Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Cash conversion strengthened sharply this quarter, with operating cash flow well above revenue and capital expenditure, yielding a robust free cash flow margin. The improvement was driven by favorable timing of premium collections and payments, as noted in the filing.
- Revenue was higher than the prior quarter and the same quarter a year ago, while operating cash flow improved from a negative level in the prior quarter to a positive level, and was also higher than the year-ago quarter. Capital expenditure was slightly lower than both comparative periods. The resulting free cash flow turned positive from negative in the prior quarter and was higher than the year-ago quarter, with the margin also improving markedly.
- Compared to the prior quarter, operating cash flow and free cash flow both improved from negative to positive, and the free cash flow margin reversed from negative to positive. Versus the same quarter a year ago, all metrics—revenue, operating cash flow, free cash flow, and margin—were higher.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$8.4B
Trailing twelve-month free cash flow.
Quarter free cash flow
$4.0B
Free cash flow in the selected fiscal quarter.
Operating cash flow
$4.3B
Cash generated by operations before capital spending.
CapEx
$225.0M
Capital spending and related asset purchases.
FCF margin
11.6%
The share of revenue converted into free cash flow.
Cash flow trend
A short quarterly history shows whether FCF is scaling with revenue or only spiking for one period.
| Period | Revenue | Operating CF | CapEx | FCF | FCF margin |
|---|---|---|---|---|---|
| 2022-06-30 | $34.0B | $3.4B | $282.0M | $3.1B | 9.0% |
| 2022-09-30 | $33.7B | $3.3B | $247.0M | $3.1B | 9.1% |
| 2022-12-31 | $33.6B | -$1.6B | $233.0M | -$1.8B | -5.4% |
| 2023-03-31 | $35.0B | $4.3B | $225.0M | $4.0B | 11.6% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 357.9% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 0.6% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$2.5B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Favorable cash flow timing
The filing indicates that operating cash flows were driven by net earnings, early receipt of CMS payments, and timing of pass-through payments, partially offset by a delay in premium payments from one state partner. These timing items were the strongest observable factor in the quarter's cash conversion.
The favorable timing resulted in operating cash flow and free cash flow that were substantially higher than both the prior quarter and the year-ago quarter.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was higher than the prior quarter and the same quarter a year ago, while operating cash flow improved from a negative level in the prior quarter to a positive level, and was also higher than the year-ago quarter. Capital expenditure was slightly lower than both comparative periods. The resulting free cash flow turned positive from negative in the prior quarter and was higher than the year-ago quarter, with the margin also improving markedly.
Compared to the prior quarter, operating cash flow and free cash flow both improved from negative to positive, and the free cash flow margin reversed from negative to positive. Versus the same quarter a year ago, all metrics—revenue, operating cash flow, free cash flow, and margin—were higher.
Monitor whether the timing benefits from early CMS payments and pass-through payment timing recur in future quarters, as the filing notes these factors contributed to the current quarter's strong cash flow.