Earnings

Despite Medicaid pressures, Elevance reports strong Q1 earnings

By Doug Bailey

Elevance Health Inc. (NYSE: ELV) reported strong first quarter 2025 earnings Tuesday, with operating revenue rising 15.4% year-over-year to $48.8 billion. The Indianapolis-based healthcare giant also posted a 4.1% gain in adjusted operating income to $3.3 billion, despite margin pressure in its Medicaid segment.

Adjusted diluted earnings per share came in at $11.97 for the quarter, and the company reaffirmed its full-year 2025 guidance range of $34.15 to $34.85.

CEO Gail Boudreaux said Elevance continued to make headway on its strategy to reimagine the healthcare experience through technology and whole-health integration. “Across our businesses, we're staying focused on what we can control, delivering operational results, engaging proactively with partners, and advancing our long-term strategy,” Boudreaux said in a Tuesday morning call with analysts.

Carelon Delivers Major Growth, Offsetting Medicaid Drag

Elevance’s Carelon segment was a standout in the quarter, with operating revenue jumping 38% to $16.7 billion, driven by acquisitions in home health and pharmacy services and strong growth at CarelonRx. Adjusted operating gain rose to $1.1 billion from $0.9 billion a year ago, reflecting both scale and improved performance in Carelon Health.

By contrast, the Health Benefits segment—which includes Medicare, Medicaid, and commercial plans—saw operating gain fall slightly to $2.2 billion from $2.3 billion. A higher medical cost trend in Medicaid impacted results, though that was partially offset by growth in Medicare Advantage and Individual ACA enrollment.

“We remain confident in the long-term outlook for Medicare Advantage,” Boudreaux said. “Stronger retention not only improves member satisfaction, it's associated with better care coordination, fewer inpatient stays, and lower overall Medicare spending.”

Quarterly Snapshot:

- Operating Revenue: $48.8 billion (up 15.4% year-over-year)
- Adjusted Operating Gain: $3.3 billion (up 4.1%)
- Adjusted Operating Margin: 6.7% (down from 7.4% in 1Q 2024)
- Adjusted Diluted EPS: $11.97
- FY 2025 EPS Guidance: Reaffirmed at $34.15–$34.85
- Capital Returned to Shareholders: $1.3 billion in Q1 2025
-Stock Price Movement: Stock is down 21% for the year, to $416 per share, down 2% in mid-day trading Tuesday

Management Perspective:

Elevance’s leadership emphasized the value of diversification across its enterprise. “Through Carelon and our broader enterprise, we’re delivering on our strategy to be a lifetime trusted health partner,” Boudreaux said, underscoring efforts to control costs and improve outcomes via digital and value-based care.

The company also noted improvements in expense ratios, with the adjusted operating expense ratio improving 60 basis points year-over-year to 10.7%. This was largely due to revenue leverage and continued cost discipline.

By The Numbers:

- Cash Flow from Operations: $1.0 billion (down $1.0 billion YOY due to timing)
- Share Repurchases: 2.2 million shares for $880 million
- Dividend Paid: $1.71/share ($386 million distributed)
- Total Membership: 45.8 million (up 99,000 since year-end 2024)
- Benefit Expense Ratio: 86.4% (up 80 bps YOY)
- Days in Claims Payable: 44.0 days (up 0.5 days sequentially)

Health Benefits Picture:

- Revenue: $41.4 billion (up 11%)
- Adjusted Operating Gain: $2.2 billion (down slightly)
- Medicaid Drag: Medical cost pressures weighed on segment margin (5.4%, down from 6.2%)

Carelon Picture:

- Revenue: $16.7 billion (up 38%)
- Adjusted Operating Gain: $1.1 billion (up 22%)
- Growth Drivers: Home health, CarelonRx, value-based service expansion