Financial Data and Key Metrics Changes - In Q1 2025, GAAP diluted earnings per share was $9.61, and adjusted diluted earnings per share was $11.97, reflecting year-over-year growth of more than 10% [25] - Operating revenue for the quarter was $48.8 billion, an increase of over 15%, driven by higher premium yields in the health benefits segment and growth in Medicare Advantage and individual ACA membership [26] - The consolidated benefit expense ratio was 86.4%, an increase of 80 basis points year over year, primarily due to higher cost trends in the Medicaid business [27] Business Line Data and Key Metrics Changes - Medicaid business is making progress on rate alignment, with April adjustments coming in as expected [16] - Medicare Advantage performance was consistent with expectations, with strong retention and targeted growth [17] - Health benefits operating gain was $2.2 billion, slightly declining due to higher Medicaid costs, while Calon's operating gain grew 34% to $1.1 billion [29] Market Data and Key Metrics Changes - Individual ACA membership grew approximately 11% sequentially, but a moderation in membership is anticipated in Q2 due to lower effectuation rates [25][56] - The company is expanding into three new states to support broader strategy for coordinated ACA and Medicaid coverage [19] Company Strategy and Development Direction - The company is focused on transforming healthcare experiences to be simpler, more affordable, and more human, with sustained investments in patient advocacy solutions and digital platforms [9][10] - Expansion of value-based oncology care model to Medicare Advantage is planned, following success in the commercial sector [12] - Carillon continues to be a strategic growth engine, significantly expanding relationships with external payers [20] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for Medicare Advantage, emphasizing strong retention and disciplined growth [17] - Elevated Medicare costs are manageable, with consistent tracking of claims data to identify emerging patterns [39][41] - The company remains disciplined in its approach to benefit design and risk management, ensuring alignment with healthcare needs [129] Other Important Information - The company was named to Fortune's 100 Best Companies to Work For and recognized as one of America's most innovative companies [22] - Operating cash flow totaled $1 billion, with expectations for approximately $8 billion for the year remaining unchanged [32] Q&A Session Summary Question: Medicare Advantage trends and IRA impact - Management indicated that Medicare costs remain elevated but manageable, with no material changes in expectations [39][41] Question: Carillon Services growth and cross-sales - Carillon Services experienced over 60% growth, with strong internal and external expansion [47] Question: Effectuation rates and membership attrition - Membership attrition is projected in the mid-single digit percent range in early Q2, with stabilization expected thereafter [56] Question: Medicaid MLR margin trends - Medicaid trends remain elevated but decelerated as expected, with improvements anticipated in the latter half of the year [117] Question: Part D changes and utilization behavior - Management is comfortable with the mix of Medicare Advantage membership and has not observed substantial variations in utilization [140]

Core Viewpoint - Elevance Health reported quarterly earnings of $11.97 per share, exceeding the Zacks Consensus Estimate of $11.21 per share, and showing an increase from $10.64 per share a year ago, indicating a 6.78% earnings surprise [1][2] Financial Performance - The company achieved revenues of $48.77 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 5.95%, compared to $42.27 billion in the same quarter last year [2] - Over the last four quarters, Elevance Health has exceeded consensus EPS estimates three times and topped revenue estimates four times [2] Stock Performance - Elevance Health shares have increased approximately 10.2% since the beginning of the year, contrasting with a decline of 12.3% in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $9.81 on revenues of $47.67 billion, and for the current fiscal year, it is $34.19 on revenues of $192.23 billion [7] - The trend of estimate revisions for Elevance Health is mixed, which may change following the recent earnings report [6] Industry Context - The Medical Services industry, to which Elevance Health belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Performance - 1Q 2025 operating revenue was $48.8 billion, an increase of 15.4% from 1Q 2024[5] - 1Q 2025 adjusted operating gain was $3.3 billion, up 4.1% from 1Q 2024[5] - 1Q 2025 diluted EPS was $9.61; adjusted diluted EPS was $11.97[5] - Total revenues for the three months ended March 31, 2025, increased by 14.8% to $48,891 million compared to $42,577 million in 2024[37] - Premiums rose by 14.5% to $40,887 million, while product revenue increased by 29.1% to $5,809 million[37] - Net income attributable to shareholders decreased by 2.8% to $2,183 million, with earnings per diluted share slightly up by 0.2% to $9.61[37] - Shareholders' net income for Q1 2025 was $2,183 million, a decrease of 2.8% from $2,246 million in Q1 2024[51] - Adjusted shareholders' net income increased by 7.2% to $2,719 million in Q1 2025, compared to $2,537 million in Q1 2024[51] - Operating revenue rose by 15.4% to $48,765 million in Q1 2025, up from $42,273 million in Q1 2024[54] - Reportable segments operating gain increased by 5.1% to $3,170 million in Q1 2025, compared to $3,016 million in Q1 2024[54] - Adjusted shareholders' earnings per diluted share for Q1 2025 was $11.97, reflecting a 10.5% increase from $10.83 in Q1 2024[51] - Full year 2025 outlook for shareholders' earnings per diluted share is projected to be between $28.30 and $29.00[54] Revenue Segments - Health Benefits segment operating revenue was $41.4 billion, an increase of 11% compared to the prior year quarter[15] - Operating revenue from the Health Benefits segment grew by 11.2% to $41,431 million, while Carelon Services saw a significant increase of 63.0% to $6,536 million[44] - Carelon operating revenue was $16.7 billion, an increase of 38% compared to the prior year quarter[21] Expenses and Ratios - The benefit expense ratio was 86.4%, an increase of 80 basis points year over year[9] - Total expenses increased by 16.3% to $46,094 million, with benefit expenses rising by 15.6% to $35,312 million[37] - The operating margin for total operating revenue decreased to 6.5%, down from 7.1% in the previous year[44] - Adjusted operating expense for Q1 2025 was $5,215 million, an increase of 9.2% from $4,776 million in Q1 2024[54] - The operating expense ratio improved to 10.9% in Q1 2025, down from 11.6% in Q1 2024, representing a 70 basis points improvement[54] Cash Flow and Assets - Operating cash flow was $1.0 billion, a decrease of approximately $1.0 billion year over year[11] - The company reported a net cash provided by operating activities of $1,017 million, a decrease from $1,978 million in the prior year[41] - Cash and cash equivalents at the end of the period were $7,500 million, down from $8,288 million at the beginning of the period[41] - The total assets increased to $119,717 million as of March 31, 2025, compared to $116,889 million at the end of 2024[39] Claims and Liabilities - Medical claims payable at the end of the period increased to $16,529 million from $16,183 million[47] Other Financial Metrics - Net losses on financial instruments increased to $464 million in Q1 2025 from $161 million in Q1 2024[51] - Interest expense rose to $344 million in Q1 2025, compared to $265 million in Q1 2024[51] - The company returned $1.3 billion of capital to shareholders in 1Q 2025[5] - The second quarter 2025 dividend was declared at $1.71 per share, payable on June 25, 2025[24]

Core Viewpoint - Elevance Health, Inc. is expected to report first-quarter 2025 results on April 22, with earnings estimated at $11.09 per share, reflecting a 4.2% increase year-over-year, and revenues projected at $46 billion, indicating an 8.7% growth from the previous year [1] Earnings Estimates - The earnings estimate for Q1 has seen three upward revisions in the last 30 days, with no downward movements [1] - The current earnings estimate of $11.09 per share has increased from $10.65 two months ago, showing a trend of positive revisions [2] Earnings Surprise History - Elevance Health has beaten earnings estimates in three of the last four quarters, with an average negative surprise of 2.60% [2] Earnings Prediction Model - The model indicates a likely earnings beat for Elevance Health, supported by a positive Earnings ESP of +4.75% and a Zacks Rank of 3 [3][4] Revenue Drivers - The anticipated growth in results is attributed to higher premiums driven by strong Medicare Advantage membership growth and strength in Carelon businesses [5] - The Zacks Consensus Estimate for premiums is $38.7 billion, reflecting an 8.3% increase year-over-year, while Medicare Advantage membership is expected to grow by 9.8% [6] Segment Performance - The Health Benefits segment is projected to see operating income of $2.2 billion, a decline of 2.5% year-over-year, primarily due to reduced Medicaid membership [8] - The Carelon segment is expected to report operating income of $956 million, indicating a 17.6% year-over-year growth [9] Expense Outlook - Elevated expenses are anticipated due to significant investments in digital capabilities, with total expenses expected to rise by 7.1% year-over-year [10]

Core Viewpoint - Analysts forecast Elevance Health (ELV) to report quarterly earnings of $11.09 per share, reflecting a year-over-year increase of 4.2%, with revenues expected to reach $45.93 billion, an increase of 8.7% compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised downward by 1.5% over the past 30 days, indicating a collective reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate trends and short-term stock performance [3]. Revenue Projections - Analysts expect 'Revenues- Premiums' to be $38.66 billion, indicating a year-over-year change of +8.3% [4]. - 'Revenues- Service fees' are projected to reach $2.13 billion, reflecting a change of +2.6% from the previous year [5]. - 'Revenues- Net investment income' is expected to be $461.32 million, showing a year-over-year change of -0.8% [5]. - 'Revenues- Product revenue' is anticipated to reach $5.11 billion, indicating a change of +13.6% from the prior year [5]. Membership Metrics - Total Medical Membership is forecasted to be 46.24 million, consistent with the same quarter last year [6]. - 'Medical Membership - Medicare - Medicare Advantage' is expected to reach 2.21 million, up from 2.02 million in the same quarter last year [6]. - 'Medical Membership - Medicaid' is estimated at 8.89 million, down from 9.33 million in the previous year [7]. - 'Medical Membership - Federal Employees Health Benefits' is projected to remain at 1.66 million, unchanged from the year-ago figure [7]. - The consensus for 'Medical Membership - Total Medicare' stands at 3.08 million, up from 2.91 million last year [8]. - 'Medical Membership - Commercial Risk-Based - Individual' is expected to reach 1.42 million, compared to 1.25 million in the same quarter last year [8]. Expense Ratios - The 'Benefit Expense Ratio' is projected to be 87.3%, up from 85.6% in the same quarter last year [9]. - 'Medical Membership - Commercial Fee-Based' is expected to be 27.44 million, slightly down from 27.45 million in the previous year [9]. Stock Performance - Elevance Health shares have increased by +0.4% over the past month, contrasting with the Zacks S&P 500 composite's decline of -4.2% [9].

Core Viewpoint - Elevance Health (ELV) is anticipated to report a year-over-year increase in earnings driven by higher revenues, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The earnings report is scheduled for April 22, 2025, with expectations of quarterly earnings at $11.09 per share, reflecting a +4.2% year-over-year change, and revenues projected at $45.95 billion, an increase of 8.7% from the previous year [3][2]. Estimate Revisions - The consensus EPS estimate has been revised down by 1.46% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Elevance Health is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +4.75%, suggesting a bullish outlook from analysts [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8]. - Elevance Health currently holds a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Elevance Health had an earnings surprise of +1.05%, having beaten consensus EPS estimates three times over the last four quarters [12][13]. Industry Context - Medpace (MEDP), another player in the Zacks Medical Services industry, is expected to report earnings of $3.06 per share, reflecting a -4.4% year-over-year change, with revenues projected at $530.12 million, up 3.7% from the previous year [17]. - Medpace's consensus EPS estimate has been revised down by 1.5% over the last 30 days, resulting in an Earnings ESP of -3.39%, making it challenging to predict a beat on the consensus EPS estimate [18].

Core Insights - Health insurance stocks experienced a significant surge following the announcement of a more than 5% increase in government reimbursement rates for 2026 Medicare Advantage plans [1][2][3] Group 1: Government Announcement - The Centers for Medicare & Medicaid Services (CMS) announced a 5.06% increase in payments to Medicare Advantage plans for the 2026 calendar year, which is more than double the initial proposal made in January [2][3] - This increase is expected to generate an additional $25 billion in revenue for the health insurance industry [2] Group 2: Market Reaction - Major health insurance stocks rallied, with UnitedHealth Group rising by 7%, CVS Health by 8%, Human by 10%, and Elevance Health by 4% [3] - The finalized rate increase is 2.83 percentage points higher than the Biden administration's earlier proposal, attributed to new health spending data [3] Group 3: Industry Implications - The increase in average reimbursement rates allows insurers to receive more funding per Medicare Advantage plan recipient, enabling them to offer more services and generate additional revenue [5] - This reimbursement increase is particularly beneficial for large insurers, as the Medicare business had been a drag on profits over the past year [5]

Core Viewpoint - Elevance Health's shares experienced a 5.4% increase, closing at $452.69, driven by notable trading volume and a broader market shift towards defensive sectors like healthcare amid market volatility [1][2]. Group 1: Stock Performance - Elevance Health's stock gained 8% over the past four weeks, reflecting investor interest in stable investments during uncertain market conditions [1][2]. - The company's share price rise is attributed to a shift from tech and industrial stocks to healthcare, as investors seek stability [2]. Group 2: Financial Outlook - The upcoming quarterly earnings report is expected to show earnings of $10.92 per share, a year-over-year increase of 2.6%, with revenues projected at $45.94 billion, up 8.7% from the previous year [4]. - Despite the positive earnings and revenue growth expectations, the consensus EPS estimate has been revised 1.4% lower in the last 30 days, indicating potential caution among investors [5]. Group 3: Strategic Positioning - Elevance Health's strong position in managed care and stable revenue from government-backed programs enhances its appeal to risk-averse investors [2]. - The company is focusing on improving margins and operational efficiencies in Medicaid and Medicare Advantage plans, which is expected to strengthen its financial position [3].

Core Insights - The pharmaceutical and healthcare sectors are characterized by significant volatility, with companies often facing long periods of unprofitability before achieving success, particularly when new products or clinical trial results emerge [1][2] - Tracking firms that attract investor interest can be beneficial, but caution is advised to avoid entering positions too late [2] Company Summaries Viking Therapeutics Inc. (VKTX) - Viking Therapeutics is gaining attention due to its potential contribution to the GLP-1 weight loss market, with its drug VK2735 completing enrollment for a Phase 2 clinical trial [4][5] - The stock forecast for Viking indicates a potential upside of 271.08%, with a 12-month price target of $95.18, compared to the current price of $25.65 [4] - Initial studies suggest VK2735 may facilitate faster weight loss than existing GLP-1 agonists, and it is being developed in both injectable and oral forms [5] - Despite the promising outlook, shares have declined over 67% in the year leading to March 27, 2025, due to investor impatience regarding the Phase 3 trial [6] Absci Corp. (ABSI) - Absci utilizes AI technology in drug development, with a 12-month stock price forecast indicating a potential upside of 181.48%, targeting $7.60 from a current price of $2.70 [8] - The company has reported significant successes in its drug pipeline, but also rising expenses, with R&D costs increasing by approximately 50% year-over-year, leading to net losses widening to $29 million [9][10] - Cash reserves have decreased to $112.4 million, necessitating careful management as the company seeks to build revenue-generating capacity [10] Elevance Health Inc. (ELV) - Elevance Health is positioned as a defensive play in healthcare, with a 12-month stock price forecast suggesting a 20.37% upside, targeting $519.81 from a current price of $431.84 [11] - The company boasts attractive valuation metrics, including a price-to-sales ratio of 0.55 and a low forward price-to-earnings ratio of 12.7, which may enhance efficiency and margins through AI integration [12] - Despite regulatory uncertainties in the health benefits industry, Elevance's strong market position is expected to provide resilience, with a consensus buy rating from 14 out of 16 analysts [12]

U.S. health benefits company Elevance Health, Inc. (ELV) appears undervalued. It is currently trading at 12.25X forward 12-month earnings, below its five-year median of 13.44X and the industry average of 15.40X. It also trades at a discount to major health insurance companies like UnitedHealth Group Incorporated (UNH) and Humana Inc. (HUM) , which have forward P/E ratios of 16.46X and 16.86X, respectively. ELV currently holds a Value Score of A.This discounted valuation could reflect market skepticism about ...