Despite Medicaid Pressure, Elevance Health Delivers Strong Q1 Performance, Reiterates Profit Outlook

Elevance Health Inc. ELV on Tuesday reported first-quarter 2025 revenues of $48.77 billion, up 15% year-over-year, higher than the consensus of $46.29 billion.

The increase was driven by higher premium yields in the Health Benefits segment, acquisitions completed in the past year, Medicare Advantage and Individual ACA membership growth, and CarelonRx product revenue, partially offset by membership attrition in Medicaid business.

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The benefit expense ratio was 86.4%, an increase of 80 basis points year over year, reflecting a higher Medicaid medical cost trend, partially offset by out-of-period premium taxes. Reuters noted that the analysts’ average estimate was 86.8%.

“…In the first quarter, 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…” said Gail Boudreaux, President and Chief Executive Officer

Last week, CVS Health Corp CVS, Humana Inc. HUM, and Elevance Health stocks fell as investors were spooked after UnitedHealth Group, Inc.’s UNH disappointing Q1 earnings and slashed 2025 guidance.

The operating expense ratio was 10.9%, improving 70 basis points from the prior year. The adjusted operating expense ratio was 10.7%, an improvement of 60 basis points, primarily driven by expense leverage associated with growth in operating revenue and ongoing cost management, partially offset by out of period premium tax expense during the quarter.

Premiums rose 14.5% to $40.89 billion, product revenue rose 29.1% to $5.81 billion, and services fees fell marginally to $2.07 billion.

Adjusted earnings per share reached $11.97, up 10.8%, beating the consensus of $11.38.

The operating revenue of the health benefits segment was $41.4 billion in the first quarter of 2025, an 11% increase driven primarily by higher premium yields and growth in our Medicare Advantage and Individual ACA plan membership.

Medical membership totaled approximately 45.8 million as of March 31, 2025, an increase of 99 thousand from year-end 2024, driven by growth in Medicare Advantage and Commercial risk-based member, partially offset by a decline in Commercial fee-based membership from a known customer transition.

Operating revenue for Carelon was $16.7 billion, up 38%, driven by recent acquisitions in home health and pharmacy services, growth in CarelonRx product revenue, and the scaling of innovative risk-based capabilities in Carelon Services.

Guidance: Elevance Health reaffirms the 2025 adjusted EPS outlook of $34.15-$34.85 versus consensus of $34.22.

Price Action: ELV stock is up 1.87% at $414.31 at the last check on Tuesday.

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