On July 17, 2024, Elevance Health Inc (ELV, Financial) released its 8-K filing for the second quarter of 2024. Elevance Health remains one of the leading health insurers in the U.S., providing medical benefits to 47 million medical members as of December 2023. The company offers employer, individual, and government-sponsored coverage plans and is the largest single provider of Blue Cross Blue Shield branded coverage, operating as the licensee for the Blue Cross Blue Shield Association in 14 states.
Performance Overview
Elevance Health Inc (ELV, Financial) reported operating revenue of $43.2 billion for Q2 2024, slightly below the $43.4 billion reported in the same quarter last year. Despite this minor decline, the company achieved a significant increase in earnings per share (EPS), with diluted EPS rising 26% to $9.85 and adjusted diluted EPS increasing 12% to $10.12, surpassing the analyst estimate of $9.58.
Key Financial Achievements
Elevance Health's operating gain for the quarter was $2.8 billion, up from $2.6 billion in the previous year, reflecting a robust operating margin of 6.4%. The company declared a third-quarter dividend of $1.63 per share, reinforcing its commitment to returning value to shareholders.
Segment Performance
The Health Benefits segment reported operating revenue of $37.2 billion, a 2% decrease from the prior year, primarily due to Medicaid membership attrition. However, the segment maintained an operating gain of $2.1 billion, consistent with the previous year. The Carelon segment saw a 10% increase in operating revenue to $13.3 billion, driven by growth in CarelonRx product revenue and the acquisition of Paragon Healthcare.
| Segment | Operating Revenue (Q2 2024) | Operating Revenue (Q2 2023) | Operating Gain (Q2 2024) | Operating Gain (Q2 2023) |
|---|---|---|---|---|
| Health Benefits | $37.2 billion | $38.0 billion | $2.1 billion | $2.1 billion |
| Carelon | $13.3 billion | $12.1 billion | $0.7 billion | $0.7 billion |
Challenges and Strategic Initiatives
The decrease in operating revenue was attributed to attrition in Medicaid membership, which was partially offset by higher premium yields and growth in CarelonRx product revenue. The benefit expense ratio improved by 10 basis points to 86.3%, driven by premium rate adjustments and disciplined commercial underwriting. However, the operating expense ratio increased by 60 basis points to 11.7%, reflecting targeted investments and integration costs.
Cash Flow and Shareholder Returns
Operating cash flow year-to-date was $2.4 billion, a decrease of $6.0 billion year-over-year, influenced by timing-related items and lower Medicaid membership. The company repurchased 0.9 million shares for $462 million and paid a quarterly dividend of $1.63 per share, totaling $378 million in cash distribution. As of June 30, 2024, Elevance Health had $3.2 billion of Board-approved share repurchase authorization remaining.
Management Commentary
"Second quarter results reflect the power of our diversified business and thoughtful execution of our strategic initiatives during a dynamic time for our industry, as we remain steadfast in our purpose to improve the health of humanity. We have prudently maintained our full-year outlook and are confident in the earnings power of our Health Benefits and Carelon businesses, which underpin our long-term targets."
Conclusion
Elevance Health Inc (ELV, Financial) demonstrated resilience and strategic agility in Q2 2024, achieving notable financial milestones despite industry challenges. The company's diversified business model and strategic initiatives position it well for sustained growth and value creation for shareholders.
Explore the complete 8-K earnings release (here) from Elevance Health Inc for further details.
