Elevance Health Inc. (NYSE:ELV) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings report shows strong financial metrics like revenue and EPS growth, but also highlights challenges such as increased costs and membership growth issues. The Q&A section reveals management's confidence in managing costs and growth, but some responses lacked clarity, particularly on risk coding and Medicaid rates. The share repurchase indicates confidence, but the economic pressures on healthcare costs and higher benefit expense ratio offset the positives, leading to a neutral sentiment overall.
Key Financial Performance
GAAP diluted earnings per share $9.61, year-over-year growth of more than 10%.
Adjusted diluted earnings per share $11.97, year-over-year growth of more than 10%.
Medical members 45.8 million, up 99,000 from year end.
Operating revenue $48.8 billion, an increase of over 15%, driven by higher premium yields, growth in Medicare Advantage and Individual ACA membership, and CarelonRx product revenue.
Consolidated benefit expense ratio 86.4%, an increase of 80 basis points year-over-year due to higher costs in Medicaid, partially offset by favorable seasonality in Medicare Part D.
Adjusted operating expense ratio 10.7%, an improvement of 60 basis points.
Health Benefits operating gain $2.2 billion, declined slightly due to higher Medicaid costs.
Carelon’s operating gain $1.1 billion, grew 34% due to growth in pharmacy volumes and improved performance of risk-based capabilities.
Operating cash flow $1 billion, impacted by timing-related items.
Debt-to-capital ratio Approximately 41%, preserving flexibility for strategic investments.
Days in claims payable 44 days, reflecting a consistent approach to reserving.
Share repurchases 2.2 million shares for approximately $880 million.
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Operating Highlights
Patient Advocacy Solutions: Supported over 6 million members with a 95% satisfaction rate, providing personalized guidance for benefits, chronic conditions, and behavioral health services.
HealthOS Digital Platform: Now supports over 88,000 care providers and 1,200 provider organizations, facilitating real-time decision-making and seamless prior authorizations.
Value-Based Oncology Care Model: Expanded to Medicare Advantage, following success in commercial, with reduced inpatient admissions and higher adherence to treatment protocols.
Carelon Services Expansion: Launched new post-acute and behavioral health contracts with health plan clients, validating ability to deliver risk-based outcomes.
Acquisition of CareBridge: Strengthened capabilities in home and community-based services, integrating offerings into Medicaid and duals platforms.
Expansion into New States: Expanded into three new states to build lifetime value through coordinated ACA and Medicaid coverage.
Acquisition of Centers Plan for Health Living: Will expand whole health approach to deliver improved care for members and greater value for the state.
Operating Revenue: Increased to $48.8 billion, up over 15%, driven by higher premium yields and growth in Medicare Advantage and Individual ACA membership.
Benefit Expense Ratio: Consolidated benefit expense ratio was 86.4%, reflecting higher costs in Medicaid business.
Operating Cash Flow: Totaled $1 billion, with an unchanged outlook for approximately $8 billion for the year.
Focus on Whole-Person Health: Elevance Health emphasizes a purpose-driven model focusing on whole-person health and delivering outcomes that matter.
Share Repurchases: Repurchased 2.2 million shares for approximately $880 million, reflecting confidence in intrinsic value.
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Risk or Challenges
Regulatory Issues: Listeners are cautioned that forward-looking statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of Elevance Health.
Membership Growth Challenges: While Individual ACA effectuation rates have been lower, we still expect solid growth in 2025.
Cost Trends: The consolidated benefit expense ratio was 86.4%, an increase of 80 basis points year-over-year due to higher cost trended on Medicaid business.
Economic Factors: High-cost trends in Medicare Advantage are expected to persist in 2025, indicating economic pressures on healthcare costs.
Operational Challenges: Utilization patterns in the Health Benefit segment remain elevated, consistent with the assumptions embedded in full-year guidance.
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Guidance & Outlook
Patient Advocacy Solutions: Supported over 6 million members with a 95% satisfaction rate, delivering personalized guidance.
HealthOS Digital Platform: Now supports over 88,000 care providers and 1,200 provider organizations, enabling real-time decision-making.
Value-Based Oncology Care Model: Expanding to Medicare Advantage with reduced inpatient admissions and higher adherence to treatment protocols.
Carelon Services Expansion: Launched new post-acute and behavioral health contracts, validating ability to deliver risk-based outcomes.
Acquisition of CareBridge: Strengthens capabilities in home and community-based services, integrating into Medicaid and duals platforms.
Whole Health Approach: Achieved nearly $100 in per member per month savings across medical and pharmacy.
Acquisition of Centers Plan for Health Living: Expands whole health approach to deliver improved care for members.
2025 Adjusted Diluted EPS Guidance: Expected to be in the range of $34.15 to $34.85.
Operating Cash Flow Outlook: Expected to be approximately $8 billion.
Membership Growth Expectations: Anticipate moderation in Individual ACA membership during Q2.
Debt-to-Capital Ratio: Approximately 41%, preserving flexibility for strategic investments.
Share Repurchase: Repurchased 2.2 million shares for approximately $880 million, indicating confidence in share value.
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Shareholder Return Plan
Share Repurchase: In the quarter, we repurchased 2.2 million shares of common stock for approximately $880 million, demonstrating our confidence in the intrinsic value of our shares.
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Key Q&A
Q:Are you seeing anything unusual in Medicare Advantage, particularly regarding group MA and the IRA impact?
A:Medicare costs overall remain elevated but manageable. We are closely tracking claims data and remain comfortable with the trend environment and cost trajectory.
Q:Can you talk about the strong growth in Carelon services and cross sales into the Anthem book of business?
A:Carelon services saw over 60% growth, with balanced growth internally and externally. We are confident in the growth trajectory for 2025.
Q:Can you expand on the effectuation rate and membership step down expected in the second quarter?
A:Effectuation rates are tracking lighter than expected due to a surge in passive renewals. We project single-digit percent membership attrition in early Q2.
Q:What drove the better MLR performance in the back half of March?
A:The Medicare Part D medical cost ratio ended up as expected, driven by a larger-than-anticipated premium tax.
Q:Can you clarify the impact of new members versus existing members on risk coding?
A:We are managing new volume carefully and delivering targeted growth across specific populations and products.
Q:What is the embedded guidance for Medicare trends?
A:We feel comfortable that trends have emerged consistent with our expectations, expecting stable margins in 2025.
Q:How much impact did flu and respiratory illnesses have on the first quarter MLR?
A:Flu-driven costs came in modestly above expectations, impacting benefit expansion ratios by 15 to 20 basis points.
Q:What is the Medicaid MLR margin trend from Q4 to Q1?
A:The benefit expense ratio decreased sequentially more than typical, driven by workday dynamics and Part D seasonality changes.
Q:What is the outlook for Medicaid rate updates?
A:Early discussions for July renewals are underway, but it's too soon to comment on specifics.
Q:What is the expected impact from the V28 risk model change?
A:The changes were anticipated and incorporated into our 2025 planning and pricing.
Q:Are you seeing different trends in Group MA compared to individual MA?
A:Utilization patterns in Group MA do not indicate any meaningful acceleration in cost-trend.
Q:Can you discuss the utilization of MA Part D members and their out-of-pocket limits?
A:We are comfortable with the mix of our MA membership and have not observed substantial variation in Part D utilization.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer or lacked clarity on the following questions:
1. The specific impact of new members on risk coding and how it compares to historical averages.
2. The exact dynamics affecting exchange profitability and membership step down expectations.
3. The anticipated Medicaid rate updates and their implications.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ACA Medicaid
ACA effectuation
Advantage expectation
Advantage success
America company
Benefits review
Blues plan
CEO Kaye
CFO Kaye
Capital value
CareBridge end
Carelon ability
Carelon capability
Carelon engine
Inc expectation
Kaye CFO
Kaye result
Transcript Elevance
advocacy
authorization
care coordination
care experience
care model
care provider
care value
commitment
cost care
difference
expectation Ladies
health approach
member care
outcome cost
participant
person
platform
purpose
relationship
retention
risk uncertainty
satisfaction
specialty care
stay
ELV Transcript
Elevance Health, Inc. (ELV) Q4 2025 Earnings Call Transcript
Unknown1-28
The earnings call presents several concerns: declining Medicaid margins, membership losses, and unclear management responses. Despite some positive aspects like Carelon growth and strategic repositioning, these are overshadowed by negative trends and uncertainties, particularly around Medicare and Medicaid. The Q&A revealed further risks and lack of clarity, which likely weigh on investor sentiment. Given these factors, along with the absence of strong positive catalysts, a negative stock price reaction is anticipated.
Elevance Health, Inc. (ELV) Q3 2025 Earnings Call Transcript
Unknown10-21
The earnings call reflects concerns about Medicaid margin decline, ACA market contraction, and lack of clarity on certain financial metrics. Despite some positive developments in specialty pharmacy and Medicare strategy, the overall tone is cautious with significant risks in Medicaid and ACA markets. The revised EPS guidance and potential Medicaid margin trough in 2026 suggest challenges ahead. The market is likely to react negatively, especially without clear guidance on key metrics, leading to a predicted stock price movement in the -2% to -8% range.
Elevance Health, Inc. (ELV) Q2 2025 Earnings Call Transcript
Positive7-17
The earnings call showed strong financial performance with a 15% revenue increase and significant EPS growth. Despite some challenges in Medicaid and ACA margins, the company is taking proactive measures to address these. Share repurchases indicate confidence, and the optimistic guidance suggests future growth. The Q&A section highlighted strategic actions to stabilize markets and improve cost structures, which are positive indicators. Overall, the company's initiatives and financial outlook suggest a positive stock price movement over the next two weeks.
Elevance Health Inc. (NYSE:ELV) Q1 2025 Earnings Call Transcript
Unknown4-23
The earnings report shows strong financial metrics like revenue and EPS growth, but also highlights challenges such as increased costs and membership growth issues. The Q&A section reveals management's confidence in managing costs and growth, but some responses lacked clarity, particularly on risk coding and Medicaid rates. The share repurchase indicates confidence, but the economic pressures on healthcare costs and higher benefit expense ratio offset the positives, leading to a neutral sentiment overall.
ELV Report
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