Elevance Health Inc at UBS Global Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: A J Rice - UBS - Analyst : Mark, maybe just to start us off, the company provided a 2025 view that sees mid-single digit EPS growth next year. Can you talk about the puts and takes underpinning that outlook?

Question: A J Rice - UBS - Analyst : Okay, great. And thanks for the comments about the business lines. When thinking about the mid-single digit growth rate, capital deployment typically expected to provide about 4% of the growth at [Allance]. Certainly in the context of talking about a 12% growth algorithm historically, given what you just shared about '25 will capital deployment contribute its traditional 4%-plus to EPS growth in '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 3:15PM, ELV.N - Elevance Health Inc at UBS Global Healthcare Conference

Question: A J Rice - UBS - Analyst : Okay. Maybe just ask about Medicaid a little bit since that's been the primary focus. One of the major questions we've received from investors is sort of the dichotomy between Elevance's commentary and that of some of the peers. It was noted on your three conference call that the recovery could possibly take multiple cycles to get back to normalized margins. I know states need [actuar] sound rates, but can they take multiple years to get back to normal? Is the issue that the required increases for some states are so large that the state budgets can absorb the needed increase. The company I know said on its Q3 call that it may take the several rate cycles. Do we have that, right?

Question: A J Rice - UBS - Analyst : Okay, great. I think on the third quarter call elements talked about trends running 3 to 5 times higher than normal. Traditionally, we thought of the Medicaid cost trend as being in the 2% to 3% range So putting that numbers to that would suggest that the company seeing high single digit to low double digit increases in the second half of '24 perhaps the range of 6% to 15%. Are we thinking about all that correctly?

Question: A J Rice - UBS - Analyst : Okay. I assume the January 1 rate updates that some states have will help Medicaid margins improve somewhat in the first half of next year versus the back half of this year. First of all, is that the right way to think about it? And is there any reason to think that trends seen in the third quarter with respect to Medicaid margins will be materially different in Q4, given that there's less help from rate updates.

Question: A J Rice - UBS - Analyst : Okay. You mentioned earlier, it sounds like some of the pressure is seeing goes beyond just the impact of redetermination and there's some greater utilization on the part of the population this year versus last year that you're retaining. Can you spend a little more time diving into this a little bit more? Is there anything about your geographical footprint that would account for why it sounds a little different than what we're hearing from some of the others? Any thoughts on why your experience might be a little different.

Question: A J Rice - UBS - Analyst : Okay. And it was noted and you referenced this in a minute ago that the company straight line, the September cost trend, which we viewed as the peak for the remainder of the fourth quarter based on what you've seen quarter to date. Does it still seem like an accurate level? Are things trending as you expected? We've got a number of questions as to why if every month since April has looked a little worse than the prior month, why September would be the peak?

Question: A J Rice - UBS - Analyst : Okay. We're thinking about the recovery to the company's target margins of Medicaid of 2% to 4%. It sounds like the principal drivers will be getting [actually] sound rate updates. Is there much that the company can do to drive efficiency or otherwise improve performance proactively?

Question: A J Rice - UBS - Analyst : Okay, maybe I'll pivot over to Medicare advantage for a few minutes. There's been some questions in the investment community regarding Elevance approach to benefit design in MA for 2025, the discussion point has been that perhaps the company has been aggressive and adding benefits at a time when others are pulling back. Historically, we thought Elevance generally prioritizes margin stability over enrollment gains. What perspective can you provide regarding the company's approach to MA bids for '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 3:15PM, ELV.N - Elevance Health Inc at UBS Global Healthcare Conference

Question: A J Rice - UBS - Analyst : Okay. How is the open enrollment in MA progress thus far? Is there anything about it? That's a surprise to you. There's been speculation the market elements could see double digit enrollment growth or even better next year in MA just as CVS saw outsized growth this year, would you be surprised by growth in the high-teens or greater? Would it scare you from a margin contribution perspective?

Question: A J Rice - UBS - Analyst : Okay. We did see that the company has taken the approach of making some MA products noncommissionable starting at the beginning of November 1. Is there anything to call out about that?

Question: A J Rice - UBS - Analyst : Okay. I just want to confirm before we leave MA, it sounds like Elevance has been operating below its target MA margin range of 3% to 5% for '24 and the expectation is not for significant change in '25. Are we thinking about that correctly? What's a reasonable time frame to expect this business to get back to target margins?

Question: A J Rice - UBS - Analyst : Okay. Switching over to commercial for a few minutes. The commercial business is the company's largest segment further. It's been performing well. One of your peers has called out elevated cost trends which they are pricing for and taking larger premium increases for '25 versus '24. What's the company seeing in the commercial market in terms of cost trend and projected premium increases for next year?

Question: A J Rice - UBS - Analyst : Okay. The company's been working through a two year repricing cycle in commercial. Is it possible as this cycle comes to an end that the company could see a pick-up in enrollment in the commercial segment and further market share gains. In other words, has the two years of repricing in the commercial business been a constraint on enrollment growth in any way.

Question: A J Rice - UBS - Analyst : Okay. And I wanted to ask you about that, the individual business, it has been a standout for growth in '24. How are you thinking about '25 for that business? Would your posture toward how active you are in this segment change once there's clarity on the enhanced subsidies beyond '25 and any thoughts on the (inaudible) opportunity is that significant for smaller midsized employers that they might increasingly choose to shift their employees to the exchanges?

Question: A J Rice - UBS - Analyst : All right, just wanted to pivot over to Carollo companies called out strong performance there. The company is working on a number of new initiatives including ramping up the insourcing of services recently acquired such as Kroger Specialty Pharmacy, Paragon Bio Plus. Can you comment on how this is going -- how all this is going and how much of a tailwind to Carelon could this provide and growth next year.

Question: A J Rice - UBS - Analyst : Okay. And the company has also struck a deal with Clayton do here and Rice to form a joint venture that will pursue care enablement assets. Can you tell us a little more about what the company hopes to do here? How quickly do you see this developing?

Question: A J Rice - UBS - Analyst : Okay. And Caroline Elevance has completed a number of acquisitions and transactions to bulk up the business. Presumably these are largely serving the Elevance population where is the company now in its efforts to build up its cross selling to ASO customers and move the ratio of ASO life REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 3:15PM, ELV.N - Elevance Health Inc at UBS Global Healthcare Conference contribution to full risk contribution from 5 to 1 to 3 to 1. Where is the company on that transition? And is there any updated view as to when the 3 to 1 may be achieved?

Question: A J Rice - UBS - Analyst : Okay. As you just mentioned, the CarelonRx is seen its principal opportunities pursuing business and legacy anthem ASO accounts as well as Medicaid notably, where the company can partner with other blue plans. Can you comment on what Traction CarelonRx is seen in pursuit of this strategy?

Question: A J Rice - UBS - Analyst : Okay. Another focus for Carelon has been trying to partner with other blue plans. He brought an update on how this is trending as the move toward a settlement regarding the long running blues and situation created an incremental opportunity as the announcement of HCSC that they are going to buy [Cigma] MA business meant that other blue plans are more interested in working with you to develop their government capabilities? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 3:15PM, ELV.N - Elevance Health Inc at UBS Global Healthcare Conference

Question: A J Rice - UBS - Analyst : Okay. And finally, I might just ask, can you remind us regarding the company's current priorities with respect to capital deployment? MA tucking deals, share repurchases dividends. Any of these becoming more or less a focus. Will the MA focus principally be on building Carelon service, offering any other areas of interest? And I know from time to time there's discussion about whether an advance might look at a larger deal. Any updated perspective on the possibility of considering a larger deal?

Question: A J Rice - UBS - Analyst : Okay, I think we're out of time here. I want to express my appreciation to Elevance in participating this year, Mark, Vince and Nate. Welcome aboard as new IR for Elevance. So look forward to working with him and I think the room is clear for the next half an hour, but I appreciate everyone coming out.