Elevance Health, Inc. ((ELV)) has held its Q4 earnings call. Read on for the main highlights of the call.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
Elevance Health’s latest earnings call conveyed a mixed sentiment, with notable growth in Medicare Advantage and commercial sectors, albeit with challenges in Medicaid cost trends and membership reductions. The company expressed confidence in tackling these challenges while sustaining its growth trajectory.
Medicare Advantage Growth
Elevance Health expects a 7% to 9% growth in Medicare Advantage membership, aligning with prior forecasts. This growth is driven by robust member retention and an increase in group membership, underscoring the strength of their Medicare Advantage offerings.
Strong Commercial Business Performance
The commercial segment of Elevance Health saw notable success, welcoming 18 new national accounts and achieving record retention for 2025. These developments contributed to significant revenue growth, highlighting the company’s strong foothold in the commercial market.
Carelon Services Growth
Carelon Services reported over 50% growth, fueled by both internal and external expansion. This impressive growth was driven by strategic acquisitions, including CareBridge, and robust organic growth, marking a significant milestone for the services segment.
Adjusted EPS Guidance for 2025
Elevance Health provided guidance for adjusted diluted earnings per share, projecting it to be between $34.15 and $34.85. The company aims to manage cost trends while seizing growth opportunities to achieve these targets.
Elevated Medicaid Cost Trends
The fourth quarter saw elevated Medicaid cost trends, particularly in behavioral health and inpatient services. Current rates have not fully covered these costs, posing a challenge for the company.
Reduction in Membership
There was a decline in total membership by 1.1 million year-over-year, primarily due to Medicaid redeterminations and changes in the geographic footprint. This reduction highlights the challenges faced in maintaining membership levels.
Challenges with Medicaid Rates
Medicaid rates have been insufficient to cover the elevated cost trends. However, Elevance Health anticipates improvements in the second half of 2025 as state partners implement rate adjustments.
Forward-Looking Guidance
Looking ahead, Elevance Health projects adjusted diluted earnings per share to be in the range of $34.15 to $34.85 for 2025. The company expects Medicare Advantage membership to grow by 7% to 9% and foresees operating revenue growth in the high single to low double-digit range, supported by acquisitions such as CareBridge. They plan to manage elevated Medicaid cost trends through rate adjustments and have set a consolidated medical loss ratio target of around 89.1%. The company also aims to repurchase approximately $2.3 billion in shares, demonstrating a strong commitment to shareholder returns.
In summary, Elevance Health’s earnings call highlighted a balanced sentiment with strong performances in Medicare Advantage and commercial sectors, despite challenges in Medicaid cost trends and membership reductions. The company remains optimistic about navigating these hurdles and executing its growth strategies effectively.
