Elevance Health Inc Q4 2024 Earnings Call Transcript

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

Question: AJ Rice - UBS Investment Bank - Analyst : Hi everybody. Thanks for the comments. Maybe -- I know it's not your biggest business, but there certainly has been a lot of discussion in the financial community about your Medicare Advantage business enrollment looks like you're targeting sort of mid 7% to 8% or so for the year. Is that fully reflective of which you've got the full view of open enrollment at this point? So you think from here, it's just age-ins largely? And what are you seeing as you drill down in that demographic of the types of members you've attracted in the open enrollment? And then just also -- I think the comment on the third quarter was that the Medicare Advantage margin in '25 might step up modestly but still be below your long-term targets for Medicare Advantage. Is that still your thinking?

Question: Lance Wilkes - Bernstein & Co. LLC - Analyst : Great. Thanks so much. Could you talk a little bit about what you were seeing in terms of utilization? In particular, perhaps you could talk to what you're seeing in trends by product like MA and commercial. And how you're thinking about that in terms of your assumptions for '25? And if you can give any commentary on categories of medical cost trend as far as like inpatient, outpatient, et cetera. That would be great. Thanks a lot.

Question: Stephen Baxter - Wells Fargo Securities LLC - Analyst : Hi, thanks. Just to follow up on that, you mentioned that Medicaid is an influencer of the higher year-over-year MLR that you're expecting in 2025. I think your previous expectations you discussed last quarter were for something more stable than that. And it sounds like potentially the conversation around 1/1 rates has been pretty constructive. I love to just get a better sense of what explicitly you're embedding for Medicaid full-year MLR change in this guidance. Thank you.

Question: Lisa Gill - JPMorgan Chase & Co - Analyst : Good morning. I just really want to understand two things. First would be the comments around the Part D redesign. Mark, can you talk about the specific impact to MLR? And then secondly, just understanding the performance in CarelonRx going into 2025, you talked about mid-teens growth. Can you talk about how much of that is organic? The investments that you are making when we think about the margin improvement that you are talking about for 2025?

Question: Andrew Mok - Barclays Capital, Inc. - Analyst : Hi, good morning. I think there's still some confusion around your Medicare Advantage membership growth for 2025. So I was hoping you could to clear some of this up and tell us what your actual AEP growth is, how much of that accounts for the full year outlook. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / 1:30PM, ELV.N - Q4 2024 Elevance Health Inc Earnings Call

Question: Ryan Langston - TD Securities - Analyst : Hi, thanks. I know you stepped back from the Blue Cross of Louisiana acquisition a little while ago, but I believe there's still a potential to revisit that deal. I guess is that true? And then just maybe more broadly on the environment. You closed Kroger Specialty, closed Paragon, you closed CareBridge. Maybe just remind us of your priority going forward into '25 and beyond on potential acquisition targets? Thank you.

Question: Justin Lake - Wolfe Research, LLC - Analyst : Thanks. Good morning. A question on the healthcare benefits business. First, hoping you can talk to your expected seasonality for 2025, including how Q1 should look versus the full year. And then on the health benefits 2025 op margin guidance, looks like it's down year-over-year. You've talked to Medicaid being flat, Medicare being flat. Is that coming in commercial? And maybe you can talk about what's driving that and the magnitude of it on the commercial side. Thanks.

Question: Joshua Raskin - Nephron Research LLC - Analyst : Hi, thanks. Good morning. Just within the 2025 guidance, can you speak to your expectations for commercial trend and what you priced for? And I just want to make sure I understand, are you still expecting margin improvement in commercial? I thought that was a previous expectation. And then just on the MA side, I know the CMS data got rescinded, but it looked like your growth was already above -- slightly above the midpoint of full year guidance. I heard not a lot of growth the rest of the year. Could you just help us with the actions you've taken on the distribution side and maybe why you've taken some of those actions, and if that's what's slowing the growth?

Question: David Windley - Jefferies LLC - Analyst : Thanks for taking my question. Good morning. Question on pricing, kind of a two-parter. The guidance in commercial for ASO revenue or fee revenue flat. Your membership, I think you're expecting up, is there no pricing there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / 1:30PM, ELV.N - Q4 2024 Elevance Health Inc Earnings Call And in Medicaid, I hear you saying kind of stable MLR, stable margin, as we move into the early part of 2025. I think 50% of the book reprices on Jan 1. And so I'm just curious about the benefit or lack thereof from that price to actually move you into an improving pattern in your Medicaid margins. So pricing on Medicaid and ASO. Thanks.

Question: Joanna Gajuk - BofA Securities, Inc - Analyst : Hi, good morning. Thanks so much for taking the question. So I was looking at your slides. And the slide that when you talk about the long-term CAGR targets, I noticed that you no longer seem to be targeting to get to your margin 6.5% - 7% by 2027. So is that the way to read it? And also, I guess, if that's the case, when should we expect that to be achieved? And what would need to happen really for the margins to get to that target Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / 1:30PM, ELV.N - Q4 2024 Elevance Health Inc Earnings Call

Question: Erin Wright - Morgan Stanley & Co - Analyst : Great. Thanks. A follow-up on Medicare Advantage. I wanted to hear your thoughts on the advanced rate notice and where it can go from here in terms of incorporating a catch-up period in the final rate notice. And just bigger picture in light of that and the broader political environment seems to be more supportive of MA, but how are you thinking about regulatory implications, I guess, across the rest of your business and mainly in Medicaid, where I guess there's a lot of questions and maybe there's no answer. But wanted to hear your initial thoughts. Thanks.

Question: Gabie Ingoglia - Cantor Fitzgerald - Analyst : This is Gabie on for the line for Sarah. Could you just speak a little bit more to the commercial cost trends you saw in the fourth quarter and overall for 2024, maybe more by product inpatient, outpatient? And then just reiterate what's assumed in guidance for how commercial cost trends evolve in '25?

Question: George Hill - Deutsche Bank AG - Analyst : Yeah. Good morning guys and thanks for taking the questions. Kind of two parts here on the exchange business. I guess, number one is do you guys have an expectation for what happens to the enhanced subsidies as part of the upcoming political cycle? And then part two, Mark, is kind of a nuanced one. What percent of your exchange members have actually paid the January premiums relative to what you guys have experienced last year given that the government turned the income verification back on kind of expecting a change in like when people actually show up and pay the premiums there? Any color would be helpful.

Question: Scott Fidel - Stephens Inc. - Analyst : Hi, thanks. Good morning. I wanted to just get a clarification and then a question. Just the clarification would be appreciate Mark's comments on the operating margin dynamics for Carelon by '27. I was hoping maybe, Mark, if you could also just elaborate on health benefits and whether those margin targets are still intact for '27 or have evolved? And then also I was just curious if you guys can give us the breakdown in the commercial risk enrollment growth guidance between commercial group and the exchanges. Thanks.

Question: Michael Ha - Baird - Analyst : I wanted to revisit AJ's question and ask it in a bit different way. So regarding your '25 MA growth guide, healthy growth in line with expectations, averting the worst case high-growth scenarios that investors had. With that said, for the investors who may still push back and say, okay, Elevance only achieved this healthy growth level through aggressive plan suppression tactics, and that the company still mispriced the business. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / 1:30PM, ELV.N - Q4 2024 Elevance Health Inc Earnings Call Curious to hear your response to that. I know you're still very confident. But given this context, I'm trying to get a better sense of the level of conviction and confidence on MA margins this year. Thank you.

Question: Whitman Mayo - Leerink Partners LLC - Analyst : Thanks. I just wanted to get a quick update on the performance of your Puerto Rico MA business. How did that perform last year versus your targets? And what are you thinking about growth in margins this year and whether or not that's driving any contribution to the views on stabilization overall MA margins. Thanks.