Elevance Health Inc's forecast raise and strong quarterly profit on Wednesday failed to ease investor concerns over regulatory hits to the company's government-backed insurance business, sending its shares down over 4%.
Elevance's medical costs in the first quarter beat analysts' expectations, mainly due to a delay in paying out claims, but were in-line with estimates after discounting the delay, analysts said.
The company's growth and ability to manage costs is already under the scanner as the health insurance industry faces lower government payouts for 2024 in the Medicare Advantage business.
Similar worries sent larger rival UnitedHealth's shares down nearly 3% on Friday despite the health insurance industry bellwether beating estimates for first-quarter profit.
"We suspect Elevance shares are declining on near-term headwinds that may emerge related to Medicaid redeterminations later this year and Medicare Advantage primarily in 2024," Morningstar analyst Julie Utterback said.
Medicaid memberships are expected to be hit from the removal of pandemic-related relief measures, as several members who had signed up under those provisions for the government-aided plans become ineligible beginning April 1.
Elevance's benefit expense ratio, a measure of the share of premiums paid for medical services, was 85.8% in the first quarter, compared with analysts' expectations of 85.98%, according to Refinitiv.
On an adjusted basis, the company now expects annual profit of more than $32.70 per share, compared with its previous forecast of over $32.60 per share.
Excluding items, Elevance earned $9.46 per share, above estimates of $9.26 per share.
https://news.yahoo.com/elevance-health-raises-annual-profit-103624944.html
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