Elevance Health(ELV)2024-10-17 21:01Membership 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 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 5,102 million, primarily due to timing of CMS payments and Medicaid membership decline[162] - Total operating revenue increased 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 445 million (9.6%) for the three months ended September 30, 2024, reflecting higher pharmacy revenues from CarelonRx[169][172] - Operating expense 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 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 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 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 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 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 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 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 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 360 million as of September 30, 2024, from 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 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 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]