2024

Future

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<p class="has-drop-cap">Elevance Health Inc. (NYSE: ELV) reported its <a href="https://www.businesswire.com/news/home/20241016900631/en/Elevance-Health-Reports-Third-Quarter-2024-Results" target="_blank" aria-label="third-quarter financial results for 2024 (opens in a new tab)" rel="noopener noreferrer nofollow" class="deco-link">third-quarter financial results for 2024</a>, showcasing a robust performance despite facing challenges in the Medicaid segment. The company reported an operating revenue of $44.7 billion, marking a 5.3% increase from the previous year’s third quarter.</p>
<p>This growth was primarily driven by higher premium yields in the Health Benefits segment and increased revenue from CarelonRx products. However, the company faced a decline in operating gain, which stood at $1.4 billion, down from $1.8 billion in the same quarter last year. The adjusted operating gain was $2.4 billion, reflecting a slight decrease from $2.5 billion in the previous year.</p>
<p>The operating margin for the third quarter was 3.1%, a decline from 4.1% in the same period last year. The adjusted operating margin also saw a decrease, coming in at 5.3% compared to 6.0% in the previous year. These declines were attributed to a timing mismatch between Medicaid rates and the higher acuity of members, as well as a reduction in Medicaid membership due to eligibility redeterminations.</p>
<p>Despite these challenges, Elevance Health managed to improve its operating expense ratio to 11.8%, a 110 basis point improvement, achieved through disciplined cost management.</p>
<p>The Health Benefits segment reported an operating revenue of $38.3 billion, up from $36.7 billion in the previous year, driven by higher premium yields. However, the segment’s operating gain decreased to $1.6 billion, impacted by the unfavorable mix shift in Medicaid membership.</p>
<p>Meanwhile, the Carelon segment, which includes CarelonRx and Carelon Services, reported a significant increase in operating revenue to $13.8 billion, a 15% rise from the previous year, driven by growth in risk-based capabilities and product revenue.</p>
<h3 id="elevance-health-falls-short-on-eps-expectations-in-q3-delivers-on-revenue">Elevance Health Falls Short on EPS Expectations in Q3, Delivers on Revenue</h3>
<p>Elevance Health’s third-quarter performance was slightly below market expectations, particularly in terms of <a href="https://tokenist.com/investing/how-to-value-a-stock/" rel="noopener noreferrer nofollow" class="deco-link">earnings per share (EPS)</a>. The company reported a diluted EPS of $4.36, while the adjusted diluted EPS was $8.37. These figures fell short of the market’s expectations, which anticipated an EPS of $9.66. The reported operating revenue of $44.7 billion, however, exceeded the expected revenue of $43.46 billion, showcasing a strong top-line performance despite the challenges faced.</p>
<p>The shortfall in EPS can be attributed to the increased benefit expense ratio, which rose to 89.5%, up by 270 basis points from the previous year. This increase was primarily driven by the timing mismatch between Medicaid rates and the higher acuity of members. Additionally, the company faced a decrease in operating gain, which was impacted by the unfavorable mix shift in Medicaid membership due to eligibility redeterminations.</p>
<p>Despite these challenges, Elevance Health’s management remains confident in the company’s long-term earnings potential. The proactive measures taken to enhance operational efficiencies and the focus on cost management have helped mitigate some of the adverse effects. The company’s ability to exceed revenue expectations is a testament to its strong market position and the effectiveness of its growth strategies, particularly in the Carelon segment.</p>
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<h3 id="guidance-and-future-outlook">Guidance and Future Outlook</h3>
<p>Looking ahead, Elevance Health has adjusted its full-year guidance for 2024. The company now expects its GAAP net income per diluted share to be approximately $26.50, with an adjusted net income per diluted share projected at around $33.00.</p>
<p>This revised guidance reflects the challenges faced in the Medicaid segment and the timing mismatch between rates and member acuity. However, the company remains optimistic about its long-term growth prospects and is taking proactive steps to align Medicaid rates with member needs.</p>
<p>Elevance Health is also focusing on enhancing operational efficiencies to ensure a stronger position in the future. The company has announced a $1.63 per share dividend for the fourth quarter of 2024, reflecting its commitment to returning value to shareholders.</p>
<p>Additionally, the Board of Directors has authorized an $8.0 billion increase to the common stock repurchase program, which the company intends to utilize over a multi-year period, subject to market conditions.</p>
<p>The management’s confidence in the company’s long-term potential is further supported by its strategic initiatives in the Carelon segment. The growth in CarelonRx product revenue and the expansion of risk-based capabilities in Carelon Services are expected to drive future performance. As Elevance Health navigates the dynamic operating environment, the focus remains on leveraging its diverse business portfolio to deliver sustainable growth and value to stakeholders.</p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe>
<p><em>Disclaimer: The author does not hold or have a position in any securities discussed in the article.</em></p>
<h3 id="br"><br></h3>
<p>The post <a rel="noopener noreferrer nofollow" href="https://tokenist.com/elevance-health-nyse-elv-falls-to-deliver-on-eps-expectations-for-third-quarter/">Elevance Health (NYSE: ELV) Falls to Deliver on EPS Expectations for Third Quarter</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Elevance Health (NYSE: ELV) Falls to Deliver on EPS Expectations for Third Quarter

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