Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Elevance Health Inc (ELV, Financial) reported a strong start to 2025 with GAAP diluted earnings per share of $9.61 and adjusted diluted earnings per share of $11.97, reflecting over 10% year-over-year growth.
- The company expanded its value-based oncology care model to Medicare Advantage, following success in the commercial sector, which reduced inpatient admissions and improved treatment adherence.
- Carelon Services experienced significant growth, expanding relationships with external payers and launching new contracts in post-acute and behavioral health, validating its scalable platform for whole-person care.
- Elevance Health Inc (ELV) completed the acquisition of CareBridge, enhancing capabilities in home and community-based services, which helps reduce ER visits and institutional stays.
- The company maintained strong retention rates in Medicare Advantage, supporting both margin and membership sustainability, and expanded into three new states to build lifetime value through coordinated ACA and Medicaid coverage.
Negative Points
- Elevance Health Inc (ELV) faced elevated cost trends in its Medicaid business, impacting the consolidated benefit expense ratio, which increased by 80 basis points year over year.
- Individual ACA membership effectuation rates were lower than expected, leading to anticipated membership attrition in the mid-single-digit percent range in early Q2.
- The company experienced higher-than-expected flu-driven costs in Q1, impacting the benefit expense ratio by 15 to 20 basis points.
- Medicare Part D changes due to the Inflation Reduction Act resulted in a shift in earnings seasonality, with stronger financial performance expected in earlier quarters and lower margins later in the year.
- Elevance Health Inc (ELV) is navigating elevated utilization trends in Medicare Advantage, requiring careful management of new volume and targeted growth across specific populations and geographies.
Q & A Highlights
Q: Are you seeing anything unusual in Medicare Advantage, particularly concerning the IRA impact and elevated trends in the individual market?
A: Mark Kaye, CFO, stated that Medicare costs remain elevated but manageable, consistent with expectations. They are closely monitoring trends and remain comfortable with the current cost trajectory.
Q: Can you discuss the strong growth in Carelon Services and cross-sales into the Anthem book of business?
A: Gail Boudreaux, CEO, highlighted strong internal and external growth in Carelon Services. Peter Haytaian, President of Carelon, noted balanced growth across offerings and significant external growth, particularly in CarelonRx and specialty pharmacy.
Q: How are effectuation rates in the ACA market impacting your membership and profitability expectations?
A: Mark Kaye, CFO, mentioned that effectuation rates are slightly below expectations due to passive renewals from Medicaid transitions. They anticipate mid-single-digit membership attrition in Q2, with stabilization expected thereafter. These assumptions are factored into their EPS guidance.
Q: Can you explain the better-than-expected MLR performance and its implications for the trend outlook?
A: Mark Kaye, CFO, explained that the MLR benefited from a larger-than-expected premium tax and IRA-related changes, with no material impact on operating earnings. The trend remains consistent with expectations.
Q: How are you engaging new Medicare Advantage members, and what impact does this have on care activity?
A: Felicia Norwood, President of Government Business, emphasized early engagement with new members to ensure care coordination and accurate health assessments. This strategy aims to maintain quality and improve member experience.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
