Elevance Health reported nearly $6 billion in profits in 2024, including $413 million in the fourth … [+]
Elevance Health reported nearly $6 billion in profits by 2024, including $418 million in the fourth quarter, as the health insurer worked to absorb rising medical costs for patients in its Medicaid plans.
Elevance, which operates Blue Cross and Blue Shield health plans in 14 states as well as government-subsidized Medicaid benefits for the poor and Medicare Advantage plans for seniors, like other health insurers has struggled to keep costs under control amid of an influx of patients seeking medical treatment. Health insurers are seeing an increase in the number of claims submitted by patients. Executives say this is partly caused by pent-up demand for medical care that has been postponed during the Covid-19 pandemic. In Elevance’s case, the company is experiencing an influx of sick patients insured by Medicaid.
Elevance’s expense ratio, the percentage of premium revenue that goes toward medical costs, has increased dramatically. The health insurer’s expense ratio was “92.4 percent in the fourth quarter, up 320 basis points from the prior-year period, and 88.5 percent for the full year, up 150 basis points year-over-year,” the company said . in the earnings report published on Thursday.
These rising costs effectively cut fourth-quarter net income in half to $418 million, or $1.81 per share, compared to $856 million, or $3.63 per 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 revenue rose 6.6% to $45.4 billion in the fourth quarter, rising 3.3% to $177. billion for the entire last year.
“As part of our commitment to elevate healthcare as a whole and advance health beyond healthcare, we deliver value to the members and caregivers we serve by ensuring simple, affordable and accessible care,” said Gail Boudreaux, CEO of Elevance Health, said in a statement accompanying the earnings report. “Our fourth quarter results demonstrate tangible progress in improving our operations in response to the dynamic environment facing the industry. As we look to 2025, we remain resolute in our purpose to simplify the healthcare experience, deepen Carelon’s impact and deploy innovative care models, enabling us to achieve sustainable growth over the long term.”
Elevance Health ended the year with fewer health plan members, largely due to a decline in Medicaid customers.
The end of the US public health emergency in May 2023, after three years of the COVID-19 pandemic, has impacted health insurers who have significant activity in managing Medicaid coverage for states, which are called ‘ Medicaid redeterminations.” Medicaid redetermination, also called Medicaid renewal or Medicaid recertification, is essentially when people are asked to demonstrate their eligibility for such coverage.
Elevance’s medical membership decreased 2%, or 1.1 million, to 45.7 million as of December 31, 2024, “driven by the attrition of our Medicaid business, partially offset by Employer Group membership growth at reimbursements and from Affordable Care Act health plans.”
“As part of our commitment to elevate healthcare as a whole and advance health beyond healthcare, we deliver value to the members and caregivers we serve by ensuring simple, affordable and accessible care,” said Gail Boudreaux, CEO of Elevance Health, said in a statement accompanying the earnings report. “Our fourth quarter results demonstrate tangible progress in improving our operations in response to the dynamic environment facing the industry. As we look to 2025, we remain resolute in our purpose to simplify the healthcare experience, deepen Carelon’s impact and deploy innovative care models, enabling us to achieve sustainable growth over the long term.”
In fairness, the company’s Carelon business, which also includes medical providers and pharmacy benefit management company CarelonRx, reported a 19 percent increase in operating revenues to $14.7 billion in the fourth quarter of 2024.
“Operating revenues were $53.9 billion in 2024, an increase of $5.9 billion, or 12 percent,” the company said of Carelon. “The increases for the quarter and full year were driven by the launch and growth of risk-based capabilities at Carelon Services and acquisitions completed in 2024.”