01—Abstract
Summary
Summary of the 10-Q filed April 22, 2025. Cited figures are marked; the original filing is the authoritative source.
Elevance Health, Inc. (ELV) reported its first-quarter 2025 financial results, demonstrating robust top-line growth driven by premium rate increases and membership gains in key segments like Medicare Advantage and Individual ACA.
Total operating revenue increased by 15.4% year-over-year to $48.8 billiona, while net income saw a slight decrease of 2.9% to $2.18 billion. This dip in net income was influenced by increased benefit expenses reflecting higher medical cost trends, and a rise in net losses on financial instruments.
Despite these pressures, the company maintained its competitive position with a solid operating gain and a slight increase in diluted earnings per share to $9.61b. The company continues to execute its strategic growth initiatives, including key acquisitions in the long-term care and home and community-based services sectors, reinforcing its diversified healthcare offerings.
02—Key points
Key Highlights
- Total operating revenue grew 15.4% to $48.8 billion, driven by premium rate increases and membership growth in Medicare Advantage and Individual ACA.
- Net income decreased by 2.9% to $2.18 billion, primarily due to increased benefit expenses from higher medical cost trends and higher net losses on financial instruments.
- Diluted earnings per share (EPS) increased slightly to $9.61, up 0.2% year-over-year, supported by a reduction in diluted shares outstanding.
- The Health Benefits segment experienced a 3.1% decrease in operating gain, primarily due to Medicaid rates being insufficient to cover medical cost trends.
- CarelonRx and Carelon Services segments showed strong operating gain growth of 15.1% and 69.3%, respectively, driven by increased prescription volume and strategic acquisitions.
- Medical membership saw a slight overall decline of 0.5%, mainly from Medicaid attrition, but was partially offset by growth in Medicare Advantage and Individual ACA.
- The company completed several strategic acquisitions, including Centers Plan for Healthy Living LLC and CareBridge, enhancing its long-term care and home-based services capabilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Elevance Health, Inc. kept $0.04.
- Revenue$48.89B100.0%
- Cost of revenue−$4.98B10.2%
- Gross profit$43.91B89.8%
- Operating costs−$40.74B83.3%
- Operating income$3.17B6.5%
- Interest, other & tax−$986.0M2.0%
- Net income$2.18B4.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed April 22, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $48.89B$42.58B | +14.8% |
| Cost of Revenue | $4.98B$3.83B | +30.3% |
| Gross Profit | $43.91B$38.75B | +13.3% |
| SG&A Expenses | $5.30B$4.89B | +8.5% |
| Operating Income | $3.17B$3.02B | +5.1% |
| Net Income | $2.18B$2.25B | −2.9% |
| EPS (Basic) | $9.64$9.65 | −0.1% |
| EPS (Diluted) | $9.61$9.59 | +0.2% |
| Shares Outstanding (Basic) | 226.40M232.70M | −2.7% |
| Shares Outstanding (Diluted) | 227.20M234.20M | −3.0% |
05—Questions
Frequently Asked Questions
What drove the year-over-year increase in total operating revenue?
The substantial 15.4% increase in total operating revenue to $48.8 billion was primarily driven by premium rate increases in the Health Benefits segment to account for medical cost trends, contributions from recent acquisitions, growth in Medicare Advantage and Individual ACA membership, and an increase in product revenue from CarelonRx. These positive factors were partially offset by membership attrition in the Medicaid business.
Why did net income decrease despite revenue growth?
Net income saw a 2.9% decrease to $2.18 billion primarily due to an increase in benefit expenses, reflecting higher medical cost trends across all lines of business. Additionally, net losses on financial instruments increased, and the Health Benefits segment experienced a lower operating gain due to Medicaid rates not fully covering medical cost trends. These factors outweighed improvements in other segments and increased net investment income.
How is the company managing its medical cost trends?
Elevance Health employs various medical management programs to mitigate medical cost trends, including care and condition management, program integrity, specialty pharmacy management, and utilization management. They also utilize benefit design changes. However, factors such as changes in service utilization, unit costs, regulatory changes, and the emergence of new high-cost treatments continue to influence these trends.
What is the impact of the recent acquisitions on the company's strategy?
The recent acquisitions, such as Centers Plan for Healthy Living LLC and CareBridge, are strategically aligned with growing the Health Benefits and Carelon Services segments. These acquisitions enhance the company's capabilities in serving Medicaid and dual-eligible populations, expanding its long-term care and home and community-based services offerings, and reinforcing its commitment to providing integrated healthcare solutions.
06—Continue