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    Elevance Health (ELV)

    Q1 2024 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$508.97Last close (Apr 17, 2024)
    Post-Earnings Price$520.58Open (Apr 18, 2024)
    Price Change
    $11.61(+2.28%)
    • Elevance Health is firmly committed to achieving a long-term adjusted earnings per share (EPS) compound annual growth rate (CAGR) of 12% to 15% through 2027, and sustaining at least a 12% CAGR over the long term, reflecting confidence in their business strategy and growth prospects.
    • Strong performance in both the Health Benefits and Carelon divisions led to an increase in adjusted EPS guidance by $0.10 to be greater than $37.20, with operating margins increasing by 30 basis points and 20 basis points respectively, demonstrating disciplined execution and positive momentum.
    • Carelon Services is experiencing significant external revenue growth, exceeding total 2023 sales already in 2024, with notable wins in behavioral health and Insights businesses, indicating strong market traction and a rich pipeline for future growth.
    • Medicare rate cuts for the second consecutive year may negatively impact ELV's Medicare Advantage business, potentially leading to increased premiums and reduced benefits for seniors, affecting growth and margins.
    • Normalization of Medicaid margins due to revenue and enrollment declines may impact ELV's profitability in its Medicaid segment as membership decreases from redeterminations and rates adjust accordingly.
    • Expected decrease in Days Claims Payable (DCP) to the low 40s over the long term may reduce the embedded earnings power from reserves, which could negatively affect future earnings growth.
    1. Change Healthcare Cyberattack Impact
      Q: How did the Change cyberattack affect results?
      A: The cyberattack on Change Healthcare led to a 15–20% reduction in daily electronic claims receipts initially. The company acted quickly, and operations have returned to normal, effectively catching up on claims receipts by quarter-end. This disruption increased sequential days in claims payable by approximately 1.7 days.

    2. Value-Based Care Strategy with CD&R Partnership
      Q: What's the vision for the CD&R value-based care partnership?
      A: The partnership with CD&R aims to expand value-based care across all lines of business—commercial, Medicare, and Medicaid—in a payer-agnostic model. The combined entity will serve nearly 1 million consumers, focusing on advanced primary care, downside risk sharing, and integrating Carelon Services for complex and chronic patients ,.

    3. Medicaid Redetermination Impact
      Q: How is Medicaid redetermination affecting membership and margins?
      A: Approximately 90% of Medicaid members have been redetermined, aligning with expectations. The impact resulted in a downward trend in membership but is tracking as planned. The company has visibility into 75% of Medicaid rates for 2024, which are actuarially sound, and margins are normalizing as expected ,.

    4. Guidance Increase
      Q: What's driving the increase in guidance?
      A: The adjusted EPS guidance was increased by $0.10 to be greater than $37.20, driven by solid performance in both health benefits and Carelon divisions. The company remains prudent due to variability around medical cost trends but is confident in its ongoing strategic execution.

    5. Utilization Trends by Line of Business
      Q: How are utilization trends across different businesses?
      A: Utilization in Q1 was in line with expectations. In commercial, inpatient and outpatient authorizations aligned with projections. Medicare observed expected utilization related to inpatient stays and outpatient procedures, planned for in cost trend assumptions. Medicaid experienced increased utilization due to redetermination mix, managed with actuarially sound state rates.

    6. Medicare Growth and Margins
      Q: How will the company balance Medicare growth and margins?
      A: Despite a tougher rate environment with consecutive cuts, the company remains disciplined, focusing on delivering consistent, high-value competitive benefits. The goal is to balance growth and margins to build a sustainable, attractive long-term Medicare business.

    7. Carelon Services Growth and Margins
      Q: What's driving Carelon Services' external growth and margins?
      A: Carelon Services is experiencing strong external revenue growth, having already exceeded 2023 sales early in 2024. Notable wins include behavioral health contracts and insights businesses with other Blues plans. First-quarter margins expanded by 90 basis points, reflecting strong revenue growth and new internal risk deals ,.

    8. Specialty Pharmacy Expansion with BioPlus and Kroger
      Q: What's the progress on specialty pharmacy initiatives like BioPlus and Kroger?
      A: The integration of BioPlus is progressing well, with script migrations staged throughout 2024 and 2025. The acquisition of Kroger Specialty Pharmacy, expected to close in Q3–Q4, adds meaningful scale, increases access to limited distribution drugs, and strengthens relationships with manufacturers, enhancing affordability and quality ,.

    9. Days Claims Payable Outlook
      Q: How will days claims payable trend over time?
      A: Days claims payable increased by approximately 1.7 days due to the Change Healthcare disruption. Over the long term, the company expects DCP to return to a more normalized range in the low 40s, potentially unlocking embedded earnings power as reserves move lower ,.

    10. EPS CAGR Target Clarification
      Q: Should we expect a 12% or 12–15% EPS CAGR long-term?
      A: The company remains committed to achieving a long-term adjusted EPS CAGR of 12–15% through 2027 and is confident in sustaining at least 12% growth over the long term, leveraging the health benefits and Carelon flywheel.

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