Executive Summary

Q1 2025 beat on both revenue and adjusted EPS, and management reaffirmed full‑year adjusted EPS guidance. Total revenue was $48.89B vs S&P Global consensus $46.25B (+5.7%), and adjusted EPS was $11.97 vs $11.48 (+4.3%); GAAP EPS was $9.61. Guidance for FY25 adjusted EPS of $34.15–$34.85 was reiterated, and GAAP EPS guidance of $28.30–$29.00 was affirmed . Values retrieved from S&P Global.
Sequential margin recovery from Q4: benefit expense ratio fell to 86.4% (Q4: 92.4%), aided by Part D seasonality and a Medicaid premium tax timing item that lowered the BER while increasing opex, with no material earnings impact; year-over-year BER rose 80 bps on higher Medicaid cost trend .
Carelon remained a growth engine: operating revenue +38% y/y to $16.7B and operating gain +34% to $1.1B, driven by acquisitions (home health, pharmacy) and scaling risk‑based services; external payer relationships broadened, including Blues plans .
Membership mix shifted positively: MA membership rose to 2.255M (+11.8% y/y), Individual ACA to 1.423M (+14.2% y/y), while Medicaid continued to contract (-5.0% y/y). Total medical membership was 45.8M (flat q/q, -0.5% y/y) .
Setup for H1-weighted earnings persists: management expects >60% of FY25 adjusted EPS in 1H, with operating cash flow guidance unchanged at ≈$8B despite Q1 OCF of ~$1.0B due to timing; DCP was 44.0 days (adjusted for CareBridge), up 0.5 days sequentially on a comparable basis .

What Went Well and What Went Wrong

What Went Well

Revenue and EPS beat with guidance reaffirmed: adjusted EPS $11.97 and total revenue $48.89B exceeded consensus, and FY25 adj. EPS $34.15–$34.85 was reiterated; GAAP EPS $9.61. “We delivered performance in line with our expectations… and are reiterating our guidance” (CFO) .
Carelon momentum: Carelon operating revenue grew to $16.7B (+38% y/y) and operating gain to $1.1B (+34%), driven by pharmacy volumes and risk‑based capabilities; external payer wins expanded across post‑acute, behavioral, specialty and palliative solutions (CEO/Pete Haytaian) .
Expense discipline: adjusted operating expense ratio improved 60 bps y/y to 10.7%, reflecting expense leverage and cost management, partially offset by out‑of‑period premium tax accounting .

What Went Wrong

Medicaid cost trend still elevated: BER rose 80 bps y/y to 86.4% on higher Medicaid trend; Health Benefits operating gain dipped to $2.2B vs $2.3B y/y, despite rate increases and efficiencies .
Influenza/respiratory headwind: flu‑related utilization added ~15–20 bps to Q1 benefit expense ratios, though severity aligned with assumptions and incidence eased late in the quarter (CFO) .
ACA effectuation softness: while Individual ACA membership rose sequentially, effectuation rates trailed initial expectations; management expects mid‑single‑digit attrition in early Q2 before stabilization (CFO) .

Financial Results

Consolidated P&L and Margin Trends (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Operating Revenue ($B)	$44.72	$44.99	$48.77
Total Revenues ($B)	$45.11	$45.44	$48.89
GAAP Diluted EPS ($)	$4.36	$1.81	$9.61
Adjusted Diluted EPS ($)	$8.37	$3.84	$11.97
Benefit Expense Ratio (% of premiums)	89.5%	92.4%	86.4%
Operating Expense Ratio (% of op rev)	11.8%	10.7%	10.9%
Operating Margin (%)	3.1%	1.5%	6.5%
Adjusted Operating Margin (%)	5.3%	2.3%	6.7%

Q1 2025 vs Q1 2024 (year-over-year)

Metric	Q1 2024	Q1 2025
Operating Revenue ($B)	$42.27	$48.77
Total Revenues ($B)	$42.58	$48.89
GAAP Diluted EPS ($)	$9.59	$9.61
Adjusted Diluted EPS ($)	$10.83	$11.97
Benefit Expense Ratio (%)	85.6%	86.4%
Operating Expense Ratio (%)	11.6%	10.9%
Operating Margin (%)	7.1%	6.5%
Adjusted Operating Margin (%)	7.4%	6.7%

Results vs S&P Global Consensus (Q1 2025)

Metric	Consensus	Actual	Surprise
Total Revenues ($B)	$46.25*	$48.89	+$2.64
Adjusted EPS ($)	$11.48*	$11.97	+$0.49
Values retrieved from S&P Global.

Segment Breakdown

Operating Revenue ($B)	Q3 2024	Q4 2024	Q1 2025
Health Benefits	$38.28	$37.58	$41.43
CarelonRx	$9.14	$9.98	$10.12
Carelon Services	$4.64	$4.77	$6.54
Corporate & Other	$0.07	-$0.01	$0.17
Eliminations	-$7.41	-$7.32	-$9.48
Total Operating Revenue	$44.72	$44.99	$48.77

Operating Gain ($B)	Q3 2024	Q4 2024	Q1 2025
Health Benefits	$1.60	$0.21	$2.22
CarelonRx	$0.62	$0.53	$0.60
Carelon Services	$0.18	$0.04	$0.49
Corporate & Other	-$1.00	-$0.10	-$0.14
Total Operating Gain	$1.41	$0.67	$3.17

KPIs and Membership (oldest → newest)

KPI	Q3 2024	Q4 2024	Q1 2025
Total Medical Membership (000s)	45,760	45,734	45,833
Individual ACA (000s)	1,299	1,287	1,423
Medicare Advantage (000s)	2,047	2,066	2,255
Medicaid (000s)	8,926	8,917	8,862
CarelonRx Adj. Scripts (M)	80.2	82.9	83.9
Days in Claims Payable (days)	42.8	42.9	44.0 (adj. for CareBridge)

Non‑GAAP adjustments (Q1 2025): Net adjustment items were $2.36 per diluted share (components include net losses on financial instruments $2.04, amortization $0.68, transaction/integration $0.35, litigation $0.02, tax impact -$0.74) .

Guidance Changes

Metric	Period	Previous Guidance (as of Q4’24)	Current Guidance (Q1’25)	Change
Adjusted Diluted EPS	FY 2025	$34.15–$34.85	$34.15–$34.85	Maintained
GAAP Diluted EPS	FY 2025	$30.40–$31.10	$28.30–$29.00	Lowered range (methodology updated)
Operating Cash Flow	FY 2025	≈$8.0B	≈$8.0B (unchanged)	Maintained
Benefit Expense Ratio	FY 2025	89.1% ±50 bps	Not updated in Q1 release	N/A
Adjusted Operating Expense Ratio	FY 2025	10.4% ±50 bps	Not updated in Q1 release	N/A
Dividend per Share (quarterly)	2025	$1.71 declared for Q1	$1.71 declared for Q2 (payable 6/25)	Maintained

Earnings Call Themes & Trends

Topic	Q3 2024 (Q-2)	Q4 2024 (Q-1)	Q1 2025 (Current)	Trend
Medicaid rates vs acuity	Timing mismatch drove higher BER; rate alignment expected over time	Elevated Medicaid trends persisted; BER 92.4%	April rate updates came in as expected; July cohort (≈1/3 of membership) discussions underway (too early to size)	Stabilizing, improvement 2H25 targeted
MA utilization/cost trend	Not specifically highlighted	Not specifically highlighted	Elevated but manageable; consistent with Q4 and plan	Stable (elevated)
Part D IRA seasonality	N/A	N/A	New seasonality: stronger earlier quarters, lower later; benefited Q1; risk corridors and offsets noted	New cadence established
Carelon growth/external sales	Risk‑based growth and Paragon drove Carelon	Carelon rev +19% q/q; adj. op gain +32% y/y	Carelon rev +38% y/y; external payer expansion (post‑acute, BH, specialty, palliative)	Strengthening
ACA membership/effectuation	ACA growth y/y	ACA up y/y	Effectuation below expectations; mid‑single‑digit attrition expected early Q2; then stabilize	Near‑term headwind
DCP/reserving	DCP 42.8 days	DCP 42.9 days	DCP 44.0 days (adj.); +0.5 days seq. on comparable basis	Slightly higher, prudent reserving
Expense management	Adj. opex ratio improved 150 bps y/y	Adj. opex ratio down 170 bps y/y	Adj. opex ratio down 60 bps y/y to 10.7%	Improving

Management Commentary

CEO Gail Boudreaux on strategic execution: “We made measurable progress reimagining the healthcare experience with personalized support, real-time digital solutions… and a whole‑health model that improves outcomes and reduces cost.” She highlighted scaling HealthOS to 88,000 providers and removing prior auth for 400+ outpatient procedures for high‑performing providers .
Carelon as a flywheel: “We significantly expanded our relationships with external payers… validating Carelon's ability to deliver outcomes beyond our own membership” (CEO). Risk‑based models delivered “nearly $100 PMPM savings across medical and pharmacy” (CEO) .
CFO Mark Kaye on outlook and cadence: “Adjusted diluted EPS was $11.97… We are reiterating our guidance… we continue to expect more than 60% of adjusted EPS to be realized in the first half of the year” .

Q&A Highlights

MA trend visibility: Medicare costs “elevated but manageable… very consistent with our fourth quarter experience” with flu/respiratory uptick moderating late Q1; no unusual patterns in Group MA; retention strong .
ACA effectuation: Effectuation rates tracking lighter (post‑Medicaid transitions); expect mid‑single‑digit attrition early Q2, then stabilization; impact embedded in reaffirmed EPS guide .
Part D mechanics: New IRA‑driven seasonality (front‑loaded margins); any potential higher utilization would be mitigated by corridors/rebates/offsets; plan tracking to expectations .
Medicaid rates: January/April renewals in line with expectations; July cohort negotiations (≈1/3 of membership) just starting; path remains stabilization 1H and improvement 2H .
BER drivers: A larger‑than‑anticipated Medicaid premium tax lowered BER and raised opex with no material earnings impact; flu added ~15–20 bps to BER .

Estimates Context

Q1 2025 results vs S&P Global consensus: Adjusted EPS $11.97 vs $11.48; Total revenues $48.89B vs $46.25B; both beats. Management reaffirmed FY25 adjusted EPS guidance ($34.15–$34.85), supporting estimate stability or upward bias on revenue-driven confidence. Values retrieved from S&P Global .

Key Takeaways for Investors

Beat-and‑reaffirm quarter: Revenue and adjusted EPS exceeded consensus while full‑year adjusted EPS was reaffirmed—historically supportive for sentiment when combined with improved sequential BER .
Margin cadence explained: Sequential BER improvement benefited from Part D seasonality and a premium tax timing item; investors should factor a back‑half Part D margin fade and H1‑weighted EPS cadence (>60% in 1H) in models .
Carelon outperformance is durable: 38% revenue growth and 34% operating gain growth reflect scaling risk‑based services and pharmacy; external payer wins broaden the addressable market .
Membership mix improving: MA and ACA growth (with near‑term effectuation attrition) offset Medicaid declines; disciplined MA growth and retention support stable margins in 2025 (management view) .
Medicaid rate trajectory: Early‑year renewals aligned to expectations; July cohort negotiations in progress—watch for 2H improvement confirmation as a potential catalyst .
Capital returns intact: $880M Q1 buybacks (2.2M shares) and maintained $1.71 quarterly dividend; OCF ≈$8B for FY25 unchanged .
Risk watch‑list: Elevated utilization persists, flu/respiratory variability, ACA effectuation softness in Q2, and evolving Part D seasonality; DCP at 44 days signals conservative reserving posture .

Elevance Health, Inc. (ELV)·Q1 2025 Earnings Summary