Elevance Health (ELV) Q3 Earnings Beat on Carelon Unit Strength
Shares of the health insurer Elevance Health, Inc. ELV gained 0.8% on Oct 18 after reporting third-quarter 2023 results. The positive response can be attributed to an earnings beat and a hiked profit guidance for 2023. Management believed the strength of the Health Benefits and Carelon businesses contributed to the quarterly results. However, an escalating benefit expense level may have acted as a partial offset.
Synopsis of Q3 Earnings
ELV reported adjusted net income of $8.99 per share, which outpaced the Zacks Consensus Estimate by 6.4%. The bottom line improved 20.5% year over year.
Operating revenues amounted to $42.5 billion, which advanced 7.2% year over year in the quarter under review. Yet, the top line fell short of the consensus mark by a whisker.
Elevance Health, Inc. Price, Consensus and EPS Surprise
Elevance Health, Inc. price-consensus-eps-surprise-chart | Elevance Health, Inc. Quote
Growing Premiums: A Vital Top-Line Contributor
Premiums, the most significant contributor to a health insurer’s top line, were $35.3 billion for Elevance Health in the third quarter. The figure rose 4.6% year over year and beat our estimate of $34.3 billion. Premiums benefited from higher membership growth within ELV’s BlueCard, Affordable Care Act health plan and Medicare Advantage businesses.
Its medical membership inched up 0.1% year over year to around 47.3 million as of Sep 30, 2023. The reported figure fell short of our estimate of 47.4 million.
Segmental Contribution
The Health Benefits and Carelon businesses exhibited impressive performance in the third quarter of 2023, attributable to higher premium revenues and strong pharmacy product revenues. The Health Benefits unit’s operating revenues grew 4.8% year over year to $36.7 billion, which surpassed our estimate of $35.6 billion. Operating revenues of the Carelon segment amounted to $11.9 billion, which improved 14.3% year over year and outpaced our estimate of $10.8 billion. The unit’s operating gain of $650 million inched up 1.4% year over year.
Solid Growth in Cash Reserves
Elevance Health is backed with a solid financial standing, substantiated by expanding cash reserves. As of Sep 30, 2023, its cash and cash equivalents of $10.9 billion surged 47.8% from the figure at 2022 end. The financial strength imparts the health insurer the ability to pursue uninterrupted business investments and engage in returning capital to shareholders.
A Promising Forward Outlook
A commendable performance observed during the first nine months of 2023 prompted management to raise its adjusted profit guidance for this year. Adjusted net income is projected to be more than $33.00 per share, higher from the prior guidance of adjusted net income of more than $32.85 per share and the 2022 reported figure of $29.07 per share.
Management expects 2024 adjusted earnings per share (EPS) to be around $37. Additionally, the segmental strength makes management optimistic about achieving its long-term compound annual growth rate target of adjusted EPS of 12-15%.
Zacks Rank
Elevance Health currently carries a Zacks Rank #3 (Hold).
Upcoming Medical Sector Releases
Ligand Pharmaceuticals Incorporated LGND has an Earnings ESP of +2.94% and sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LGND’s third-quarter 2023 earnings is 68 cents per share, which indicates a surge of 65.9% from the year-ago quarter’s reported figure. The consensus mark for Ligand Pharmaceuticals’ third-quarter earnings has moved 7.9% north in the past 30 days.
DENTSPLY SIRONA Inc. XRAY has an Earnings ESP of +1.85% and a Zacks Rank #2 (Buy) at present. The Zacks Consensus Estimate for XRAY’s third-quarter 2023 earnings is 48 cents per share, implying 17.1% growth from the year-ago quarter’s reported figure.
DENTSPLY SIRONA’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 12.51%.
BioMarin Pharmaceutical Inc. BMRN has an Earnings ESP of +11.09% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for BMRN’s third-quarter 2023 earnings is 46 cents per share, suggesting 2.2% growth from the year-ago quarter’s reported figure.
BioMarin Pharmaceutical’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 17.09%.
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