01—Abstract
Summary
Summary of the 8-K filed April 22, 2025. Cited figures are marked; the original filing is the authoritative source.
Elevance Health (ELV) reported first-quarter 2025 results with operating revenue of $48.8 billiona, up 15.4% year over year, driven by higher Health Benefits premium yields, acquisitions, Medicare Advantage and ACA membership growth, and CarelonRx product revenue.
Adjusted operating gain rose 4.1% to $3.3 billionb, but the adjusted operating margin contracted to 6.7% from 7.4%, as the benefit expense ratio rose 80 basis points to 86.4% on higher Medicaid medical cost trend. GAAP diluted EPS was $9.61, roughly flat versus $9.59 a year earlier, while adjusted diluted EPS rose 10.5% to $11.97. Net losses on financial instruments of $464 million weighed on GAAP results.
Cash generation was weaker. Operating cash flow fell to $1.0 billionc from $2.0 billion, reflecting timing-related working capital items, and the company returned $1.3 billion to shareholders through $880 million of buybacks (2.2 million shares at about $395.78) and $386 million of dividends. About $8.4 billion of repurchase authorization remained at quarter end.
Management reaffirmed full-year 2025 adjusted diluted EPS guidance of $34.15 to $34.85d, while GAAP EPS guidance of $28.30 to $29.00 implies a reconciliation of about $5.85 per share in adjustments, mainly amortization of intangibles, transaction costs, and net losses on financial instruments. Segment performance was mixed. Health Benefits revenue grew 11% to $41.4 billion, but its operating gain fell 3.1% to $2.2 billion and its margin dropped to 5.4% from 6.1%, pressured by Medicaid cost trend, even as Medicaid membership declined 5% year over year.
Carelon was the stronger contributor, with revenue up 38% to $16.7 billion and operating gain up 34% to $1.1 billion, aided by acquisitions in home health and pharmacy and growth in CarelonRx product revenue. Total medical membership of 45.8 million was roughly flat, with Medicare Advantage up 11.8% offsetting Medicaid attrition.
02—Key points
Key Highlights
- Operating revenue of $48.8 billion, up 15.4% year over year, driven by premium yield increases, acquisitions, and Medicare Advantage and ACA growth.
- Adjusted diluted EPS of $11.97, up 10.5% from $10.83; GAAP diluted EPS of $9.61 versus $9.59 in the prior-year quarter.
- Benefit expense ratio rose 80 basis points to 86.4% on higher Medicaid medical cost trend, partially offset by out-of-period premium taxes; Health Benefits operating margin fell to 5.4% from 6.1%.
- Carelon segment revenue rose 38% to $16.7 billion and operating gain rose 34% to $1.1 billion, led by home health and pharmacy acquisitions and CarelonRx growth.
- Full-year 2025 adjusted EPS guidance of $34.15 to $34.85 was reaffirmed; GAAP EPS guidance is $28.30 to $29.00.
- Operating cash flow fell to $1.0 billion from $2.0 billion on working capital timing; parent company cash and investments were about $1.4 billion.
- Returned $1.3 billion to shareholders ($880 million of buybacks and $386 million of dividends); $8.4 billion of repurchase authorization remains and the quarterly dividend is $1.71 per share.
03—Questions
Frequently Asked Questions
Did Elevance Health grow earnings in the first quarter of 2025?
Adjusted operating gain grew 4.1% to $3.3 billion and adjusted diluted EPS grew 10.5% to $11.97. GAAP diluted EPS was essentially flat at $9.61 versus $9.59, because of $464 million in net losses on financial instruments and amortization of intangibles, which are excluded from adjusted results.
Why did margins decline despite higher revenue?
The benefit expense ratio rose 80 basis points to 86.4%, mainly due to higher Medicaid medical cost trend. Adjusted operating margin fell to 6.7% from 7.4%. Operating expense leverage, with the operating expense ratio improving 70 basis points to 10.9%, partly offset the medical cost pressure.
Is the full-year 2025 outlook changing?
No. Management reaffirmed full-year 2025 adjusted diluted EPS guidance of $34.15 to $34.85. The GAAP EPS guidance range of $28.30 to $29.00 reflects projected adjustments of about $5.85 per share, including roughly $2.98 of intangible amortization and $3.21 of net losses on financial instruments.
How is the company returning capital to shareholders and how much cash flow supports it?
In the quarter, Elevance repurchased 2.2 million shares for $880 million and paid $386 million in dividends, totaling $1.3 billion. Operating cash flow was $1.0 billion, down from $2.0 billion, so the payout exceeded operating cash flow in the period. About $8.4 billion of buyback authorization remains, and the Q2 2025 dividend is $1.71 per share.
What is driving growth and the mix shift across segments?
Growth came from Medicare Advantage membership (up 11.8%), ACA individual membership (up 14.2%), premium yield increases, acquisitions, and CarelonRx and Carelon Services, where revenue rose 25.4% and 63.0%, respectively. Medicaid membership fell 5.0%, and the Health Benefits operating gain declined 3.1%, so earnings growth is increasingly reliant on Carelon.
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