Elevance Health Inc. ELV reported weaker-than-expected earnings for its third quarter on Thursday. The company posted revenues of $44.7 billion, up 5.3% year-over-year, beating the consensus of $43.33 billion. Profit fell 21% to $1.02 billion, or $4.36 a share. Per-share adjusted earnings reached $8.37, down from $8.99 a year ago, missing the consensus of $9.66. "We remain confident in the long-term earnings potential of our diverse businesses as we navigate a dynamic operating environment and unprecedented ...

Key Takeaways The S&P 500 was essentially flat on Thursday, Oct. 17, closing less than 0.1% lower despite strong retail sales data and a resurgence in AI chip stocks. Shares of health insurance companies dropped after Elevance Health missed quarterly profit estimates, pointing to declines in Medicaid enrollments. Increased premiums and investment income helped drive strong results for Travelers despite high catastrophe losses, and shares of the insurer surged. Major U.S. equities indexes were mixed as earni ...

Membership and Market Expansion - Elevance Health serves nearly 46 million medical members as of September 30, 2024, making it one of the largest health insurers in the U.S.[131] - The company expanded its participation in the Individual Public Exchange market, offering products in 141 of 143 rating regions for 2024, up from 138 in 2023[135] - Total medical membership declined by 3.3% to 45,760 thousand as of September 30, 2024, primarily due to Medicaid membership attrition and lapses exceeding sales in Employer Group risk-based and Medicare businesses[157][165] - Medicaid membership decreased by 19.0% to 8,926 thousand as of September 30, 2024, driven by eligibility redeterminations and market exits[165] - Individual medical membership increased by 30.0% to 1,299 thousand as of September 30, 2024, driven by sales exceeding lapses[165] - Dental membership increased by 3.6% to 7,021 thousand as of September 30, 2024, driven by favorable sales in Individual, Employer Group fee-based, and FEHB businesses[166] - Vision membership increased by 5.3% to 10,382 thousand as of September 30, 2024, driven by sales exceeding lapses in Employer Group fee-based and Individual businesses[166] Financial Performance - Operating revenue for the three months ended September 30, 2024 increased by 5.3% to $44,719 million, driven by premium rate increases and higher product revenue from CarelonRx[158] - Net income for the three months ended September 30, 2024 decreased by 22.5% to $1,008 million, primarily due to a net decrease in operating gain and lower gain on sale of life and disability businesses[159] - Fully-diluted EPS for the three months ended September 30, 2024 decreased by 20.0% to $4.36, primarily due to decreased net income[161] - Operating cash flow for the nine months ended September 30, 2024 decreased to $5,102 million, primarily due to timing of CMS payments and Medicaid membership decline[162] - Total operating revenue increased by $2.239 billion (5.3%) for the three months ended September 30, 2024, compared to the same period in 2023, driven by premium rate increases and higher product revenue from CarelonRx[169][170] - Net investment income rose by $58 million (11.8%) for the three months ended September 30, 2024, primarily due to higher income from fixed maturity securities[169][171] - Benefit expense increased by $2.343 billion (7.7%) for the three months ended September 30, 2024, driven by higher medical cost trends in the Health Business segment, partially offset by Medicaid membership attrition[169][171] - Cost of products sold increased by $445 million (9.6%) for the three months ended September 30, 2024, reflecting higher pharmacy revenues from CarelonRx[169][172] - Operating expense decreased by $201 million (3.7%) for the three months ended September 30, 2024, due to disciplined cost management and lower business optimization charges[169][172] - Shareholders' net income decreased by $273 million (21.2%) for the three months ended September 30, 2024, primarily due to higher benefit expenses and increased tax reserves[169][173] - Total operating revenue increased by $2.460 billion (1.9%) for the nine months ended September 30, 2024, driven by premium rate increases and higher product revenue from CarelonRx[169][173] - Net investment income increased by $228 million (17.6%) for the nine months ended September 30, 2024, due to higher income from fixed maturity securities and alternative investments[169][174] - Benefit expense increased by $1.071 billion (1.2%) for the nine months ended September 30, 2024, driven by higher medical cost trends in the Health Business segment, partially offset by Medicaid membership attrition[169][174] - Shareholders' net income increased by $431 million (8.4%) for the nine months ended September 30, 2024, despite higher benefit expenses and increased tax reserves[169][177] - Health Benefits operating revenue increased by $1.534 billion (4.2%) for the three months ended September 30, 2024, compared to the same period in 2023, driven by higher premium revenues[181][182] - CarelonRx operating revenue increased by $625 million (7.3%) for the three months ended September 30, 2024, primarily due to the acquisition of Paragon and higher prescription volume[181][183] - Carelon Services operating revenue increased by $1.129 billion (32.2%) for the three months ended September 30, 2024, driven by the expansion of medical management, behavioral health, and post-acute care services[181][184] - Total operating revenue increased by $2.239 billion (5.3%) for the three months ended September 30, 2024, compared to the same period in 2023[181] - Health Benefits operating gain decreased by $230 million (12.5%) for the three months ended September 30, 2024, due to inadequate Medicaid rates to cover medical cost trends[181][182] - CarelonRx operating gain increased by $142 million (29.8%) for the three months ended September 30, 2024, driven by growth in product revenue[181][183] - Total operating gain decreased by $348 million (19.8%) for the three months ended September 30, 2024, compared to the same period in 2023[181] - The ratio of current year medical claims paid as a percent of current year net medical claims incurred was 85.4% for the nine months ended September 30, 2024, indicating slightly faster claims processing speed compared to 84.6% in 2023[194] - Favorable development in completion factors and trend factors contributed to a total favorable development of $1.610 billion for the nine months ended September 30, 2024[193] - The percentage of prior year redundancies in the current period was 11.3% for the nine months ended September 30, 2024, driven by favorable completion and trend factor development[195] - Net cash provided by operating activities decreased to $5,102 million for the nine months ended September 30, 2024, compared to $11,032 million in the same period in 2023, primarily due to timing of CMS payments, Medicaid membership decline, and working capital changes[201] - Total cash, cash equivalents, and investments in fixed maturity and equity securities increased by $1,581 million to $38,826 million as of September 30, 2024, driven by cash from operations, debt issuances, and proceeds from subsidiary sales[202] - The company's consolidated debt-to-capital ratio improved to 38.2% as of September 30, 2024, compared to 38.9% at December 31, 2023[205] - The company maintains a senior revolving credit facility of up to $4,000 million, with no amounts outstanding as of September 30, 2024[208] - Short-term borrowings from Federal Home Loan Banks increased to $360 million as of September 30, 2024, from $225 million at December 31, 2023[210] - The company holds $3,107 million in cash, cash equivalents, and investments at the parent company level, available for general corporate use, including acquisitions and stock repurchases[204] - The company's senior debt is rated "A" by S&P Global Ratings, "BBB+" by Fitch Ratings, "Baa2" by Moody's, and "bbb+" by AM Best, with intentions to maintain investment-grade ratings[206] - The company has a shelf registration statement to issue an unlimited amount of debt or equity securities for general corporate purposes, including acquisitions and debt repayment[207] - The company's regulated subsidiaries exceeded all applicable mandatory Risk-Based Capital (RBC) requirements as of December 31, 2023[212] - The company expects future liquidity needs to be met through cash on hand, operating cash flows, and available credit facilities, including the $4,000 million 5-Year Facility[213] Acquisitions and Investments - CarelonRx began assuming responsibility for pharmacy mail order front-end intake from CVS in Q1 2024, with the CVS agreement set to terminate on December 31, 2025[136] - Elevance Health made a $2,580 million equity investment in Mosaic Health, a joint venture with CD&R, in August 2024[147] - The company completed the acquisition of Paragon Healthcare, Inc. on March 11, 2024, enhancing its infusion services and injectable therapies offerings[148] - On April 1, 2024, Elevance Health sold its life and disability businesses to StanCorp Financial Group, Inc., resulting in a $201 million gain[150] - The company entered into an agreement to acquire Centers Plan for Healthy Living LLC on December 31, 2023, expected to close in Q4 2024[151] - Elevance Health agreed to acquire CareBridge on October 15, 2024, aligning with its care-at-home strategy, with closing expected in late 2024 or early 2025[152] Medicare Advantage and Star Ratings - 53% of Medicare Advantage members are enrolled in plans rated at least 4.0 Stars or higher for 2024, up from 34% in October 2023[145] - The company expects a $183 million reduction in 2026 operating revenue due to lower Medicare Advantage Star Ratings, with 38% of members in plans rated 4.0 Stars or higher for 2025[146] Risks and Uncertainties - Forward-looking statements reflect the company's views about future events and financial performance, not historical facts[216] - Risks and uncertainties include trends in healthcare costs, reduced enrollment, and the impact of large-scale medical emergencies[216] - The company faces risks related to cyber-attacks, data security incidents, and compliance with privacy laws[216] - Changes in economic and market conditions may negatively affect the company's liquidity and investment portfolios[216] - Competitive pressures and the ability to adapt to industry changes are significant risks[216] - Risks associated with Medicare and Medicaid programs, including non-compliance with complex regulations[216] - The company's ability to maintain and improve CMS Star Ratings and other quality scores is a key risk[216] - Risks related to mergers, acquisitions, joint ventures, and strategic alliances[216] - Possible impairment of intangible assets if future results do not support goodwill and other intangible assets[216] - No material changes to market risks since December 31, 2023[218]

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Elevance Health, Inc. (ELV) reported third-quarter 2024 adjusted earnings per share (EPS) of $8.37, which lagged the Zacks Consensus Estimate by 13.7%. The bottom line deteriorated 6.9% year over year. Operating revenues of $44.7 billion rose 5.2% year over year. Moreover, the top line beat the consensus mark by 3.4%. Quarterly earnings were impacted by rising expenses and a decline in Medicaid and Medicare membership. However, improved product revenues in the CarelonRx business and better premiums in the H ...

Elevance Health Inc. ELV reported on Thursday third-quarter revenues of $44.7 billion, up 5.3% year-overyear, beating the consensus of $43.33 billion. The increase was driven by higher premium yields in the Health Benefits segment and growth in CarelonRx product revenue, partially offset by membership attrition in the Medicaid business. The benefit expense ratio was 89.5%, an increase of 270 basis points, driven primarily by the timing mismatch between Medicaid rates and the higher acuity of members. The co ...

Financial Data and Key Metrics Changes - For Q3 2024, adjusted diluted earnings per share were $8.37, below expectations due to elevated medical costs in the Medicaid business [5][17] - GAAP diluted earnings per share for the quarter was $4.36, with total operating revenue at $44.7 billion, reflecting over 5% year-over-year growth [17][18] - The consolidated benefit expense ratio increased to 89.5%, up 270 basis points year-over-year, primarily due to worsening Medicaid cost trends [18][19] - Adjusted operating gains for the quarter were $2.4 billion, with year-to-date gains at $8.3 billion, mainly reflecting declines in the Medicaid business [19] Business Line Data and Key Metrics Changes - Commercial membership grew by nearly 600,000 year-over-year, driven by strong fee-based and individual ACA health plan growth [18] - Medicaid membership decreased by approximately 85,000 due to a specific footprint change [17][18] - Carelon Services is on track to exceed initial revenue growth targets, with low 20s percentage growth expected [13][14] Market Data and Key Metrics Changes - The Medicaid managed care business is experiencing elevated cost trends, currently running at 3x to 5x historical averages [19][51] - The company anticipates that Medicaid rates will ultimately reflect the acuity of its members, although this may take time due to state processes [20][30] Company Strategy and Development Direction - The company has reduced its full-year outlook for adjusted diluted earnings per share to approximately $33, reflecting a prudent approach to current challenges [6][20] - The focus remains on long-term growth, with investments in operational efficiencies and partnerships with states to enhance Medicaid rates [7][16] - The company is expanding its individual and family ACA plans in three states, aiming to drive growth in Health Benefits and Carelon segments [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging operating environment but remains confident in the long-term growth potential of the Medicaid managed care business [6][16] - The company expects continued momentum in its commercial business and stability in Medicaid as redeterminations return to normal [21][22] - Management emphasizes the importance of ongoing investments and operational efficiencies to navigate current challenges [15][22] Other Important Information - The company is integrating AI across various touchpoints to enhance member and provider experiences while reducing costs [15] - The acquisition of Kroger Specialty Pharmacy aligns with the company's strategy to control key levers in delivering whole health affordably [13][14] Q&A Session Summary Question: Concerns about accelerated earnings growth due to Medicaid issues - Management reassured that the earnings power of diverse businesses remains strong, with a long-term target of at least 12% growth in adjusted EPS [25][26] Question: Understanding the worsening Medicaid situation - Management noted accelerated cost trends in Medicaid and unfavorable prior period developments, attributing these to higher membership acuity [28][29] Question: Utilization trends in Medicaid - Management indicated ongoing elevated trends in behavioral health, with expectations of continued pressure on margins [38] Question: Medicaid profitability - Management confirmed that the Medicaid business is expected to be profitable this year, albeit below target margins [41][42] Question: Medicare Advantage competitive environment - Management expressed confidence in their positioning within the Medicare Advantage market, focusing on sustainable growth and stability [46][47] Question: Rate outlook for Medicaid - Management discussed ongoing negotiations with state partners, emphasizing the need for alignment between rates and member acuity [60][61]

Key Takeaways Elevance Health shares plunged Thursday after the insurer reported lower-than-expected earnings and cut its outlook as changes in Medicaid slashed membership rolls. The insurer's third-quarter Medicaid membership dropped 19% from a year ago on eligibility redeterminations and other changes to the program. Elevance said because of the issues with Medicaid, it lowered its full-year profit outlook. Elevance Health (ELV) shares cratered Thursday after the insurer posted a lower-than-expected profi ...

For the quarter ended September 2024, Elevance Health (ELV) reported revenue of $44.72 billion, up 5.3% over the same period last year. EPS came in at $8.37, compared to $8.99 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $43.26 billion, representing a surprise of +3.37%. The company delivered an EPS surprise of -13.71%, with the consensus EPS estimate being $9.70. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- ...

On Thursday, Elevance Health Inc. ELV reported third-quarter revenues of $44.7 billion, up 5.3% year-overyear, beating the consensus of $43.33 billion. The increase was driven by higher premium yields in the Health Benefits segment and growth in CarelonRx product revenue, partially offset by membership attrition in the Medicaid business. The benefit expense ratio was 89.5%, an increase of 270 basis points, driven primarily by the timing mismatch between Medicaid rates and the higher acuity of members. "We r ...