Elevance Health logs $2.3 billion profit in Q2
Operating revenue was $43.2 billion in the quarter, a decrease of $0.2 billion compared to the prior year quarter.
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Elevance Health's profits in the second quarter were 24% higher than in Q2 2023, as the health insurer logged $2.3 billion in profit and $43.9 billion in revenue – the latter an improvement, but just 1% higher than the second quarter of last year.
Operating revenue was $43.2 billion in the quarter, a decrease of $0.2 billion compared to the prior year quarter. This decrease, according to Elevance, was driven by attrition in Medicaid membership, partially offset by higher premium yields to reflect medical cost trend, as well as growth in CarelonRx product revenue related to members served.
"Second quarter results reflect the power of our diversified business and thoughtful execution of our strategic initiatives during a dynamic time for our industry, as we remain steadfast in our purpose to improve the health of humanity," said Elevance Health president and CEO Gail Boudreaux in a statement. "We have prudently maintained our full-year outlook and are confident in the earnings power of our Health Benefits and Carelon businesses, which underpin our long-term targets."
WHAT'S THE IMPACT?
In Q2 the benefit expense ratio was 86.3%, an improvement of 10 basis points, driven primarily by premium rate adjustments to cover medical cost trend in the Health Benefits business and disciplined commercial underwriting.
Days in Claims Payable was 45.3 days as of June 30, a decrease of 3.7 days from March 31, including a 1.7 day decline related to industry-wide delays earlier this year in claims receipts, and a decrease of 1.2 days compared to June 30, 2023, which Elevance said was principally due to improved operational efficiency.
Elevance Health expects GAAP net income per diluted share to be at least $34.05 in 2024, and adjusted diluted net income per share to be at least $37.20.
Operating cash flow hit $2.4 billion for the year thus far, a decrease of $6 billion year-over-year, including $4.3 billion of timing-related items and $1.3 billion of net cash outflows associated with medical claims payable, principally due to lower Medicaid membership. As of June 30, cash and investments at the parent company totaled about $2.4 billion.
Also during the quarter, Elevance repurchased 0.9 million shares of its common stock for $462 million, at a weighted average price of $524.55, and paid a quarterly dividend of $1.63 per share, representing a distribution of cash totaling $378 million. As of June 30, the company had roughly $3.2 billion of board-approved share repurchase authorization remaining.
Operating revenue for the company's Health Benefits segment – comprising individual, employer group risk-based, employer group fee-based, BlueCard, Medicare, Medicaid, and federal health products and services businesses – was $37.2 billion, a decrease of 2% compared to the prior year quarter, as Medicaid membership attrition was only partially offset by premium rate increases to reflect medical cost trends, as well as growth in Individual Affordable Care Act health plan membership. Operating gain totaled $2.1 billion, which was unchanged from the previous year.
Medical membership totaled about 45.8 million as of June 30, a decrease of 2.2 million, or 5%, compared to Q2 2023.
At the same time, Carelon, comprised of CarelonRx and Carelon Services, posted operating revenue of $13.3 billion in Q2, an increase of $1.2 billion, or 10% compared to the prior year quarter. This increase, said Elevance, was due to the launch and growth of risk-based medical benefit and behavioral health management services in Carelon Services, as well as growth in CarelonRx product revenue related to external members served and the acquisition of Paragon Healthcare in the first quarter.
THE LARGER TREND
Elevance Health entered into an agreement in January to acquire Paragon Healthcare for an undisclosed amount. Paragon, which has been operating for more than 20 years, provides infusion services to patients through its omnichannel model of ambulatory infusion centers, home infusion pharmacies, and other specialty pharmacy services. The company, headquartered in Plano, Texas, provides care to patients with a broad range of chronic and acute conditions.
Pete Haytaian, executive vice president of Elevance Health and president of subsidiary Carelon, said the acquisition of Paragon will deepen the organization's capabilities around providing affordable and convenient access to specialty medications and other services for members living with chronic and complex illnesses.
Elevance took a step into the specialty pharmacy space early last year when it finalized its acquisition of BioPlus, which provides a range of specialty pharmacy services for patients living with complex and chronic conditions, such as cancer, multiple sclerosis, hepatitis C, autoimmune diseases and conditions in rheumatology.
Elevance anticipated the acquisition would help it meet the specialty-drug needs of clients and customers with a more whole health-focused approach.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
