Elevance Health 1Q 2025 Earnings Presentation April 22, 2025 The Value We Deliver We advance whole health through innovative solutions that integrate physical, behavioral, and social care to achieve our purpose of improving the health of humanity For Consumers Simple, Affordable, and Accessible Health Care For Care Providers Deepen Clinical and Business Partnerships 3 1Q 2025 Results 2 1. Simplifying healthcare through enhanced digital capabilities that personalize member experiences 2. Affordability at the ...

Elevance Health, Inc. (ELV) Q1 2025 Earnings Conference Call April 22, 2025 08:30 AM ET Company Participants Conference Operator - OperatorNathan Rich - Vice President of Investor RelationsGail Boudreau - President and CEOMark Kay - Chief Financial OfficerPete Haitayan - President, CarillonFelicia Norwood - President, Government Health Benefits BusinessModerator - Call Moderator Conference Call Participants AJ Rice - Analyst, UBSLance Wilkes - Analyst, BernsteinStephen Baxter - Analyst, Wells FargoAndrew Mo ...

Core Viewpoint - Elevance Health reported quarterly earnings of $11.97 per share, exceeding the Zacks Consensus Estimate of $11.21 per share, and showing an increase from $10.64 per share a year ago, indicating a 6.78% earnings surprise [1][2] Financial Performance - The company achieved revenues of $48.77 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 5.95%, compared to $42.27 billion in the same quarter last year [2] - Over the last four quarters, Elevance Health has exceeded consensus EPS estimates three times and topped revenue estimates four times [2] Stock Performance - Elevance Health shares have increased approximately 10.2% since the beginning of the year, contrasting with a decline of 12.3% in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $9.81 on revenues of $47.67 billion, and for the current fiscal year, it is $34.19 on revenues of $192.23 billion [7] - The trend of estimate revisions for Elevance Health is mixed, which may change following the recent earnings report [6] Industry Context - The Medical Services industry, to which Elevance Health belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Performance - 1Q 2025 operating revenue was $48.8 billion, an increase of 15.4% from 1Q 2024[5] - 1Q 2025 adjusted operating gain was $3.3 billion, up 4.1% from 1Q 2024[5] - 1Q 2025 diluted EPS was $9.61; adjusted diluted EPS was $11.97[5] - Total revenues for the three months ended March 31, 2025, increased by 14.8% to $48,891 million compared to $42,577 million in 2024[37] - Premiums rose by 14.5% to $40,887 million, while product revenue increased by 29.1% to $5,809 million[37] - Net income attributable to shareholders decreased by 2.8% to $2,183 million, with earnings per diluted share slightly up by 0.2% to $9.61[37] - Shareholders' net income for Q1 2025 was $2,183 million, a decrease of 2.8% from $2,246 million in Q1 2024[51] - Adjusted shareholders' net income increased by 7.2% to $2,719 million in Q1 2025, compared to $2,537 million in Q1 2024[51] - Operating revenue rose by 15.4% to $48,765 million in Q1 2025, up from $42,273 million in Q1 2024[54] - Reportable segments operating gain increased by 5.1% to $3,170 million in Q1 2025, compared to $3,016 million in Q1 2024[54] - Adjusted shareholders' earnings per diluted share for Q1 2025 was $11.97, reflecting a 10.5% increase from $10.83 in Q1 2024[51] - Full year 2025 outlook for shareholders' earnings per diluted share is projected to be between $28.30 and $29.00[54] Revenue Segments - Health Benefits segment operating revenue was $41.4 billion, an increase of 11% compared to the prior year quarter[15] - Operating revenue from the Health Benefits segment grew by 11.2% to $41,431 million, while Carelon Services saw a significant increase of 63.0% to $6,536 million[44] - Carelon operating revenue was $16.7 billion, an increase of 38% compared to the prior year quarter[21] Expenses and Ratios - The benefit expense ratio was 86.4%, an increase of 80 basis points year over year[9] - Total expenses increased by 16.3% to $46,094 million, with benefit expenses rising by 15.6% to $35,312 million[37] - The operating margin for total operating revenue decreased to 6.5%, down from 7.1% in the previous year[44] - Adjusted operating expense for Q1 2025 was $5,215 million, an increase of 9.2% from $4,776 million in Q1 2024[54] - The operating expense ratio improved to 10.9% in Q1 2025, down from 11.6% in Q1 2024, representing a 70 basis points improvement[54] Cash Flow and Assets - Operating cash flow was $1.0 billion, a decrease of approximately $1.0 billion year over year[11] - The company reported a net cash provided by operating activities of $1,017 million, a decrease from $1,978 million in the prior year[41] - Cash and cash equivalents at the end of the period were $7,500 million, down from $8,288 million at the beginning of the period[41] - The total assets increased to $119,717 million as of March 31, 2025, compared to $116,889 million at the end of 2024[39] Claims and Liabilities - Medical claims payable at the end of the period increased to $16,529 million from $16,183 million[47] Other Financial Metrics - Net losses on financial instruments increased to $464 million in Q1 2025 from $161 million in Q1 2024[51] - Interest expense rose to $344 million in Q1 2025, compared to $265 million in Q1 2024[51] - The company returned $1.3 billion of capital to shareholders in 1Q 2025[5] - The second quarter 2025 dividend was declared at $1.71 per share, payable on June 25, 2025[24]

Core Viewpoint - Elevance Health, Inc. is expected to report first-quarter 2025 results on April 22, with earnings estimated at $11.09 per share, reflecting a 4.2% increase year-over-year, and revenues projected at $46 billion, indicating an 8.7% growth from the previous year [1] Earnings Estimates - The earnings estimate for Q1 has seen three upward revisions in the last 30 days, with no downward movements [1] - The current earnings estimate of $11.09 per share has increased from $10.65 two months ago, showing a trend of positive revisions [2] Earnings Surprise History - Elevance Health has beaten earnings estimates in three of the last four quarters, with an average negative surprise of 2.60% [2] Earnings Prediction Model - The model indicates a likely earnings beat for Elevance Health, supported by a positive Earnings ESP of +4.75% and a Zacks Rank of 3 [3][4] Revenue Drivers - The anticipated growth in results is attributed to higher premiums driven by strong Medicare Advantage membership growth and strength in Carelon businesses [5] - The Zacks Consensus Estimate for premiums is $38.7 billion, reflecting an 8.3% increase year-over-year, while Medicare Advantage membership is expected to grow by 9.8% [6] Segment Performance - The Health Benefits segment is projected to see operating income of $2.2 billion, a decline of 2.5% year-over-year, primarily due to reduced Medicaid membership [8] - The Carelon segment is expected to report operating income of $956 million, indicating a 17.6% year-over-year growth [9] Expense Outlook - Elevated expenses are anticipated due to significant investments in digital capabilities, with total expenses expected to rise by 7.1% year-over-year [10]

Core Viewpoint - Analysts forecast Elevance Health (ELV) to report quarterly earnings of $11.09 per share, reflecting a year-over-year increase of 4.2%, with revenues expected to reach $45.93 billion, an increase of 8.7% compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised downward by 1.5% over the past 30 days, indicating a collective reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate trends and short-term stock performance [3]. Revenue Projections - Analysts expect 'Revenues- Premiums' to be $38.66 billion, indicating a year-over-year change of +8.3% [4]. - 'Revenues- Service fees' are projected to reach $2.13 billion, reflecting a change of +2.6% from the previous year [5]. - 'Revenues- Net investment income' is expected to be $461.32 million, showing a year-over-year change of -0.8% [5]. - 'Revenues- Product revenue' is anticipated to reach $5.11 billion, indicating a change of +13.6% from the prior year [5]. Membership Metrics - Total Medical Membership is forecasted to be 46.24 million, consistent with the same quarter last year [6]. - 'Medical Membership - Medicare - Medicare Advantage' is expected to reach 2.21 million, up from 2.02 million in the same quarter last year [6]. - 'Medical Membership - Medicaid' is estimated at 8.89 million, down from 9.33 million in the previous year [7]. - 'Medical Membership - Federal Employees Health Benefits' is projected to remain at 1.66 million, unchanged from the year-ago figure [7]. - The consensus for 'Medical Membership - Total Medicare' stands at 3.08 million, up from 2.91 million last year [8]. - 'Medical Membership - Commercial Risk-Based - Individual' is expected to reach 1.42 million, compared to 1.25 million in the same quarter last year [8]. Expense Ratios - The 'Benefit Expense Ratio' is projected to be 87.3%, up from 85.6% in the same quarter last year [9]. - 'Medical Membership - Commercial Fee-Based' is expected to be 27.44 million, slightly down from 27.45 million in the previous year [9]. Stock Performance - Elevance Health shares have increased by +0.4% over the past month, contrasting with the Zacks S&P 500 composite's decline of -4.2% [9].

Core Viewpoint - Elevance Health (ELV) is anticipated to report a year-over-year increase in earnings driven by higher revenues, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The earnings report is scheduled for April 22, 2025, with expectations of quarterly earnings at $11.09 per share, reflecting a +4.2% year-over-year change, and revenues projected at $45.95 billion, an increase of 8.7% from the previous year [3][2]. Estimate Revisions - The consensus EPS estimate has been revised down by 1.46% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Elevance Health is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +4.75%, suggesting a bullish outlook from analysts [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8]. - Elevance Health currently holds a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Elevance Health had an earnings surprise of +1.05%, having beaten consensus EPS estimates three times over the last four quarters [12][13]. Industry Context - Medpace (MEDP), another player in the Zacks Medical Services industry, is expected to report earnings of $3.06 per share, reflecting a -4.4% year-over-year change, with revenues projected at $530.12 million, up 3.7% from the previous year [17]. - Medpace's consensus EPS estimate has been revised down by 1.5% over the last 30 days, resulting in an Earnings ESP of -3.39%, making it challenging to predict a beat on the consensus EPS estimate [18].

Core Viewpoint - Elevance Health's shares experienced a 5.4% increase, closing at $452.69, driven by notable trading volume and a broader market shift towards defensive sectors like healthcare amid market volatility [1][2]. Group 1: Stock Performance - Elevance Health's stock gained 8% over the past four weeks, reflecting investor interest in stable investments during uncertain market conditions [1][2]. - The company's share price rise is attributed to a shift from tech and industrial stocks to healthcare, as investors seek stability [2]. Group 2: Financial Outlook - The upcoming quarterly earnings report is expected to show earnings of $10.92 per share, a year-over-year increase of 2.6%, with revenues projected at $45.94 billion, up 8.7% from the previous year [4]. - Despite the positive earnings and revenue growth expectations, the consensus EPS estimate has been revised 1.4% lower in the last 30 days, indicating potential caution among investors [5]. Group 3: Strategic Positioning - Elevance Health's strong position in managed care and stable revenue from government-backed programs enhances its appeal to risk-averse investors [2]. - The company is focusing on improving margins and operational efficiencies in Medicaid and Medicare Advantage plans, which is expected to strengthen its financial position [3].

U.S. health benefits company Elevance Health, Inc. (ELV) appears undervalued. It is currently trading at 12.25X forward 12-month earnings, below its five-year median of 13.44X and the industry average of 15.40X. It also trades at a discount to major health insurance companies like UnitedHealth Group Incorporated (UNH) and Humana Inc. (HUM) , which have forward P/E ratios of 16.46X and 16.86X, respectively. ELV currently holds a Value Score of A.This discounted valuation could reflect market skepticism about ...

Core Insights - Elevance Health's share prices declined approximately 30% following the Q3 results, prompting a revision of both short-term and long-term growth outlooks [1]. Group 1: Company Performance - The company experienced a significant drop in share prices after the Q3 results, indicating potential concerns regarding its financial health and future performance [1]. - Elevance Health's growth outlook has been revised, suggesting a reassessment of its market position and strategic direction [1]. Group 2: Valuation Approach - The analysis utilizes Cash Flow Returns On Investment based DCF valuation tools provided by ROCGA Research, highlighting a systematic approach to valuing companies [1]. - ROCGA Research has over 20 years of experience in investment analysis, focusing on identifying undervalued and quality companies [1].