Elevance Health, in its third-quarter earnings call, reported strong financial and operational performance, raising its guidance for adjusted earnings per share to be greater than $33 for 2023. The company cited robust results in its Health Benefits division and Carelon services, as well as the successful integration of BioPlus as key contributors to its performance.
Key takeaways from the call include:
- GAAP earnings per share were $5.45, and adjusted earnings per share were $8.99, reflecting a 20% growth compared to the same period in 2022. This is in line with the InvestingPro Tips that highlight the company’s consistent increase in earnings per share and its high earnings quality, with free cash flow exceeding net income.
- Elevance Health ended the third quarter with 47.3 million members, with growth in BlueCard and ACA membership but a decline in medical membership due to attrition in Medicaid.
- Operating revenue for the quarter was $42.5 billion, a 7.2% increase over the previous year. This is consistent with the company’s strong revenue growth, as indicated by InvestingPro’s real-time metrics, which show a revenue growth of 11.12% for the last twelve months (LTM2023.Q2).
- The company took proactive actions to enhance its operating efficiency and transform its cost structure, including optimizing its workforce and assets. This aligns with the InvestingPro Tip that Elevance Health yields a high return on invested capital.
- The acquisition of Blue Cross and Blue Shield of Louisiana is expected to close soon, creating a multibillion-dollar foundation focused on improving the health and lives of the people of Louisiana.
- Elevance Health plans to make incremental investments in the fourth quarter in Medicare Advantage marketing and retention, as well as in capabilities and services to enhance customer satisfaction and support growth in 2024 and beyond.
The company’s CEO, Gail (NS:) Boudreaux, expressed confidence in closing the acquisition of Blue Cross and Blue Shield of Louisiana, which is expected to create a multibillion-dollar foundation focused on improving the health and lives of the people of Louisiana. The company is actively working with regulators and stakeholders to address any remaining questions.
Elevance Health expects to deliver strong growth in adjusted earnings per share in 2024, supported by the balance of its diverse set of businesses and the enhancement of operating efficiency. The company was named one of America’s greatest workplaces by Newsweek and the number one best large workplace in healthcare by Fortune.
John Gallina, the CFO, reported strong third-quarter results and increased the outlook for adjusted earnings per share in 2023 to be greater than $33, reflecting growth consistent with their long-term target of 12% to 15%. Gallina also announced his retirement, expressing confidence in the leadership team. He mentioned that the health benefits business had performed well in the third quarter and year-to-date, with increased margins as expected.
Elevance Health is exploring options to mitigate the financial impact of the recently released Star quality ratings and anticipates returning to growth in Medicaid in 2025 and beyond. The company ended the third quarter with a debt-to-capital ratio of 39.2% and repurchased approximately 1.1 million shares of common stock for $480 million. This reflects the company’s strategy of aggressive share buybacks, as noted in the InvestingPro Tips.
During the call, the company also addressed its plans for migrating specialty scripts to its BioPlus platform starting on January 1. The company aims to in-source its specialty drug spend away from CBS and has been focused on building the infrastructure and team for this strategy. The company also mentioned its strategy of integrating Carelon and its benefits segments to manage high-cost areas of healthcare and assume full risk on categories like oncology, MSK, and renal.
Gail Boudreaux, CEO of Elevance Health, introduced Mark Kaye as the new CFO, succeeding the retiring John Gallina. Boudreaux emphasized the company’s commitment to meeting the needs of clients, consumers, and communities, while expressing optimism for the company’s future growth. Based on InvestingPro’s real-time metrics, the company’s market cap stands at a robust 110.63B USD, and the P/E ratio is 17.41, indicating a healthy valuation for the company.
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