Elevance Health, Inc. (ELV) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reflects strong financial metrics with EPS growth over 10%, a 15% increase in operating revenue, and strategic share repurchases indicating confidence. Despite some cost pressures in Medicaid, the overall sentiment remains positive due to robust growth in Carelon services and strategic investments. The Q&A highlighted manageable Medicare costs and strong growth in Carelon services, while management's confidence in trends and strategic initiatives further supports a positive outlook. However, some uncertainties were noted regarding IRA impacts and utilization trends, slightly tempering the sentiment.
Key Financial Performance
GAAP diluted earnings per share $9.61, reflecting year-over-year growth of more than 10% due to the resilience of the diversified business and disciplined execution across strategic initiatives.
Adjusted diluted earnings per share $11.97, reflecting year-over-year growth of more than 10% underscoring the resilience of our diversified business and disciplined execution.
Medical members 45.8 million, up 99,000 from year end, driven primarily by targeted expansion and better than expected retention rates in Medicare Advantage.
Operating revenue $48.8 billion, an increase of over 15%, driven by higher premium yields in Health Benefits, 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 cost trends on Medicaid business, partially offset by out-of-period Medicaid premium taxes.
Adjusted operating expense ratios 10.7%, an improvement of 60 basis points reflecting disciplined expense management and prioritization of strategic investments.
Health Benefits operating gain $2.2 billion, a slight decline due to higher Medicaid costs, partly offset by operating efficiencies.
Carelon’s operating gain $1.1 billion, grew 34% driven by growth in pharmacy volumes and improved performance of deployed risk-based capabilities.
Operating cash flow $1 billion, reflecting timing-related items that negatively impacted working capital, with an outlook for approximately $8 billion remaining unchanged.
Share repurchases 2.2 million shares for approximately $880 million, demonstrating confidence in the intrinsic value of shares.
Debt-to-capital ratio Approximately 41%, preserving flexibility for strategic investments and future capital deployment.
Days in claims payable 44 days, reflecting a consistent and prudent approach to reserving.
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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, leading to reduced inpatient admissions and higher adherence to treatment protocols.
Carelon Services: Launched new post-acute and behavioral health contracts with health plan clients, enhancing risk-based outcomes for complex populations.
Acquisition of CareBridge: Strengthened capabilities in home and community-based services, integrating offerings into Medicaid and duals platforms.
Medicaid Rate Alignment: Progress on rate alignment with April adjustments and ongoing discussions for July cohort.
Medicare Advantage Growth: Retention remained strong, with targeted growth supporting margin and membership sustainability.
Commercial Engagement: Strong engagement with integrated offerings, with employers valuing the holistic approach.
Expansion into New States: Expansion into three new states to build lifetime value through coordinated ACA and Medicaid coverage.
Operating Revenue: $48.8 billion in Q1, a 15% increase driven by higher premium yields and growth in membership.
Benefit Expense Ratio: 86.4%, an increase of 80 basis points year-over-year due to higher Medicaid costs.
Operating Cash Flow: Totaled $1 billion, with an unchanged outlook for approximately $8 billion for the year.
Share Repurchases: Repurchased 2.2 million shares for approximately $880 million, reflecting confidence in share value.
Whole-Person Health Approach: Focus on integrating physical, behavioral, and social health to drive better outcomes and lower total cost of care.
Carelon as Growth Engine: Expanded relationships with external payers for solutions in post-acute, behavioral health, and specialty care.
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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.
Economic Factors: The company anticipates a moderation in membership during the second quarter as effectuation rates on renewing members are tracking below initial expectations.
Competitive Pressures: Employers increasingly value Elevance Health's differentiated approach, indicating competitive pressures in the market.
Supply Chain Challenges: The increase in consolidated benefit expense ratio was due to higher cost trends on Medicaid business, reflecting potential supply chain challenges.
Operational Risks: Utilization patterns in the Health Benefit segment remain elevated, which could impact operational efficiency and financial performance.
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Guidance & Outlook
Patient Advocacy Solutions: Supported over 6 million members with a 95% satisfaction rate, delivering personalized guidance for benefits, chronic conditions, and behavioral health services.
HealthOS Digital Platform: Integrated clinical data into workflows for over 88,000 care providers, eliminating prior authorization for over 400 outpatient procedures.
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 contracts in post-acute and behavioral health, and completed acquisition of CareBridge to enhance home and community-based services.
Medicaid Rate Alignment: Progress on rate alignment with adjustments expected in April and ongoing discussions for July cohort.
Medicare Advantage Growth: Strong retention and disciplined growth supporting margin and membership sustainability.
Commercial Engagement: Strong engagement with integrated offerings, with expectations for solid growth in 2025.
Carelon as Growth Engine: Expanded relationships with external payers for solutions in various health sectors.
Q1 2025 GAAP EPS: Reported at $9.61, adjusted EPS at $11.97, reflecting over 10% year-over-year growth.
Operating Revenue: $48.8 billion, a 15% increase driven by higher premium yields and growth in Medicare Advantage and Individual ACA membership.
Benefit Expense Ratio: 86.4%, an increase of 80 basis points year-over-year due to higher Medicaid costs.
Operating Cash Flow: Expected to be approximately $8 billion for 2025.
Adjusted EPS Guidance: Reiterated guidance for adjusted diluted EPS in the range of $34.15 to $34.85.
Share Repurchases: 2.2 million shares repurchased for approximately $880 million, reflecting 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 saw slightly higher utilizations due to flu and respiratory illnesses, but costs moderated as the quarter ended. We are closely tracking claims data and remain comfortable with the trend environment.
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're expanding products like total cost of care for oncology and behavioral health services.
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, after which we expect stabilization.
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 related to a Medicaid state.
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 impact of flu and respiratory illnesses 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 Medicare Part D seasonality changes.
Q:What is the outlook for Medicaid rate updates?
A:Early discussions for July rate updates 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 V28 risk adjustment model 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:What percent of MA Part D members are reaching their out-of-pocket limits?
A:We are comfortable with the mix of our Medicare Advantage membership and have not observed substantial variation in Part D utilization.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific impact of the IRA on medical cost trend or MLR in the first quarter, as well as the clarity on the new normal of utilization behavior for Part D.
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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 Securities
America company
Bank Whit
Baxter
Benefits President
Boudreaux President
Capital
Government Health
President CEO
President Carelon
President Government
Research
advocacy
authorization
care coordination
care experience
care model
care provider
care value
commitment
cost care
difference
health approach
member care
offering
outcome cost
participant
person
platform
purpose
relationship
retention
risk uncertainty
satisfaction
solution
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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