By Dean Seal

Elevance Health topped profit and revenue expectations for the fourth quarter and is guiding for more gains from premiums and products in the year ahead.

The health insurer formerly known as Anthem said Thursday that it is targeting earnings of $30.40 to $31.10 a share for 2025, up from $25.68 last year. Stripping out certain amortizations and other one-time items, adjusted earnings are projected to hit $34.15 to $34.85 a share. Analysts polled by FactSet are forecasting $34.52 a share.

Premium revenue is expected to rise in the low double-digit percentage range, while product revenue rises in the low single-digit range and service fees come in flat year-over-year. Overall, operating revenue should climb in the high-single to low-double-digit range.

Shares jumped 4.5% to $408.41 in premarket trading.

For the fourth quarter, Elevance posted a profit of $418 million, or $1.81 a share, down from $856 million, or $3.63 a share, a year ago.

Stripping out one-time items, adjusted earnings were $3.84 a share. Analysts polled by FactSet had been expecting $3.81 a share.

Operating revenue rose 6% to $45 billion, above analyst projections for $44.92 billion, according to FactSet.

The top-line gain was driven by higher premium yields in Elevance's health benefits business, acquisitions completed during the year and growth in product revenue from pharmacy benefits manager CarelonRx.

Medical membership totaled 45.7 million at year-end, down 2% year-over-year, as the number of people eligible for its Medicaid plans decreased, partially offset by a rise in membership for its employer group fee-based plans and Affordable Care Act health plan.

The company's benefit-expense ratio, a measure of medical costs as a percentage of premium revenue, increased by 320 basis points to 92.4%, due to higher Medicaid costs.

Investors have been worried about the ramification of higher healthcare costs on insurers' bottom lines. Last quarter, Elevance and several competitors fell short of Wall Street's earnings estimates as costs climbed.

Elevance's fourth-quarter report comes less than two months after the killing of UnitedHealthcare CEO Brian Thompson, which spurred widespread public venting about the practices of health insurers.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

January 23, 2025 06:37 ET (11:37 GMT)

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