MW Elevance Health earnings boost health-insurance stocks after upbeat outlook

By Ciara Linnane

UnitedHealth, Humana and Centene all rally premarket

Elevance Health Inc.'s stock jumped 5% in premarket trade Thursday and boosted other health insurance stocks, after the company delivered better-than-expected earnings and forecast growth for 2025, easing investor concerns after a big miss in the third quarter.

The Indianapolis-based company (ELV) had net income of $413 million, or $1.81 a share, for the fourth quarter, down from $831 million, or $3.63 a share, in the year-earlier period. Adjusted for one-time items, the company had EPS of $3.84, ahead of the $3.81 FactSet consensus.

Revenue rose 6% to $44.989 billion from $42.454 billion a year ago, just ahead of the $44.923 billion FactSet consensus.

"Our fourth quarter results demonstrate tangible progress in improving our operations in response to the dynamic environment facing the industry," Chief Executive Gail K. Boudreaux said in prepared remarks.

"As we look to 2025, we remain resolute in our goal to simplify the healthcare experience, deepen the impact of Carelon, and deploy innovative care models, positioning us to achieve sustainable growth over the long run."

Carelon is the company's healthcare services unit.

The numbers boosted the stocks of other health insurers with rival Centene Corp. $(CNC)$ up 1.7%, while UnitedHealth Group Inc. $(UNH)$ was up 1.4% and Molina Healthcare Inc. $(MOH.AU)$ was up 1.7%. Humana Inc. $(HUM.UK)$ was up 2% and Cigna Inc. $(CI)$ was up 2.4%. Elevance was the second-biggest gainer of the S&P 500 in the premarket.

The stocks have been under pressure from the Medicaid "unwinding" process, which has seen more than 25 million people removed from Medicaid rolls since early 2023, when states were allowed to resume disenrolling people who were no longer eligible for the program, according to health-policy research nonprofit KFF. A pandemic-era law previously gave states extra federal funding in exchange for keeping people enrolled in Medicaid.

On Thursday, Elevance said medical membership fell by 1.1 million, or 2% to about 45.7 million as of Dec. 31.

Elevance said its benefit-expense ratio, also known as a medical-loss ratio-a measure of how much in premiums is spent on medical treatment versus administrative costs, where a lower number is better-rose 320 basis points to 92.4%. The increase was mostly due to higher Medicaid medical cost trends. The number was just below the FactSet consensus of 92.5%.

Net investment income fell 0.4% to $527 million in the quarter.

Elevance is now expecting 2025 EPS to range from $30.40 to $31.10 and for adjusted EPS to range from $34.15 to $34.85. The FactSet consensus is for EPS of $34.52.

Revenue is expected to climb in the high-single to low-double-digits from $175.2 billion in 2024. The current FactSet consensus implies growth of 8%.

The company is expecting its benefit-expense ratio to rise 50 basis points to 89.1%. It expects investment income of $1.875 billion, down from $2.051 billion in 2024.

The stock has fallen 17% in the last 12 months, while the S&P 500 SPX has gained 25%.

-Ciara Linnane

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January 23, 2025 07:13 ET (12:13 GMT)

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