Elevance Health (ELV) Q2 2024 earnings summary

Executive summary

• Adjusted diluted EPS for Q2 2024 was $10.12, up 12% year-over-year, with net income rising 24% to $2.3 billion and operating revenue at $43.2 billion, reflecting Medicaid attrition but strong Carelon and commercial growth.

• Full-year adjusted EPS guidance reaffirmed at at least $37.20, with strategic investments in CarelonRx, infrastructure, and recent acquisitions supporting long-term expansion.

• Membership ended at 45.8 million, down 4.6% year-over-year, mainly due to Medicaid attrition, partially offset by commercial and ACA growth.

• Results reflect strong execution, margin recovery in commercial, and resilience across business lines despite Medicaid headwinds.

• Completed sale of life and disability businesses for a $240 million gain and acquired Paragon Healthcare to expand CarelonRx services.

Financial highlights

• Q2 2024 operating revenue was $43.2 billion, down 0.4% year-over-year, with total revenues reported as $43.9 billion, and operating gain up 6% to $2.8 billion.

• Adjusted diluted EPS was $10.12 (up 12%), GAAP diluted EPS was $9.85 (up 26%), and net income was $2.3 billion (up 24%).

• Operating margin improved to 6.6% from 6.2% year-over-year; benefit expense ratio improved by 10 bps to 86.3%; operating expense ratio increased by 50-60 bps to 11.5%-11.7%.

• Net investment income rose 22% to $508 million.

• Operating cash flow year-to-date was $2.4 billion, down $6 billion year-over-year, mainly due to timing items and Medicaid reserve runoff.

Outlook and guidance

• Full-year adjusted diluted EPS guidance reaffirmed at at least $37.20, with GAAP net income per diluted share expected to be at least $34.05.

• Targeting at least 12% average annual adjusted EPS growth and operating margin expansion to 6.5%-7% by 2027.

• Expecting second half revenue growth from premiums and CarelonRx, with Medicaid utilization and acuity expected to increase.

• Full-year benefit expense ratio expected in the upper half of initial guidance (87%-87.5%) due to Medicaid dynamics.

• Ongoing business efficiency program expected to be substantially complete by Q3 2024.