Elevance Health Inc Q2 2024 Earnings Call Summary

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

Question: Albert J. William Rice - UBS Investment Bank - Analyst : Hi, everybody. Maybe just to kick it off here. I know you laid out your old term growth objectives, and all I wonder if it was early date, you're prepared to call it a little more on any plans you have to accelerated growth in '25. I know the tip line .is a redeterminations and other things this year. What's your thought about ability to get back to that growth trajectory of existing taking long term in '25?

Question: Nathan Allen Rich - Goldman Sachs Group, Inc - Analyst : Thanks for the questions. I wanted to ask on Medicaid. I think about a quarter of your book is due to set rates in the back half of the year. Could you maybe just talk about what your guidance assumes for these rate updates and maybe anything you've seen the kind of so far you think about on the updates for July or October to the extent you have visibility. And I guess, Mark, on your comment on Medicaid utilization, have you seen in the level of care on a same member basis increase? Or is the issue really just the timing dynamic between where fee rates are and the level of acuity that you're seeing in your population?

Question: Lance Arthur Wilkes - Sanford C. Bernstein & Co., LLC - Analyst : Yes. Could you talk a little bit about CarelonRx in particularly interested in contracting approach and scope, for the CVS contract that underlies parts of that as you are insourcing things? ? And then just a quick update on the status of the integration and rollout to the Anthem members and other members of BioPlus Paragon and the status of Kroger. Thanks.

Question: Kevin Mark Fischbeck - BofA Securities - Analyst : Okay, great. Thanks. I guess in your prepared remarks, you mentioned that some of the results here were somewhat burdened by, I guess three things. One; your investments in Carelon for growth and then you had a below average margins and Medicaid and below-average margins in Medicare Advantage. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 17, 2024 / 12:30PM, ELV.N - Q2 2024 Elevance Health Inc Earnings Call Can you help size those things? How should we think about where those margins are today relative to kind of, where they should be from a target perspective? Thanks.

Question: Joshua Richard Raskin - Nephron Research LLC - Analyst : Hi, thanks. Good morning. What are your expectations for market level growth in MA for 2025? And I know it's early, but maybe any headwinds, tailwinds and how we should expect Elevance to grow market share relative to the overall market in MA for 2025?

Question: Lisa Christine Gill - JPMorgan Chase & Co - Analyst : Thanks very much and good morning. I wanted to stick with Medicare Advantage for a minute. Can you talk about what you saw specifically in the quarter around trend? And then Felicia maybe you can comment on what you included around trend assumption in your MA bids as we think about 2025.

Question: Justin Lake - Wolfe Research, LLC - Analyst : Thanks. Appreciate the question. First, can you size the Medicaid trend increase that you're seeing here? And then second, I just wanted to follow up on Kevin's question on government margins. Understand you don't want to give a specific absolute margin levels, but was wondering if you could share your expectation of the trajectory of margins in Medicare Advantage and Medicaid for 2025 versus 2024. Thanks.

Question: Erin Wright - Morgan Stanley - Analyst : Hey, thanks for taking my question. Can you talk a little bit about the investments you're making around Carelon are at and how you're thinking about the trend line in terms of scaling specialty? And are there are ample opportunities out there for you to like Kroger and Paragon out there?

Question: Michael Halloran - Robert W. Baird & Co., Inc. - Analyst : Thank you. Just wanted to ask about your long-term growth target in your deck. You now have a slight decline in health benefits, long-term growth care here. Apologies if I missed your comments, but could you provide what color what's driving that. Is that MA, Medicaid, presumably not Commercial? And then I also think you reaffirm long-term targets on Carelon. But over the past year since your Investor Day, CD&R partnership, BioPlus, acquisition of Paragon, pending Kroger. The business seemingly has taken a very positive step forward in its evolution. So would it be fair to say your prior target at Investor Day, most of those assumptions within your guide or long-term targets do not contemplate all these new developments? And specifically, Carelon Services revenue per consumer served, the 50% growth target by 2027 now appears like there's much, much higher runway. So, just overall, taking a step back, even though you're reaffirming your target? Is it true that now, today, there's significantly greater potential embedded earnings power within Carelon versus that of last year that can on the unlock for future years? Thank you.

Question: Andrew Mok - Barclays - Analyst : Hi, good morning. I wanted to follow up on some of the Medicaid comments. It sounds like you're optimistic about rates get better in the back half, but also acknowledge a temporary disconnect that persists and expect higher Medicaid utilization in the back half. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 17, 2024 / 12:30PM, ELV.N - Q2 2024 Elevance Health Inc Earnings Call So if we translate that into MLR expectations. Does guidance assume that Medicaid MLR peaks into 2Q, it gets better from here with potentially better rates? Or do you expect that to pick up some point in the back half of the year? Thanks.

Question: Ryan Langston - TD Cowen - Analyst : Hi, good morning. Just a quick one for me. Prior year development was a bit more favorable than we expected. Can you maybe give us a sense on if that's just mostly from the fourth quarter? And if so, any kind of a particular pockets of utilization you'd call out as maybe coming in better than expected? Thanks.

Question: Stephen C. Baxter - Wells Fargo Securities LLC - Analyst : Hi, thanks very much around the come back to their Medicaid utilization comments. I think you are making in response to an earlier question of us to expand a little bit on that. I can you comment perhaps on how much of the pressures geographically isolated and some of your markets versus maybe more broad based? I think you're speaking to you also have some utilization of care from people that were expecting to lose coverage. Would you be expecting that dynamic to slow a little bit as redeterminations end or is that potentially offset by rejoined our dynamics are factors like that? Thank you.

Question: Scott J. Fidel - Stephens Inc. - Analyst : Hi, thanks. Good morning. I was hoping you could drill a bit more into the $4.3 billion of timing items that impacted operating cash flow. and Just wanted to see whether you expect all those to reverse in the back half of the year end and whether you're comfortable reaffirming your full year? CFFO, targeted at least $8.1 billion on and if not, where you expect job operating cash flow to land for the year. Thanks. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 17, 2024 / 12:30PM, ELV.N - Q2 2024 Elevance Health Inc Earnings Call

Question: Sarah Elizabeth James - Cantor Fitzgerald & Co. - Analyst : Thank you. So in the prepared remarks, you guys mentioned a significant win with Blue Cross Blue Shield partner. I was wondering if you can help us size your pipeline there and give us any clarity on how penetrated you are in to that market. How many of your Blues plans do you currently have contracts with? And what's the opportunity look like to expand this?

Question: George Robert Hill - Deutsche Bank AG - Analyst : Hey, good morning, guys. I appreciate you taking the question. I guess, Mark, I was just going to ask if you could bridge a little bit when we think about the 2027 OP margin targets in the MCO segments. So like how you think about the sources of the margin expansion there. And I'd be interested in particular if you would talk about what your expectations are around the extreme subsidies, nuclear to the exchange business.

Question: Benjamin Whitman Mayo - Leerink Partners LLC - Analyst : Hi, thanks. Just quickly on mid-year renewals, just remind us how much of the commercial risk book renews in the second half of this year, just how you're thinking about retention, membership ability to take the required price action that you need? And just as a clarification, is it fair that commercial is performing better than our expectations on margin with government worse, at least the first off? I just wanted to make sure are appropriately got this. Thanks.

Question: David Howard Windley - Jefferies LLC - Analyst : Thanks for taking my question. I believe you have a cost savings plan targeting around $750 million. That's maybe a relatively nearer term initiative. I'm wondering if you could describe your progress against that. And then also, should we think about the benefits of those savings dropping through? Or are you mostly reinvesting those savings and some of your growth initiatives? Thank you. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 17, 2024 / 12:30PM, ELV.N - Q2 2024 Elevance Health Inc Earnings Call

Question: Ann Kathleen Hynes - Mizuho Securities USA LLC - Analyst : Hi, good morning. And I just want to focus on specialty. I know that Elevance with the acquisitions are in-sourcing was specialty not only on the dispensing side, but also the distribution side. So I'm just I'm curious about your strategy longer term do you think there is more opportunity for specialty on the distribution side. And if you think there is any therapeutic area and you're focused on? Thanks.

Question: Benjamin Hendrix - RBC Capital Markets - Analyst : Hi, thank you very much. I just wanted a quick follow-up on for Felicia's comments on MA bids for next year. I realize it's too early to talk about growth, but I think we've I think earlier in the year, you had talked about long-term MA growth focus toward Carelon markets. And I just wanted to see if you could provide any color on how your bids contemplate your geographic footprint evolving and also your density, towards Carelon markets in 2025? Thanks.