Elevance Health(US:ELV)2023-01-25 15:29Financial Data and Key Metrics Changes - Elevance Health reported fourth quarter adjusted earnings per share of $5.23, exceeding expectations, leading to a full-year adjusted earnings per share of $29.7, reflecting over 15% year-over-year growth from an adjusted baseline of $25.20 in 2021 [10][23][34] - Total operating revenue for the year reached nearly $156 billion, an increase of approximately 14% over the prior year, driven by solid growth in health benefits businesses and Carelon [12][36] - The SG&A expense ratio improved to 11.5% in the fourth quarter and 11.4% for the full year, reflecting a 20 basis points improvement [1][43] Business Line Data and Key Metrics Changes - Medical membership grew by 248,000 members in the fourth quarter, totaling 47.5 million members by year-end, with organic growth comprising over 85% of the increase [11][35] - Carelon's revenue grew by 12% and Carelon services by 27% over 2021, contributing to the overall revenue growth [13][36] - The company added 1.1 million net new commercial members and 1.1 million net new government members for the full year [12][35] Market Data and Key Metrics Changes - The company anticipates growth in medical membership despite commercial repricing and Medicaid redeterminations, with commercial risk-based membership expected to increase by over 200,000 in 2023 [31][32] - Medicaid membership is projected to end the year in the range of 10.8 million to 11.3 million, reflecting anticipated attrition due to eligibility redeterminations [33][42] Company Strategy and Development Direction - Elevance Health is transforming into a lifetime trusted health partner, focusing on optimizing health benefits businesses and expanding Carelon's service capabilities [22][50] - The company plans to disclose Carelon as a separate business division starting in Q1 2023, reflecting its commitment to expanding the scale and scope of services [15][37] - The strategic acquisition of Blue Cross and Blue Shield of Louisiana is expected to enhance community impact and align with Elevance's mission [70][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in margin recovery for commercial and Medicare businesses, which is expected to offset member attrition in the Medicaid business [8][30] - The outlook for 2023 includes anticipated growth in adjusted earnings per share of greater than $32.60, reflecting over 12% year-over-year growth [38][44] - Management acknowledged ongoing uncertainties related to Medicaid redeterminations and macroeconomic conditions but remains optimistic about the company's resilience [9][33] Other Important Information - The consolidated medical loss ratio is expected to be 87.2% in 2023, an improvement of approximately 20 basis points compared to 2022 [42] - The company plans to repurchase approximately $2 billion in shares and has approved a 16% increase in its quarterly dividend [49][45] Q&A Session Summary Question: Can you talk about the growth in the services business and partnerships? - Management highlighted the strong momentum in Carelon and the focus on whole health and improving patient experience through partnerships [55][60] Question: Can you provide insights on the Blue Cross Blue Shield of Louisiana acquisition? - Management expressed excitement about the strategic acquisition, emphasizing alignment with Elevance's mission and community impact [70][72] Question: What are the expectations for commercial and Medicaid margins? - Management confirmed ongoing margin recovery in commercial and Medicare segments, with Medicaid margins expected to remain within the 2% to 4% range [82][84] Question: What are the trends in value-based care? - Management noted increased interest in sharing both upside and downside risk in value-based care arrangements, with a focus on timely data sharing [131][132]