Elevance Health, Inc. ((ELV)) has held its Q1 earnings call. Read on for the main highlights of the call.
Elevance Health’s earnings call for the first quarter of 2025 painted a picture of robust revenue growth and strong performances in key segments like Medicare Advantage and Carelon Services. However, the company is navigating challenges with elevated Medicaid costs and lower-than-expected ACA membership effectuation rates. The overall sentiment was positive, with notable achievements in strategic areas, though tempered by ongoing cost pressures.
Strong Start to 2025
Elevance Health kicked off 2025 with results that aligned with expectations. The company reported a GAAP diluted EPS of $9.61 and an adjusted diluted EPS of $11.97, marking over 10% year-over-year growth. This strong start underscores the company’s effective strategies and operational execution.
Revenue Growth
The first quarter saw Elevance Health’s operating revenue soar to $48.8 billion, an increase of over 15%. This growth was fueled by higher premium yields, expansion in Medicare Advantage and Individual ACA membership, and increased revenue from CarelonRx products.
Carelon Services and CarelonRx Growth
Carelon Services reported impressive growth of over 60%, driven by expansion in offerings such as post-acute care and behavioral health. CarelonRx also performed strongly, particularly in the SpecialtyRx segment, highlighting the company’s successful diversification efforts.
Medicare Advantage Success
Medicare Advantage retention remained robust, with targeted and disciplined growth strategies supporting both margin and membership sustainability. This success reflects the company’s focus on maintaining a competitive edge in the Medicare market.
Value-Based Care Savings
Elevance Health’s value-based care models generated nearly $100 per member per month in savings across medical and pharmacy services. This achievement underscores the effectiveness of their innovative care models in reducing costs while enhancing patient outcomes.
Medicaid Cost Trends
The company faced challenges with Medicaid cost trends, as the consolidated benefit expense ratio increased by 80 basis points year-over-year. This was attributed to higher cost trends in Medicaid, presenting a challenge that the company needs to address.
Individual ACA Membership Attrition
While Individual ACA membership grew approximately 11% sequentially, effectuation rates were below initial expectations. This is expected to lead to single-digit percent membership attrition in the second quarter, highlighting an area of concern for the company.
Elevated Trend Environment
Utilization patterns in the Health Benefit segment remained elevated, consistent with a trend environment that was higher than historical norms. This elevated trend environment poses a challenge for managing costs effectively.
Forward-Looking Guidance
Looking ahead, Elevance Health remains focused on its strategic initiatives, emphasizing whole-person health and operational excellence. The company reported a 95% satisfaction rate among its over 6 million members supported by patient advocacy solutions. Their digital platform, HealthOS, expanded its support to over 88,000 care providers. Guidance for 2025 remains unchanged, with adjusted EPS expected between $34.15 and $34.85, and operating cash flow projected at $8 billion.
In summary, Elevance Health’s earnings call highlighted a strong start to 2025 with significant revenue growth and strategic successes, particularly in Medicare Advantage and Carelon Services. However, challenges such as elevated Medicaid costs and ACA membership attrition remain. The company’s forward-looking guidance reflects confidence in maintaining its growth trajectory while addressing these challenges.