Elevance Health (ELV) Bolsters CarelonRx With Paragon Buyout
Elevance Health, Inc. ELV recently announced that it has completed the acquisition of Paragon Healthcare, Inc., the agreement for which was made public in the first week of this year. The strategic move is aimed at boosting its capabilities in multi-site infusion services and specialty pharmacy.
Earlier, Reuters reported that the acquisition would cost ELV more than $1 billion, according to an Axios report. The acquisition is expected to help the company offer affordable and convenient healthcare solutions to its members. The move is likely to enable ELV to offer patients with chronic and complex illnesses better access to specialty medications.
By integrating Paragon Healthcare into its CarelonRx pharmacy services unit, ELV is likely to lower costs of care and provide greater choices on patients’ infused medications. This will enhance its Carelon segment, which includes CarelonRx and Carelon Services. In the last reported quarter, Carelon’s operating revenues improved 14.1% year over year to $12.4 billion, thanks to the expansion of CarelonRx pharmacy product revenues. The company expects the CarelonRx operating margin to witness 40-60 bps growth in 2024.
However, ELV stated earlier that the acquisition is not expected to have a material impact on its 2024 adjusted profits. The infusion services from the acquiree are expected to complement ELV’s suite of pharmacy services. More such deals are expected in the future as the company plans to scale its Carelon business.
Paragon Healthcare’s extensive network of ambulatory infusion centers and home infusion pharmacies across eight states brings a wealth of experience in providing life-saving and life-giving therapies to more than 35,000 patients. ELV intends to further expand Paragon Healthcare’s geographical footprint and therapeutic coverage to ensure that patients have timely access to essential medications. This will increase its pharmacy members served and boost CarelonRx’s pharmacy product revenues.
Price Performance
Elevance Health’s shares have gained 10.5% in the past year compared with the 7.7% rise of the industry.
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Zacks Rank & Other Key Picks
Elevance Health currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader Medical space are Universal Health Services, Inc. UHS, The Cigna Group CI and Health Catalyst, Inc. HCAT, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Universal Health Services’ 2024 bottom line suggests 19.9% year-over-year growth. UHS has witnessed three upward estimate revisions over the past 30 days against one movement in the opposite direction. It beat earnings estimates in all the last four quarters, with an average surprise of 5.9%.
The Zacks Consensus Estimate for Cigna’s full-year 2024 earnings indicates a 13% year-over-year increase. CI beat earnings estimates in each of the past four quarters, with an average surprise of 2.9%. The consensus mark for revenues suggests 20.4% growth from the year-ago period.
The Zacks Consensus Estimate for Health Catalyst’s 2024 full-year earnings implies a 93.3% increase from the year-ago reported figure. HCAT beat earnings estimates in each of the last four quarters, with an average surprise of 247.9%. The consensus mark for its current-year revenues is pegged at $308 million, which indicates a 4.1% year-over-year increase.
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