Financial Data and Key Metrics Changes - Elevance Health reported third quarter GAAP diluted earnings per share of $5.32 and adjusted diluted earnings per share of $6.03, reflecting enhanced medical cost management and expense discipline [14] - Total operating revenue for the quarter was $50.1 billion, up 12% year-over-year, driven by higher premium yields and growth in Medicare Advantage membership [15] - The consolidated benefit-expense ratio was 91.3%, aligned with expectations, while the Medicaid operating margin is expected to be modestly negative for the full year 2025 [15][16] Business Line Data and Key Metrics Changes - In Medicare Advantage, approximately 55% of members will be in four-star or higher contracts for the 2027 payment year, up from about 40% for 2026, indicating improved STAR performance [8] - CarelonRx revenue grew 20% year-over-year, driven by strong momentum with large clients, while Carelon Services grew by more than 50% [17] - The integrated medical pharmacy model and advocacy solutions are driving higher retention and expanded fee-based relationships in the commercial segment [17] Market Data and Key Metrics Changes - The ACA market is experiencing higher acuity, and the anticipated expiration of enhanced subsidies could significantly impact membership in 2026 [9] - Medicaid performance is under pressure from elevated acuity and utilization, with disenrollment concentrated among lower acuity members due to stricter eligibility reviews [15][16] - The company expects a high single-digit decline in full-year operating margin for the ACA business, while commercial group margins are expected to remain consistent with prior expectations [16] Company Strategy and Development Direction - The company is focused on lowering the total cost of care and improving member experience through an integrated clinical and benefits approach [6] - Elevance Health is committed to disciplined capital allocation, balancing investment and growth with consistent shareholder returns, prioritizing share repurchases [13] - The company is investing in technology, particularly AI, to enhance member and provider experiences, aiming for long-term growth [34][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by rising medical and pharmacy costs and regulatory changes impacting coverage [6] - The company is approaching 2026 with a prudent and practical posture, planning for at least a 125 basis point decline in Medicaid margins due to elevated acuity and utilization trends [7][20] - Management remains confident in the long-term growth algorithm, expecting 2027 to mark a return to a more balanced earnings growth profile [22][72] Other Important Information - The company is integrating recent acquisitions to expand Carelon's capabilities while maintaining a strong balance sheet to support growth objectives [20][13] - The company is proactively working with state partners on rate alignment and operational enhancements to ensure the sustainability of Medicaid programs [10][20] Q&A Session Summary Question: Medicaid margin outlook and state discussions - Management discussed the expectation of a 125 basis point margin decline next year, with ongoing discussions with states about affordability and program changes [24][28] Question: Investment spending impact on 2026 - Management clarified that several hundred million dollars of investment is aimed at technology adoption, Carelon scaling, and operational improvements, which are expected to enhance long-term growth [32][34] Question: ACA membership impact from subsidy expiration - Management indicated that if enhanced subsidies expire, a material contraction in the ACA marketplace is expected, leading to lower enrollment and higher premium increases [41][45] Question: Medicaid membership and revenue outlook - Management anticipates a modest decline in Medicaid membership in 2026 due to ongoing normalization following the redetermination process [75] Question: Medicaid risk pool shifts and coding trends - Management noted that elevated acuity and utilization pressures are impacting Medicaid margins, with ongoing efforts to improve coding accuracy and compliance [82][84]

Financial Data and Key Metrics Changes - Elevance Health reported third quarter GAAP diluted earnings per share of $5.32 and adjusted diluted earnings per share of $6.30, reflecting enhanced medical cost management and expense discipline [16][17] - Total operating revenue for the quarter was $50.1 billion, up 12% year over year, driven by higher premium yields and growth in Medicare Advantage membership [17][18] - The consolidated benefit expense ratio was 91.3%, aligned with expectations, while the Medicaid operating margin is expected to be modestly negative for the full year 2025 [17][18] Business Line Data and Key Metrics Changes - In Medicaid, performance was pressured by elevated acuity and utilization, leading to a projected decline of at least 125 basis points in margins for 2026 [18][22] - Medicare Advantage costs were marginally better than expected due to disciplined plan design, with approximately 55% of MA members in four-star or higher contracts for the 2027 payment year, up from about 40% for 2026 [8][18] - CarillonRx revenue grew 20% year over year, driven by strong momentum with large clients, while Carillon Services grew by more than 50% [20][21] Market Data and Key Metrics Changes - The ACA market is expected to face significant membership impacts if enhanced subsidies expire, with independent estimates indicating lower enrollment and a higher morbidity risk pool for 2026 [10][54] - The anticipated expiration of enhanced subsidies would significantly impact membership in 2026, with the company prepared to work with states to ensure continued access for consumers [10][54] Company Strategy and Development Direction - The company is focused on lowering the total cost of care and improving member experience through an integrated clinical and benefits approach, leveraging value-based care [5][6] - Capital deployment remains a key lever for long-term earnings growth, with a commitment to disciplined capital allocation and returning capital to shareholders through share repurchases [14][21] - The company is prioritizing durable, long-term performance over near-term expense leverage, with targeted investments in AI and digital tools to enhance member and provider experience [25][41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic external environment and emphasized a prudent approach to planning for 2026, with expectations for continued challenges in Medicaid [15][22] - The company expects 2026 to be a low point for Medicaid margins, with a return to a more balanced earnings growth profile anticipated in 2027 [25][84] - Management expressed confidence in the strategy and execution, aiming to drive sustainable value for stakeholders despite external uncertainties [15][25] Other Important Information - The company is integrating recent acquisitions and focusing on operational efficiency to sustain growth and enhance performance across the enterprise [20][21] - The company has made significant investments in technology and operational initiatives to improve star ratings and member engagement [41][42] Q&A Session Summary Question: Medicaid margin expectations and state discussions - Management discussed the challenges in Medicaid margins, indicating a slight negative margin for 2025 and a projected decline of at least 125 basis points for 2026, with constructive conversations with states about improving affordability [27][30][34] Question: Investment spending and its impact - Management clarified that several hundred million dollars in investments are planned for 2026, focusing on technology adoption, Careline investments, and operational initiatives to enhance long-term growth [39][40][41] Question: Impact of enhanced subsidies on ACA membership - Management indicated that if enhanced subsidies expire, a material contraction in the ACA marketplace is expected, leading to lower enrollment and a higher morbidity risk pool for 2026 [50][54] Question: Medicaid membership outlook - Management expects Medicaid membership to decline modestly in 2026 due to ongoing normalization following the redetermination process and state program changes [87][88] Question: Variability in Medicaid performance by state - Management acknowledged variability in Medicaid performance across states and indicated a willingness to exit contracts if financial expectations are not met [70][72]

Financial Data and Key Metrics Changes - Elevance Health reported third quarter GAAP diluted earnings per share of $5.32 and adjusted diluted earnings per share of $6.03, reflecting enhanced medical cost management and expense discipline [12][14] - Total operating revenue for the quarter was $50.1 billion, up 12% year over year, driven by higher premium yields and growth in Medicare Advantage membership [14][15] - The consolidated benefit-expense ratio was 91.3%, aligned with expectations, while Medicaid performance faced pressure from elevated acuity and utilization [14][15] Business Line Data and Key Metrics Changes - In Medicare Advantage, approximately 55% of members will be in four-star or higher contracts for the 2027 payment year, up from about 40% for 2026, indicating improvement in STAR ratings performance [6][15] - CarelonRx revenue grew 20% year over year, driven by strong momentum with large clients, while Carelon Services grew by more than 50% due to robust organic growth [16][17] - The ACA market is expected to face challenges due to the anticipated expiration of enhanced subsidies, which could significantly impact membership in 2026 [8][14] Market Data and Key Metrics Changes - Medicaid operating margin is expected to be modestly negative for 2025, with a projected decline of at least 125 basis points in 2026 due to ongoing acuity and utilization trends [15][18] - The company anticipates a high single-digit decline in full-year operating margin for the ACA business, while commercial group margins are expected to remain consistent with prior expectations [15][16] - The anticipated expiration of enhanced subsidies could lead to a material contraction in the ACA marketplace, affecting overall membership [40][41] Company Strategy and Development Direction - The company is focused on lowering the total cost of care and improving member experience through an integrated clinical and benefits approach, leveraging value-based care [4][10] - Elevance Health is committed to disciplined capital allocation, balancing investment and growth with consistent shareholder returns, including share repurchases [11][18] - The company is investing in technology adoption, Carelon capabilities, and operational initiatives to enhance performance and support long-term growth [30][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic external environment but expressed confidence in the company's strategy and execution to drive sustainable value [11][20] - The company is proactively working with state partners on rate alignment and program improvements to ensure the sustainability of Medicaid programs [9][26] - Management expects 2026 to be a trough year for Medicaid margins, with a return to a more balanced earnings growth profile anticipated in 2027 [24][66] Other Important Information - The company is integrating recent acquisitions to expand Carelon's capabilities while maintaining a strong balance sheet to support growth objectives [11][18] - The company is embedding AI and digital tools across operations to enhance member and provider experiences, aiming for improved affordability and operational performance [30][35] Q&A Session Summary Question: Medicaid margin outlook and state discussions - Management indicated that Medicaid margins are expected to be slightly negative for 2025, with a projected decline of at least 125 basis points in 2026 due to elevated acuity and utilization trends [22][24] - Discussions with states are constructive, with states exploring ways to reduce overall Medicaid program costs and improve affordability [25][26] Question: Investment spending impact on 2026 - The company plans to make several hundred million dollars in discrete investments to advance strategic goals, which are expected to impact EPS positively in the long term [29][30] Question: ACA membership impact from subsidy expiration - If enhanced subsidies expire, a material contraction in the ACA marketplace is expected, leading to lower enrollment and higher premium increases [40][41] Question: Medicaid risk pool shifts and coding trends - Management noted that elevated acuity and utilization pressures have led to a below-breakeven Medicaid operating margin, with ongoing efforts to improve coding accuracy and compliance [76][78] Question: State partners considering benefit adjustments - States are looking at various levers, including potential program changes, to improve affordability in Medicaid, with adjustments typically aligning with new contract years [81][83]

Financial Data and Key Metrics Changes - Elevance Health reported third quarter GAAP diluted earnings per share of $5.32 and adjusted diluted earnings per share of $6.30, reflecting enhanced medical cost management and expense discipline [17][19] - Total operating revenue for the quarter was $50.1 billion, up 12% year over year, driven by higher premium yields and growth in Medicare Advantage membership [19][20] - The consolidated benefit expense ratio was 91.3%, aligned with expectations [19][20] Business Line Data and Key Metrics Changes - Medicaid performance faced pressure from elevated acuity and utilization, with expectations of a modestly negative operating margin for the full year 2025 and a decline of at least 125 basis points in 2026 [20][24] - Medicare Advantage costs were marginally better than expected, with an anticipated slight increase in operating margin for 2025 [20][21] - The ACA market showed favorable development compared to expectations, but cost trends remain significantly above historical levels [21] Market Data and Key Metrics Changes - The company ended the quarter with 45.4 million medical members, with Medicaid membership concentrated among lower acuity members due to stringent eligibility reviews [19][20] - In the ACA market, the anticipated expiration of enhanced subsidies could significantly impact membership in 2026 [10][21] Company Strategy and Development Direction - The company is focused on lowering the total cost of care and improving member experience through an integrated clinical and benefits approach [5][6] - Elevance Health is committed to disciplined capital allocation, balancing investment in growth with consistent shareholder returns, and prioritizing returning capital to shareholders through share repurchases [15][23] - The company is investing in technology adoption, Careline capabilities, and operational initiatives to enhance performance and member satisfaction [42][44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by rising medical and pharmacy costs and regulatory changes impacting coverage for millions of Americans [5][6] - The company is approaching 2026 with a prudent and practical posture, setting expectations that reflect current realities and uncertainties [6][14] - Management expressed confidence in the strategy and execution, anticipating a return to a more balanced earnings growth profile in 2027 [27][86] Other Important Information - The company is expanding external relationships and scaling pharmacy, behavioral health, and specialty care management, with external revenue growing double digits year over year [11][12] - The company is embedding AI-enabled tools to enhance access, efficiency, and engagement across its platform [13][44] Q&A Session Summary Question: Medicaid margin expectations and state discussions - Analyst inquired about the Medicaid margin outlook and the company's discussions with states regarding rate updates and cost trends [29] - Management clarified that the Medicaid trend assumption is anchored to expected fourth quarter exit rates, with elevated acuity and utilization driving pressures [32][33] Question: Investment spending and its impact on earnings - Analyst asked about the nature of investment spending and its potential transitory impact on earnings growth [40] - Management indicated that investments are focused on technology adoption, Careline scaling, and operational improvements, aimed at long-term growth [42][44] Question: Impact of enhanced subsidies on ACA membership - Analyst sought clarity on the potential impact of enhanced subsidies expiration on ACA membership [50] - Management acknowledged that expiration could lead to a material contraction in the ACA marketplace, with expectations of lower enrollments and higher morbidity risk [55] Question: Medicaid risk pool shifts and coding trends - Analyst inquired about the expected risk pool shifts and updates on coding trends from providers [101] - Management noted that elevated acuity and utilization pressures have not been fully offset by rate updates, and they are working on improving coding accuracy and compliance [104][106] Question: State partners' potential benefit adjustments - Analyst asked if state partners are considering pulling back on benefits to improve affordability [110] - Management confirmed that states are exploring various levers, including program changes, to enhance affordability in Medicaid programs [112]

Core Insights - Elevance Health reported a third quarter net income of nearly $1.2 billion, reflecting a 17.8% increase from $1 billion in the same period last year [4][3] - Total revenues for the third quarter rose by 12.4% to $50.7 billion, driven by higher premium yields and growth in Medicare Advantage membership [4][7] Financial Performance - The benefit expense ratio increased to 91.3%, up 180 basis points year over year, primarily due to elevated costs in the Medicare business [5] - Operating revenue for the third quarter was up 12% to $50.1 billion, influenced by recent acquisitions and growth in health benefits segments [7] Membership and Services - Elevance ended the third quarter with 45.4 million health plan members, a slight decrease of less than 1% compared to the previous year, attributed to lower BlueCard and Medicaid membership [7] - The Carelon health services business experienced significant growth, with operating revenue increasing by 33% to $18.3 billion, supported by acquisitions and scaling of risk-based solutions [7] Strategic Focus - The company emphasized disciplined execution and a focus on affordability and member experience through value-based care partnerships and AI-enabled digital solutions [6]

Q3 2025 Financial Performance - Elevance Health's Q3 2025 operating revenue reached $50.1 billion, a 12.0% increase year-over-year, driven by higher premium yields, acquisitions, and Medicare Advantage growth, offset by Medicaid reverifications[4, 7] - The benefit expense ratio was 91.3%, aligning with expectations but reflecting elevated costs across business lines[3, 7] - Adjusted diluted EPS was $6.03, including approximately $1 of higher net investment income and tax benefit timing[3] - Operating cash flow was $1.1 billion, impacted by the BCBSA Provider Settlement Agreement payment[7] Health Benefits Segment - Health Benefits operating revenue increased by 10.4% to $42.2 billion, driven by higher premium yields, acquisitions, and Medicare Advantage growth, partially offset by Medicaid reverifications[4, 9, 10] - Adjusted operating margin for Health Benefits declined by 280 bps to 1.4%, due to higher medical costs and strategic investments[9, 10] - Health Benefits membership stood at 45.4 million, reflecting lower BlueCard membership and Medicaid reverifications, offset by Medicare Advantage growth[9, 10] Carelon Segment - Carelon's operating revenue grew by 32.9% to $18.3 billion, driven by its integrated platform and performance in Pharmacy and Services[4, 12] - Adjusted operating gain for Carelon was $0.8 billion, a decrease of 9.5%[12] - Carelon Services revenue increased by approximately 60%, supported by the CareBridge integration and expansion of risk-based and home-health capabilities[13] Strategic Outlook - Elevance Health reaffirmed its full-year adjusted diluted EPS guidance of approximately $30, including a benefit expense ratio of approximately 90.0% and approximately $3 of discrete, non-core items[3] - The company anticipates Medicaid operating margin to decline by at least 125 basis points year-over-year due to rate increases lagging acuity and utilization trends[3] - Approximately 55% of Medicare Advantage members are in 4-Star or higher contracts for payment year 2027, up from approximately 40%[3]

Elevance Health (ELV) came out with quarterly earnings of $6.03 per share, beating the Zacks Consensus Estimate of $4.98 per share. This compares to earnings of $8.37 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +21.08%. A quarter ago, it was expected that this health insurer would post earnings of $9.16 per share when it actually produced earnings of $8.84, delivering a surprise of -3.49%.Over the last four quarters, the c ...

Core Insights - Elevance Health reported an increase in profit for the third quarter, driven by a rise in revenue despite a decline in overall memberships [1] Financial Performance - The company experienced higher profits in the third quarter compared to previous periods [1] - Revenue increased, contributing positively to the overall financial results [1] Membership Trends - There was a noted slip in overall memberships, indicating a potential area of concern for future growth [1]

Corporate Finance and M&A Activity - Coinbase (COIN) is set to acquire the crypto-investing platform Echo for approximately $375 million, marking its eighth acquisition this year and reflecting its active expansion amid favorable U.S. cryptocurrency policies [2][9] - Hon Hai Precision Industry Co. Ltd., a key supplier for Apple (AAPL), has mandated banks for its inaugural Euro bond sale, which could provide new capital to support operations and expand capabilities within the global technology supply chain [3][9] Q3 2025 Earnings Season Highlights - Elevance Health (ELV) reported adjusted earnings per share (EPS) of $6.03, significantly exceeding the estimated $4.93, with revenue of $50.09 billion surpassing the $49.38 billion estimate, although medical membership was slightly below projections [4][9] - Danaher (DHR) posted adjusted EPS of $1.89 against an estimated $1.72, with revenue of $6.1 billion exceeding the $6.01 billion estimate, reaffirming its full-year adjusted EPS outlook in the range of $7.70 to $7.80 [5][9] Currency Markets and European Politics - The USD/JPY currency pair extended its gains by 0.8% to reach a one-week high of 151.95, reflecting ongoing dynamics in global foreign exchange markets [6][9] - French President Emmanuel Macron reiterated the possibility of a referendum on pension reform, emphasizing its importance despite recent indications from Prime Minister Sebastien Lecornu to suspend the reform until after the 2027 presidential elections [7][9]

Core Insights - Elevance Health reported third-quarter profit that exceeded Wall Street estimates, indicating strong financial performance [1] Financial Performance - The company successfully managed to keep medical costs in check, contributing to its better-than-expected profit results [1]