1 halfway point that we had as an expectation with pharmacy being a very important driver. What I would say is, while we have certainly added pharmacy clients, the decision process has slowed down. And I think the decision process has slowed down mostly, not only in pharmacy but across the board, because employers first are dealing with their own businesses, how they get their return to work, how their businesses are performing. And so while we have a number of RFPs still, I'll call, pending decision, my sense is it's going to be a slower season just because of what employers themselves are dealing with. And we will see a lot of that potential and opportunity move out probably a year or so. But again, pharmacy is a 3-year sort of procurement cycle. We're in that sort of first year really actively, I would say, selling. We built a growth organization. We have a team dedicated in our Commercial business. So I still feel really good about it. I think the story is resonating, quite frankly, but it's -- we're not going to see the proof of it really probably until sometime next year into the year after only because of the timing of decisions. But I can report, as we came out of the first quarter, the pipeline was really robust. And we felt good about that. We also think Ingenio has a big opportunity, obviously, to embed in Medicare Advantage. And in group Medicare, big advantage there. And the one proof point I would offer is if you look at our Part D growth this year, for years, we'd had sort of a minimalistic declining Part D. With Ingenio, we were able to be a much more significant competitor and grow in Part D. And I think that just gives a bit of a sense of the opportunity that Ingenio is across our business. But I would say I think the proof points and the story for Ingenio are absolutely the same and we feel as strong. We just feel that timing of decisions particularly from the embedded ASO clients will just take longer. The last part I'll bring up is sort of the stand-alone PBM model, where we're selling to other Blues and things like that. We did add Idaho, as you know, at the beginning of this year. And that was an important client. But the reality is that's not the most important growth driver. It's important -- it will take longer procurement cycles just given the nature of what they're doing. And we still think it's a piece of it, but it's not going to be the major financial driver for Ingenio. The impetration in the ASO block is really probably our first priority. And then our ability to also be the back room for others, I think, will grow over time. So that just gives you a sense of the capacity that we see. But we're very bullish on Ingenio. We feel that we built an incredibly effective -- capitally effective PBM, and it's played into the expectations that we set forth. If COVID hadn't hit, I think we would see more decisions earlier. But at this stage, obviously, employers are waiting.
Yes. No, I think that's really understandable. I guess just -- we're just about up on time, but I want to just maybe squeeze in one high-level one on just cap deployment. I know you temporarily suspended the share repurchases. Anything you can share there as far as just what the key guidepost would be for maybe returning to the buyback? And then just any other thoughts around where the capital deployment priorities are in this environment?
Yes. Sure, Bob. I'll start with a little bit on the share buyback and let Gail make a final comment, I think, on priorities. But in terms of our capital deployment strategy, at Investor Day, I laid out 50% for M&A and reinvesting in the business, approximately 30% for share buyback and up to 20% for dividends. And over a long-term basis, that has not changed. We continue to reaffirm that. We think that is an appropriate balance of deployment of our capital. And I don't think that this COVID situation or a temporary suspension of share buyback changes the long-term aspect of it. But clearly, I had made comments multiple times that in any one quarter or even any one year, the percentages may not exactly align to a 50-30-20, as much as that was more of a long-term view. And with the COVID-19 situation and living through the situation back in 2008 and 2009 and seeing just how the liquidity system dried up so significantly, I think we made a very prudent decision back in the middle of March to suspend share buyback. Now one other point of that is our share buyback guidance for the year was $1.5 billion. And we had spent $527 million through the middle of March. So we were well over more than 1/3 of the way through our guidance spending. And we actually were buying shares at a slightly lower price than we had assumed because of the -- from my point of view, we had an unfortunate drop in value in early February. And so we really increased the share buyback activity at that point in time. So all those things were considered as part of the suspension. In terms of now liquidity is much different, we're in a much stronger situation than we were. We continue to collect our commercial premiums really on a very, very strong basis. And as I had mentioned earlier, 70% of our own premiums are related to government business, and all of those are current as well. So our liquidity situation is much, much improved. So we interact with our Board and our Finance Committee of our Board on a regular basis associated with capital deployment decisions. We're going to continue to talk to them about what the conditions need to look like. But I feel very comfortable that we will ultimately spend the $1.5 billion on share buyback by the end of the year that we had intended to when we gave guidance at the beginning of the year. Just the exact timing is still to be determined. With that -- then I'll make a final comment on priorities.
Yes. I think, as John articulated that well, I just want to make a comment on just the fundamentals of our business we still think are incredibly strong and reiterate as -- while we don't know the exact recovery of what's going to happen in the economy, that we still feel very strongly about our growth levers and our long-term EPS goal that we gave of 12% to 15% and reiterate that, that we feel with those growth levers, that's very much in play. In terms of our priorities, I mean, again, it gets back to those growth levers. We see an opportunity to enhance some capabilities in our diversified business group as well as continue to strengthen with tuck-ins across the core of our business. We've been very successful. We added Beacon this year, which gives us another part of our Whole Health strategy on behavioral health. And in the crisis that we're facing, that has been an incredible strength for us because we went to tele behavioral health and have seen a real uptick. We added Aspire last year. CareMore continues to grow. So we feel good about the positioning, and we're going to continue to do that as part of that agenda. And as John said, I think our long-term capital deployment remains the same and, again, feel good about our growth trajectory and feel committed to our long-term EPS guide that we gave last year.
Got it. Yes. No, I know we went a few minutes over, but this has been super helpful. I wanted to thank Gail, John and Chris for participating. Thanks, everyone, for dialing in, either over the phone or on the webcast. And enjoy the rest of the conference, and have a good day.
Thank you very much. Enjoy. Stay safe, everyone.
Thank you.
Thanks.
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