Elevance Health 2024 earnings hit $6 billion despite rising costs

Elevance Health reported nearly $6 billion in 2024 earnings, including $418 million in the fourth quarter, as the health insurer worked to overcome rising medical spending by patients in its Medicaid plans.

Elevance, which operates Blue Cross and Blue Shield health plans in 14 states, as well as government-subsidized benefits for the poor and Medicare Advantage plans for seniors, has struggled like other health insurers to control costs amid an influx of patients that require medical treatment. . Health insurers are seeing an increase in claims filed by patient executives, which they say is driven in part by pent-up demand for deferred medical care during the Covid-19 pandemic. In Elevance’s case, the company is experiencing an influx of sick Medicaid patients.

Elevance’s benefit expense ratio, which is the percentage of premium income that goes toward medical costs, rose dramatically. The health insurer’s benefit expense ratio was “92.4 percent in the fourth quarter, an increase of 320 basis points compared to the year-ago period, and 88.5 percent for the full year, an increase of 150 basis points year over year.” ,” the company said. in an earnings report released on Thursday.

Those rising costs helped fourth-quarter net income halve to $418 million, or $1.81 a share, compared with $856 million, or $3.63 a share. For the full year 2024, net income was largely flat at $5.98 billion, or $25.68 per share, compared to $5.987 billion, or $25.22 per share, in 2023. Total income rose 6.6% to $45.4 billion in fourth quarter and rose 3.3% to $177 billion for all of last year.

“As part of our commitment to elevating holistic health and advancing health beyond healthcare, we deliver value to the members and care providers we serve by providing care that is simple, affordable and accessible,” said Elevance’s chief executive officer. Health, Gail Boudreaux in an accompanying statement. earnings ratio. “Our fourth quarter results show tangible progress in improving our operations in response to the dynamic environment facing the industry. As we look to 2025, we remain committed to our goal of simplifying the healthcare experience, deepening Carelon’s impact and deploying innovative care models, positioning us to achieve sustainable growth over the long term. “

Elevance Health ended the year with fewer health plan members primarily from a decline in Medicaid clients.

The end of the US Public Health Emergency in May 2023 after three years of the COVID-19 pandemic has affected health insurers who have a significant business administering Medicaid coverage for states, which carry out so-called “Medicaid redeterminations”. . Medicaid redetermination, also described as Medicaid renewal or Medicaid recertification, is essentially when people are asked to show that they are eligible for such coverage.

Elevance’s medical membership decreased 2%, or 1.1 million, to 45.7 million as of December 31, 2024, “driven by declines in our Medicaid business, partially offset by growth in Group fee-based health plan membership.” Employers and the Affordable Care Act”.

“As part of our commitment to elevating holistic health and advancing health beyond healthcare, we deliver value to the members and care providers we serve by providing care that is simple, affordable and accessible,” said Elevance’s chief executive officer. Health, Gail Boudreaux in an accompanying statement. earnings ratio. “Our fourth quarter results show tangible progress in improving our operations in response to the dynamic environment facing the industry. As we look to 2025, we remain committed to our goal of simplifying the healthcare experience, deepening Carelon’s impact and deploying innovative care models, positioning us to achieve sustainable growth over the long term. “

To be sure, the company’s Carelon business, which includes medical care providers and the CarelonRx pharmacy benefits management business, reported a 19 percent increase in operating income to $14.7 billion in the fourth quarter of 2024.

“Operating income was $53.9 billion in 2024, an increase of $5.9 billion, or 12 percent,” the company told Carelon. “Increases for the quarter and year were driven by the launch and growth of risk-based capabilities at Carelon Services and acquisitions completed in 2024.”