Medicaid drags Elevance Health as it misses on profit in Q3

 Elevance Health fell short of Wall Street analysts' predictions, posting $1 billion in profit amid rising medical costs.

In its earnings report released Thursday morning, Elevance said that its medical loss ratio was 89.5% in the third quarter, "driven primarily by the timing mismatch between Medicaid rates and the higher acuity of our members." Higher-than-anticipated medical costs have battered multiple major insurers over the past several quarters.

By comparison, Elevance Health reported an MLR of 86.8% in the third quarter of 2023.

UnitedHealth Group, which released its own third-quarter report earlier this week and which tends to serve as a bellwether for the industry, also reported an elevated MLR at 85.2%, compared to 82.3% in the prior-year quarter.

“We remain confident in the long-term earnings potential of our diverse businesses as we navigate a dynamic operating environment and unprecedented challenges in the Medicaid business," CEO Gail Boudreaux said in the press release. "We expect Medicaid rates will align with the needs of our members in time, and are taking proactive actions to enhance operational efficiencies that will ensure we emerge from this period even stronger.”

While profits year over year slid by 21.2% given the $1.3 billion third-quarter 2023 tally, Elevance Health is trending ahead of 2023 on profit through the first three quarters, according to the report. Through nine months, it has posted $5.6 billion in profit, up from $5.1 billion.

Elevance Health did beat the Street on revenue in the quarter, according to Zacks Investment research, reporting $44.7 billion. Through the first three quarters, it's brought in $130.2 billion in revenue, up slightly from its $127.8 billion haul at this point last year.

On the back of these results, Elevance is cutting its guidance for the year from at least $37.20 in earnings per share to $33, according to the report.

Revenues at its health benefits segment were $38.3 billion in the quarter, growing by about $1.5 billion compared to the prior-year quarter. Elevance Health said the increase was driven in large part by higher premium yields, though membership attrition in Medicaid did partially offset these results.

It boasted 45.8 million members in the quarter, a down by 1.5 million, again driven by Medicaid.

Meanwhile, revenue at its Carelon division was up 15% in the third quarter, reaching $13.8 billion. It reported $12 billion in revenue for the prior-year quarter, Elevance said.

It saw growth in product revenue at CarelonRx, according to the report, as well as greater uptake of risk-based services in its Carelon Services segment.

https://www.fiercehealthcare.com/payers/medicaid-drags-elevance-health-it-misses-profit-q3