Elevance Health, Inc. ELV reported fourth-quarter 2024 adjusted earnings per share (EPS) of $3.84, which surpassed the Zacks Consensus Estimate by 1.1%. However, the bottom line deteriorated 31.7% year over year.
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Operating revenues of $45 billion rose 6% year over year. Moreover, the top line beat the consensus mark by a whisker.
Better-than-expected quarterly results benefited from rising premiums and product revenues. Rising expenses and a decline in Medicaid and Medicare memberships partially offset the positives.
Full-Year Results of ELV
ELV’s 2024 revenues of $175.2 billion increased from $170.2 billion a year ago due to higher premium yields and higher CarelonRx product revenue.
Full-year 2024 EPS of $33.04 declined from $33.14 in 2023.
Elevance Health, Inc. Price, Consensus and EPS Surprise
Elevance Health, Inc. Price, Consensus and EPS Surprise
Elevance Health, Inc. price-consensus-eps-surprise-chart | Elevance Health, Inc. Quote
Q4 Operational Update
Medical membership of Elevance Health was around 45.7 million as of Dec. 31, 2024, which slipped 2% year over year. The decrease was due to attrition in its Medicaid business, partially offset by growth in commercial fee-based and Affordable Care Act membership. The reported figure missed the Zacks Consensus Estimate of 46 million and our estimate of 45.9 million.
Premiums increased 3.2% year over year to $36.2 billion but came lower than the consensus mark of $36.6 billion. Product revenues of $6.7 billion increased 24.5% year over year and came higher than the Zacks Consensus Estimate of $5.9 billion and our estimate of $5.6 billion.
Net investment income declined 0.4% year over year to $527 million, which missed the consensus mark of $532.4 million. Total operating margin deteriorated 150 basis points (bps) year over year to 1.5%.
Total expenses of $44.8 billion rose 7.7% year over year and were higher than our estimate of $42.8 billion. The year-over-year rise was due to higher benefit expenses, the cost of products sold, and interest expenses.
The operating expense ratio improved 110 bps year over year to 10.7%. The benefit expense ratio of 92.4% deteriorated 320 bps year over year.
Segmental Results
Health Benefits
Operating revenues totaled $37.6 billion, which increased 3% year over year but missed the Zacks Consensus Estimate of $38.2 billion. The metric benefited from higher premium yields, partially offset by the membership decline in Medicaid.
Operating gain declined 75% year over year to $0.2 billion, lower than the consensus mark of $0.4 billion. The operating margin of 0.6% deteriorated 150 bps year over year.
Carelon
The segment’s operating revenues amounted to $14.7 billion, which rose 19% year over year. The uptick was due to the introduction and expansion of risk-based medical benefits within Carelon Services and acquisitions. The reported figure outpaced the Zacks Consensus Estimate of $14.1 billion and our estimate of $12.9 billion.
The unit’s operating gain of $0.6 billion remained stable year over year and missed the consensus mark of $0.7 and our estimate of $0.63 billion. The operating margin deteriorated 90 bps year over year to 3.9%.
Corporate & Other
Operating revenues came in at negative $14 million in the fourth quarter. The unit incurred an operating loss of $102 million, wider than the prior-year quarter’s loss of $75 million.
Financial Details (as of Dec. 31, 2024)
Elevance Health exited the fourth quarter with cash and cash equivalents of $8.3 billion, which rose 27% from the 2023-end level. Total assets of $116.7 billion increased 7.1% from the figure at 2023-end.
Long-term debt, less the current portion, amounted to $29.2 billion, up 25.7% from the figure as of Dec. 31, 2023. Short-term borrowings at the fourth-quarter end were $365 million, while the current portion of the long-term debt amounted to $1.6 billion.
Total equity of $41.4 billion grew 5.1% from the 2023-end level.
ELV generated net cash flow from operations of $5.8 billion in 2024, declining 27.9% year over year.
Capital Deployment Update
Elevance Health bought back shares worth $1.8 billion in the fourth quarter. It had a leftover capacity of around $9.3 billion under its share buyback authorization as of Dec. 31, 2024.
ELV paid a quarterly dividend of $1.63 per share, adding up to a cash distribution worth $373 million.
2025 Outlook
Adjusted EPS is anticipated to be between $34.15 and $34.85, up from the 2024 reported figure of $33.04 per share. GAAP EPS is currently projected to be between $30.4 and $31.1. The operating margin for the Health Benefits segment is estimated to witness a decrease of 50-25 basis points (bps) from the 2024 reported figure of 4.2%. Also, the operating margin for CarelonRx is expected to see 0-20 bps growth, while the same for Carelon Services is estimated to witness a decrease of 100-50 bps.
Management expects operating revenues to witness high single to low double-digit growth in 2025 from $175.2 billion in 2024. Premium revenues are estimated to witness low double-digit growth in 2025 from the 2024 level of $144.2 billion. Medical enrolment is forecasted to be between 45.8 and 46.7 million in 2025, up from 45.7 million in 2024.
Net investment income is anticipated to be $1.9 billion, down from $2.1 billion in 2024. Interest expenses are forecasted to be $1.5 billion in 2025 while operating cash flow is likely to be approximately $8 billion. Diluted shares are estimated to decline to 225-226 million from 232.9 million at 2024-end.
ELV’s Zacks Rank
Elevance Health currently carries a Zacks Rank #3 (Hold).
A Medical Sector Release
Of the Medical sector players that have reported fourth-quarter results so far, the bottom line of UnitedHealth Group Incorporated UNH beat the Zacks Consensus Estimate.
UnitedHealth Group reported a fourth-quarter 2024 adjusted EPS of $6.81, which surpassed the Zacks Consensus Estimate of $6.71. The bottom line increased 10.6% year over year. Revenues rose 6.8% year over year to $100.8 billion. The top line missed the consensus mark by 1.4%.
UNH’s operating earnings grew 1.1% year over year to $7.8 billion. The net margin deteriorated 30 bps year over year to 5.5%. Revenues of the health benefits business of UnitedHealth, UnitedHealthcare, rose 4.7% year over year to $74.1 billion on the back of an increase in domestic membership growth.
Key Picks
Some better-ranked and promising stocks in the broader Medical sector areLifeStance Health Group, Inc. LFST and Medpace Holdings, Inc. MEDP, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for LifeStance’s 2024 earnings indicates a 60.8% year-over-year improvement. LFST beat earnings estimates in three of the trailing four quarters and missed once, with an average surprise of 21.4%. The consensus mark for revenues implies 17.3% growth from the year-ago period.
The Zacks Consensus Estimate for Medpace’s 2024 earnings implies a 34.4% increase from the year-ago reported figure. MEDP beat earnings estimates in each of the trailing four quarters, with an average surprise of 14.7%. The consensus mark for its current-year revenues is pegged at $2.1 billion, which indicates an 11.8% year-over-year increase.
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