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Elevance Health is a leading health insurer in the United States, providing services to over 46 million medical members through its affiliated health plans . The company operates under several core brands, including Anthem Blue Cross/Anthem Blue Cross and Blue Shield, Wellpoint, and Carelon, and organizes its business activities into four main segments . Elevance Health offers a wide range of health plans and services, pharmacy services, and healthcare-related services, contributing significantly to its overall revenue .
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Health Benefits Segment - Offers a comprehensive suite of health plans and services to various members, including Individual, Employer Group risk-based, Employer Group fee-based, BlueCard, Medicare, Medicaid, and Federal Employees Health Benefits (FEHB) program members. Includes specialty and other insurance products such as stop loss, dental, vision, and supplemental health insurance benefits .
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CarelonRx Segment - Provides pharmacy services to both affiliated health plan customers and external customers. Offers a comprehensive pharmacy services portfolio, including home delivery, specialty pharmacies, claims adjudication, formulary management, pharmacy networks, and infusion services .
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Carelon Services Segment - Integrates various healthcare-related services, including utilization management, behavioral health, integrated care delivery, palliative care, payment integrity services, and health and wellness programs. Includes Carelon Global Solutions, which provides data management, information technology, and business operations services .
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Corporate & Other Segment - Encompasses businesses that do not individually meet the quantitative threshold for an operating segment, as well as corporate expenses not allocated to other segments .
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Given the ongoing pressures on Medicaid margins due to the mismatch between rates and member acuity and your expectation that these pressures will continue through 2025 , what specific actions are you taking to realign rates with acuity more quickly, and how confident are you in returning Medicaid margins to your target range?
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Your long-term goal is to achieve at least 12% annual EPS growth , but with a mid-single-digit EPS growth outlook for 2025 and continued Medicaid margin pressures , how do you plan to accelerate earnings growth in 2026 and 2027 to meet this target, and should investors expect any adjustments to your long-term growth algorithm?
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With the decline in the percentage of Medicare Advantage members in plans rated 4 stars or higher due to higher cut points and a major contract narrowly missing 4 stars by 0.0004 , what strategies are you implementing to improve star ratings, and how might this impact your competitiveness and revenue growth in the Medicare Advantage market?
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Considering increased utilization trends in Medicare, including pressures from the Two-Midnight Rule and a late summer surge in COVID , how are you adjusting your pricing and cost management strategies for 2025 to account for these trends, and what impact do you anticipate on your Medicare margins?
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CarelonRx's strong performance included a one-time favorable revenue adjustment, and specialty pharmacy trends increased as expected ; can you discuss the sustainability of CarelonRx's earnings growth in the face of rising specialty drug costs, and how does this align with your long-term margin expectations for the segment?
Recent developments and announcements about ELV.
Financial Reporting
- Revenue and Earnings: ELV reported total operating revenue of $175.2 billion for 2024, a 3% increase from the prior year, driven by premium rate adjustments and growth in its Carelon businesses. Adjusted diluted earnings per share (EPS) for the year was $33.04, with a fourth-quarter EPS of $3.84, consistent with prior expectations.
- Membership: The company ended 2024 with 45.7 million members, a year-over-year decline of 1.1 million due to Medicaid redeterminations and geographic changes, partially offset by growth in employer group fee-based offerings and ACA health plan products.
- Margins: The consolidated benefit expense ratio for 2024 was 88.5%, reflecting elevated Medicaid costs. The adjusted operating expense ratio improved to 10.6%, down 70 basis points year-over-year, due to disciplined expense management.
- EPS and Revenue Growth: ELV projects adjusted diluted EPS for 2025 to range between $34.15 and $34.85. Operating revenue is expected to grow in the high single to low double-digit percentage range, supported by acquisitions like CareBridge and continued expansion in Carelon.
- Membership Growth: Medicare Advantage membership is expected to grow by 7% to 9%, with total Medicare membership projected to reach 45.8 to 46.6 million by year-end 2025. Growth will be driven by group Medicare Advantage and ACA exchange plans.
- Margins: The medical loss ratio (MLR) is expected to increase to approximately 89.1%, reflecting elevated Medicaid costs, Medicare Part D redesign changes, and acquisitions. However, ELV anticipates margin stability in its Medicare Advantage business and improvement in Medicaid margins in the second half of 2025 as rate adjustments take effect.
- Carelon Expansion: Carelon, ELV's health services platform, experienced significant growth in 2024, with revenue exceeding long-term targets. The acquisition of CareBridge will enhance home and community-based services, contributing to over 50% growth in Carelon Services for 2025.
- Commercial Business: ELV's commercial segment performed strongly in 2024, with record retention in national accounts and continued growth in ACA exchange plans. The company plans to maintain disciplined pricing and expand its specialty product offerings to drive margin improvement.
- Medicaid and Medicare: ELV is working with state partners to align Medicaid rates with elevated cost trends and expects improvement in Medicaid margins in the latter half of 2025. In Medicare, the company is focusing on retention and targeted growth in specific markets and products.
- Medicare Advantage Growth: Analysts questioned the sustainability of ELV's Medicare Advantage growth and margins. Management emphasized strong retention, disciplined cost management, and strategic group growth as key drivers.
- Commercial Trends: ELV expects commercial cost trends to remain above historical averages but has accounted for this in its pricing strategy. Margins in the commercial segment are expected to remain robust.
- Carelon's Role: Analysts highlighted Carelon's impressive growth, with management noting its role in driving both internal and external revenue growth through risk-based arrangements and expanded capabilities.
Earnings Call
Elevance Health (ELV) recently released its fourth-quarter 2024 earnings call transcript, providing key insights into its financial performance, strategic initiatives, and forward guidance for 2025. Below is a summary of the main points:
Financial Performance
2025 Guidance
Strategic Initiatives
Analyst Q&A Highlights
Key Takeaways
Elevance Health is navigating a dynamic healthcare environment with a focus on disciplined execution, strategic growth in Carelon, and targeted investments in Medicare and Medicaid. The company remains confident in its ability to deliver sustainable long-term value to shareholders while addressing cost pressures and market challenges.
For further details, the full earnings call transcript is available on Elevance Health's website.
Earnings Report
Elevance Health, Inc. has released its fourth quarter and full year 2024 earnings results. The company reported operating revenue of $45.0 billion for the fourth quarter and $175.2 billion for the full year 2024. The diluted EPS for the fourth quarter was $1.81, with an adjusted diluted EPS of $3.84. For the full year, the diluted EPS was $25.68, and the adjusted diluted EPS was $33.04. Looking ahead, Elevance projects its 2025 GAAP diluted EPS to be in the range of $30.40 to $31.10, and the adjusted diluted EPS to be between $34.15 and $34.85. Additionally, the company has increased its quarterly dividend by 5% to $1.71 per share.
The company has also set a positive outlook for 2025, with expectations of high single to low double-digit growth in total operating revenue. The Health Benefits segment is projected to grow in the high single digits, CarelonRx in the mid-teens, and Carelon Services by more than 50%.
Significant trends affecting financial performance include higher premium yields and growth in CarelonRx product revenue, although these were partially offset by membership attrition in the Medicaid business. The benefit expense ratio increased due to higher Medicaid medical cost trends, while the operating expense ratio improved due to disciplined cost management and enhanced efficiency.
Elevance Health's strategic focus remains on simplifying the healthcare experience and deploying innovative care models to achieve sustainable growth.