Driven by Health Care Services, Low MLR, Elevance Posts Strong Third Quarter

by Peter Johnson

 

Elevance Health, Inc. (formerly Anthem) released its third-quarter financial results on Oct. 18, beating Wall Street consensus earnings projections and receiving praise from financial analysts. The insurer said growing membership, the performance of the commercial insurance and health care services divisions, and lower-than-expected utilization all contributed to the strong results.    The managed care giant reported $7.53 in adjusted earnings per share (EPS), beating the Wall Street consensus projection of $7.15. Membership grew by 232,000 to 47.3 million total members during the quarter, raising the year’s cumulative enrollment growth to 2.2 million. Executives project a fourth-quarter dividend of $1.28 per share, with end of year EPS “greater than $28.95 per share,” according to a press release.    Elevance boasts industry-high membership Elevance CEO Gail Boudreaux, during a conference call discussing the results, said that enrollment growth in both commercial and government books was a key driver of profitability.  “Over the past year, we've grown to serve 2.2 million more consumers, with both our commercial and government businesses delivering robust growth that solidifies our position as the largest carrier by U.S.-based medical membership,” Boudreaux said, according to a transcript prepared by the Motley Fool. Chief Financial Officer John Gallina credited recent transactions with some of the membership growth.   “We supplemented strong organic growth with the acquisitions of the Paramount and Integra Medicaid health plans, which, together, added approximately 300,000 Medicaid members earlier this year,” he said. “We earned higher premium revenue driven by membership growth in Medicaid.” Health services, PBM division drove profitability Gallina also said the firm’s health services division, Carelon, and in-house PBM, IngenioRx, “produced very strong growth." "IngenioRx grew revenue 11% year over year, while the other segment, comprised primarily of Carelon, grew operating revenue 26%....And consistent with our strategy, we continue to increase the breadth and depth of services Carelon is providing,” Gallina added. Jefferies analyst David Windley, wrote in an Oct. 19 note to investors that “we consider underlying operating results to be slightly better than expected, with revenue upside driven by IngenioRX and margin upside” from improved medical loss ratio (MLR) results.  Barclays analyst Steve Valiquette drew similar conclusions, writing that “earnings upside was primarily driven by a more favorable MLR (as well as strong upside in the IngenioRx business).”  Elevance’s “membership growth continues to be impressive,” Windley said, “having eclipsed [UnitedHealth Group] in total members in the last 12 months.”

 

From Health Plan Weekly

 

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