Elevance shares tumble on earnings miss, reduced full-year forecast

Elevance Health Inc. on Thursday morning reported third-quarter net income of $1.01 billion, down 22% from the same quarter a year ago, as total medical membership fell by 1.5 million and the company paid out more in claims.

Elevance’s shares tumbled about 12% in premarket trading Thursday morning to $437.00 by 7:40 a.m..

The Indianapolis-based health insurer reported profit of $4.36 a share. Adjusted for one-time events, profits were $8.37 a share.

That missed Wall Street’s expectation by a wide margin. The average estimate of 17 analysts was $9.70 a share, according to Zacks Investment Research.

The company said it expects full-year earnings to be $33 a share, down from $37.20 projected in the second quarter.

“We remain confident in the long-term earnings potential of our diverse businesses as we navigate a dynamic operating environment and unprecedented challenges in the Medicaid business,” CEO Gail K. Boudreaux said in written remarks. “We expect Medicaid rates will align with the needs of our members in time and are taking proactive actions to enhance operational efficiencies that will ensure we emerge from this period even stronger.”

The company, formerly known as Anthem Inc., posted revenue of $45.1 billion, up 5.3%, beating Wall Street expectations. But expenses climbed to $43.7 billion, up 6.2%, eating into profit.

Elevance said medical membership totaled about 45.8 million as of Sept. 30, a decrease of about 3% from the same quarter in 2023, driven by attrition in its Medicaid business, associated with eligibility redeterminations and footprint adjustments in certain Medicaid states.

The company’s benefit expense ratio was 89.5%, an increase of 270 basis points, driven primarily by greater need for medical care by its Medicaid members.

The losses were partially offset by growth in employer group fee-based and Affordable Care Act health plan membership.