Despite elevated medical costs, Elevance Health managed to perform more or less in line with expectations in the first quarter, bringing in $2.2 billion in profit, a slight decrease from the $2.25 billion in profit reported in Q1 2024.
Revenue was up year-over-year, hitting $48.9 billion in Q1, a 15% jump as compared to $42.6 billion a year ago.
That, the company said, was driven by higher premium yields in the Health Benefits segment, strategic acquisitions and growth in Medicare Advantage and individual Affordable Care Act membership, as well as CarelonRx product revenue.
“In Medicare Advantage, performance was consistent with expectations,” said Elevance Health President and CEO Gail Boudreaux. “Retention remains strong, and growth was sustained. We remain confident in the outlook for Medicare Advantage. Stronger retention is linked to better care coordination, and fewer inpatient days.”
The company's focus on administrative services-only plans shields it from rising medical costs, benefiting from its 27.2 million fee-based members, according to Seeking Alpha. Such plans are a type of group health insurance where an employer self-funds their plan and hires a third-party administrator or insurance company to handle the administrative tasks, like claims processing; the employer ultimately covers the cost of those claims.
Operating cash flow was $1.0 billion in the quarter, a YOY decrease of about $1 billion. As of March 31, cash and investments at the parent company totaled approximately $1.4 billion.
Elevance reiterated its profit forecast for the year at $34.15 to $34.18 per share, and confirmed Q1 adjusted shareholders’ net income of $11.97 per share.
“We delivered performance in line with our expectations … despite an elevated trend environment,” Boudreaux said. “We’re staying focused on what we can control: delivering operational results, interacting proactively with partners and advancing our long-term strategy.”
This compares to UnitedHealth Group’s recent Q1 earnings report, which cut its earnings guidance due to unexpectedly higher care costs in its Medicare Advantage business.
WHAT’S THE IMPACT
Operating revenue for the health benefits segment was $41.4 billion in the first quarter, a $4.2 billion (11%) increase YOY, which Elevance attributed to growth in Medicare Advantage and Individual ACA plan membership.
Operating gain totaled $2.2 billion, which was affected by a higher medical cost trend in the Medicaid business compared to Q1 2024, but was partially offset by premium rate increases.
Medical membership totaled about 45.8 million as of March 31, an increase of 99,000 from year-end 2024 due to MA and Commercial risk-based member growth.
Operating revenue for Carelon, meanwhile, was $16.7 billion in Q1, an increase of $4.6 billion, or 38% compared to the prior year quarter. This was driven by recent acquisitions in home health and pharmacy services, growth in CarelonRx product revenue, and the scaling of risk-based capabilities in Carelon Services.
Operating gain for Carelon totaled $1.1 billion, an increase of $0.3 billion, or 34%, ue to higher performance and CarelonRx product revenue.
THE LARGER TREND
In November Elevance sued the Department of Health and Human Services over Medicare Advantage Star Ratings. Only seven Medicare Advantage and Part D plans received 5 stars when the Centers for Medicare and Medicaid Services released star ratings in October. This compares to 38 contracts that received 5 stars in 2024. One of the plans to receive 5 stars was HealthSun Health Plans by Elevance Health.
Also in November, Elevance was one of the insurers named in a lawsuit filed by orthopedic providers alleging a multibillion-dollar price-fixing scheme with MultiPlan. The complaint claims the scheme was aimed at suppressing payment rates to doctors for out-of-network services.
The complaint, filed in federal court in Illinois, requests class action status, a jury trial, a determination that the conduct is unlawful and a judgment requiring payment.