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Elevance Health, Inc. on Jan.
25 reported adjusted earnings per share (EPS) of $29.07 in 2022,
representing a 12% increase from 2021. Gail Boudreaux, the company’s
president and CEO, told analysts on a conference call that it was the fifth
consecutive year in which Elevance’s adjusted EPS had hit or exceeded its 12%
to 15% annual target increase. That came as the insurer ended the year with
more than 47.5 million medical members, up nearly 2.2 million from the end of
2021.
Elevance provides guidance
for 2023
- David Windley,
a Jefferies analyst, wrote in a note to investors on Jan. 25 that
Elevance’s fourth quarter “was solid (maybe not exceptional),” citing
the company’s 89.4% medical loss ratio (MLR) and adjusted EPS of $5.23,
which beat the Wall Street consensus estimate of 90.1% and $5.19,
respectively. Windley noted that Elevance “still has a long way to go”
with improving its full-year 5.4% operating margin.
- Windley said
the fact that Elevance and UnitedHealth Group each reported MLRs in
the fourth quarter that were unfazed by a historically strong flu season
“suggests tame utilization overall (e.g., ability to absorb elevated flu
costs).”
- For 2023,
Elevance projects an MLR of 87.2% with a range between 86.7% and 87.7%,
whereas its MLR was 87.4% last year. John Gallina, Elevance’s chief
financial officer, said during the company’s earnings call that the
slightly improved MLR outlook for this year is “primarily driven by the
re-pricing of commercial risk-based business and margin expansion in
Medicare Advantage, related to the improved reimbursement levels across
rates, risk adjustment and star quality performance.”
- The company
also anticipates generating $164 billion in operating revenue this year,
up 8.3% from last year, and adjusted EPS of greater than $32.60,
representing at least a 12.1% increase from 2022.
Medicaid redeterminations
may impact membership
- Elevance
provided guidance regarding health plan enrollment for 2023, as well.
The company expects to add between 449,000 and 749,000 lives in
fee-based plans. Meanwhile, it expects the number of risk-based lives to
have a range of between losing 580,000 lives and adding 220,000
lives.
- Windley noted
that wide 800,000 range “isn’t surprising given uncertainty surrounding
[Medicaid] Redetermination and repricing of the final 25% of the
[commercial] risk book throughout ’23.”
- Since the
COVID-19 pandemic began in March 2020, states maintained continuous
enrollment of nearly all Medicaid recipients, increasing Medicaid
enrollment levels to record highs and benefiting insurers. But starting
on April 1, Medicaid redeterminations will resume, a condition that was part of the
Consolidated Appropriations Act and will see some people lose their
Medicaid coverage. Elevance expects half of the redeterminations to
occur this year and the other half next year, according to
Gallina.
- Boudreaux added
that “we look forward to working alongside our state partners to help
minimize loss of coverage due to administrative challenges and to ensure
beneficiaries no longer eligible for Medicaid understand their coverage
options…We remain committed and prepared to ensure seamless transitions
of those Medicaid members, as they move into exchange plans or
employer-based coverage.”
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