Elevance pulls in 8 million in Q4 profit

Elevance pulls in $418 million in Q4 profit

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Elevance Health saw $418 million in profit during the fourth quarter, down 51% from the $856 million in profit it hauled in at the end of 2023, company officials said during an earnings call this morning.

Revenue was up year-over-year, hitting $45 billion in 2024, up from $42.5 billion the prior year.

For the full year, that translated into $175.2 billion in revenue for Elevance (a 2.9% increase over 2023), while profit hit $5.98 billion, almost identical to its total a year ago. Operating revenue was $175.2 billion in 2024, an increase of $5 billion, or 3%.

Officials attributed the revenue increase to higher premium yields in its health-benefits segment, acquisitions that were completed in 2024, and revenue growth for CarelonRx, partially offset by attrition in the Medicaid business.

“This is consistent with our expectations shared back in October,” said Elevance Health president and CEO Gail Boudreaux. “It’s a response to unprecedented cost trends in out Medicaid business. Medicaid cost trends remain elevated. We are grateful for the continued collaboration of our state partners. Rates are insufficient, but we remain confident that the rates will ultimately reflect the acuity of our members over time.”

WHAT’S THE IMPACT?

The benefit expense ratio was 92.4% in the fourth quarter, an increase of 320 basis points compared to the prior year period, and 88.5% for the full year, an increase of 150 basis points year-over-year, with the increases driven primarily by higher Medicaid medical cost trends.

Days in Claims Payable was 42.9 days as of December 31, a slight increase of 0.1 days from September 30, 2024, and a decrease of 4.4 days compared to December 31, 2023.

The operating expense ratio was 10.7% in the fourth quarter and 11.4% for the full year. On an adjusted basis, the corresponding operating expense ratios were 9.9% and 10.6%.

Operating revenue for Elevance’s health benefits segment totaled $0.2 billion in the fourth quarter of 2024 and $6.2 billion for the full year. On an adjusted basis, operating gain was $0.3 billion in the fourth quarter of 2024 and $6.3 billion for the full year. Adjusted operating gain in both periods was impacted primarily by the higher cost trend in Medicaid linked to redeterminations, Elevance said.

Medical membership totaled about 45.7 million as of December 31, 2024, a decrease of 1.1 million, or 2% year-over-year. That was driven largely by attrition in the Medicaid business, partially offset by growth in Employer Group fee-based and Affordable Care Act health plan membership.

Meanwhile, operating revenue for Carelon – comprised of CarelonRx and Carelon Services –  was $14.7 billion in the fourth quarter of 2024, an increase of $2.3 billion, or 19% compared to the previous year. Operating revenue was $53.9 billion in 2024, an increase of $5.9 billion, or 12%.

“Carelon has seen internal and external growth, and is positioned for revenue growth greater than the long-term target range,” said Boudreaux, adding that the increases were fueled primarily by various 2024 acquisitions as well as the growth of risk-based capabilities within Carelon Services.

Operating gain for Carelon totaled $0.6 billion in the fourth quarter, effectively flat year over year. But on an adjusted basis, operating gain was $0.8 billion, an increase of $0.2 billion, or 32%.

“We have a strong foundation for growth,” said Boudreaux. “We’ve improved retention in Medicare Advantage, with growth of 7 to 9% expected. We remain confident in our ability to manage growth and financial performance.”

THE LARGER TREND

In October, Elevance Health announced plans to acquire home health company CareBridge, saying it will serve as the foundation for subsidiary Carelon’s home health business. Nashville Business Journal said the deal will be worth about $2.7 billion.

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.

Jeff Lagasse is editor of Healthcare Finance News.
Email: [email protected]
Healthcare Finance News is a HIMSS Media publication.

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