Elevance Health's Q3 Earnings: Profit Falls Short Of Expectations On Higher Medical Costs, Issues Soft Annual Outlook

On Thursday, Elevance Health Inc. ELV reported third-quarter revenues of $44.7 billion, up 5.3% year-over-year, beating the consensus of $43.33 billion. 

The increase was driven by higher premium yields in the Health Benefits segment and growth in CarelonRx product revenue, partially offset by membership attrition in the Medicaid business.

The benefit expense ratio was 89.5%, an increase of 270 basis points, driven primarily by the timing mismatch between Medicaid rates and the higher acuity of members.

“We remain confident in the long-term earnings potential of our diverse businesses as we navigate a dynamic operating environment and unprecedented challenges in the Medicaid business. We expect Medicaid rates will align with the needs of our members in time, and are taking proactive actions to enhance operational efficiencies that will ensure we emerge from this period even stronger,” said Gail Boudreaux, President & CEO.

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Premiums rose 4.4% to $36.81 billion, and product revenue rose 13.7% to $5.89 billion. Services fees fell 1% to $2.02 billion.

Profit fell 21% to $1.02 billion, or $4.36 a share. Per-share adjusted earnings reached $8.37, down from $8.99 a year ago, missing the consensus of $9.66.

Medical membership totaled approximately 45.8 million, a decrease of 1.5 million, or 3%, driven by attrition in the Medicaid business associated with eligibility redeterminations and footprint adjustments in certain Medicaid states.

Health Benefits segment operating revenue was $38.3 billion, an increase of $1.5 billion compared to the prior year quarter, driven primarily by higher premium yields, partially offset by membership attrition in the Medicaid business.

Operating revenue for Carelon was $13.8 billion, up 15%, driven by the launch and growth of risk-based capabilities in Carelon Services and growth in CarelonRx product revenue related to the acquisition of Paragon Healthcare in the first quarter and increases in external members served.

Guidance: Elevance Health expects GAAP net income per diluted share of approximately $26.50 versus the prior guidance of at least $34.05.

The company forecasts an adjusted EPS of $33.00, down from the prior guidance of at least $37.20 and the consensus of $37.26.

Price Action: ELV stock is down 12.3% at $436.00 during the premarket session on the last check Thursday.

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