The paragraph introduces the Elevance Health fourth quarter earnings conference call and lists the company's management team who will be speaking. It also mentions that non-GAAP measures and forward-looking statements will be discussed. The CEO, Gail Boudreaux, will discuss the quarter and year, as well as the company's progress on strategic initiatives. The CFO, Mark Kaye, will discuss financial results and outlook. The company cautions listeners about potential risks and uncertainties.

In the fourth quarter, Elevance Health saw strong financial results, with GAAP diluted earnings per share of $3.63 and adjusted diluted earnings per share of $5.62. This marks the sixth consecutive year of meeting or exceeding their long-term growth targets. They have been executing their strategy to accelerate capabilities and services, invest in high-growth opportunities, and optimize their health benefits business. In 2023, they acquired Paragon Healthcare, expanding their capabilities for consumers with complex and chronic needs. They also launched new services, such as Carelon Insights and comprehensive Carelon Behavioral Health Management Services. Despite a dynamic operating environment, their health benefits business had another strong year.

The company's commercial business has seen improved performance and operating margins, thanks to initiatives to enhance the customer experience through AI support and automation. Their national accounts business has also seen strong retention and new client wins, while their individual business has driven profitable growth. The company is expecting even stronger membership growth in 2024, particularly in their Medicaid segment, despite ongoing re-determinations and un-enrollments for administrative reasons.

Despite facing challenges with re-enrollment, Elevance Health is making progress with nearly two-thirds of the process completed and 30% of un-enrolled members re-enrolled. They are addressing barriers to re-enrollment through a renewal campaign and are committed to supporting their members as a trusted health partner. Their Medicaid business is performing well and they will expand their community connected care model and launch a program to increase access to digital and virtual health tools for eligible Medicaid members. They have also made investments in Medicare to improve star quality ratings and drive sustainable growth in targeted markets.

The company's Medicare Advantage market has been highly competitive, leading to a flat membership in 2024 but improved earnings. The company has implemented a personalized customer service model for Medicare members, resulting in improved experiences and quality performance. The company is confident in its health benefits business and expects strong earnings growth in 2024. They are also focused on advancing health equity in the communities they serve.

Elevance Health has received recognition for its industry-leading approach, including receiving the Health Equity accreditation plus from the National Committee for Quality Assurance. They have also made progress in reducing the disparity in preterm birth rates between black and non-black communities. The company's CFO, Mark Kaye, is pleased to report strong results for the fourth quarter, with adjusted diluted earnings per share exceeding expectations. Elevance Health remains focused on serving its members and making a positive impact in the communities it serves.

Elevance Health has experienced strong growth since 2018, with a compound annual growth rate of nearly 16%. Their operating revenue exceeded $170 billion in 2023, driven by growth in their health benefits and Carelon businesses. The benefit expense ratio improved by 50 basis points in the fourth quarter and 60 basis points for the full year, thanks to premium rate adjustments. The adjusted operating expense ratio increased slightly due to investments in key areas. Operating cash flow was $8.1 billion, including state-based payments for 2024. The company also repurchased 5.8 million shares of common stock for $2.7 billion during the year.

The health benefits business saw a decrease in membership due to Medicaid eligibility redeterminations, but they are working on reenrollment efforts. They expect reenrollment to continue through 2024 and for growth in ACA exchange plans to increase. The company has provided guidance for adjusted diluted earnings per share for 2024, expecting at least 12% growth. They are focused on optimizing their health benefits business and investing in high-growth opportunities. The momentum in their commercial health benefits and Carelon businesses is offset by Medicaid membership challenges.

The company anticipates a decrease in total medical membership for 2024 due to changes in their footprint and ongoing eligibility redeterminations. However, commercial membership is expected to grow, driven by new business wins and strong client retention. Medicare Advantage membership is expected to remain flat due to intentional actions taken to improve product offerings. The company is confident in their outlook for utilization and medical cost trends. Operating revenue is expected to be flat to slightly up, and operating earnings are projected to grow by 9% with contributions from both health benefits and Carelon businesses.

The guidance metrics for the company do not include the impact of pending M&A. Earnings seasonality is expected to be consistent year-over-year with a slight increase in the first half of the year. The Board of Directors approved a 10.1% increase in the regular quarterly dividend. The company is committed to delivering strong results for shareholders. The company is looking forward to meeting financial targets in 2023. The company will have to consider strategies to offset the potential impact of Star ratings in 2025, such as increasing share repurchases or investing in Carelon.

In this paragraph, the speaker discusses their company's plans for the year 2025, specifically in regards to Medicare Advantage and Star ratings. They mention their strategic commitment to the long-term success of their business and their confidence in their bid for 2025. They also mention investments made in their Health Advocate model and potential growth in their health benefits business and Carelon segment. However, they do not give specific guidance for 2025 and state that it is too early to make predictions.

The company expects accelerated growth and increased revenue for Carelon due to new capabilities and cost efficiencies. They are confident in their ability to achieve long-term targets. When asked about the medical loss ratio (MLR) guidance for 2024, the company explains that while they are expecting margin improvement in Medicare Advantage (MA) and repositioning in commercial and Medicaid, they are also being cautious due to the dynamic operating environment for government businesses. As a result, they are guiding for a flat MLR of 87%, with a range of plus/minus 50 basis points.

The speaker is addressing a question about the growth of Medicare Advantage and mentions that there has been some competition in certain areas. They also mention that they have made disciplined decisions and feel good about their bids for the upcoming year. The leader of the government business then provides more details about their decisions and the market.

The company has exited certain underperforming markets in the mainland and reduced supplemental benefits in Puerto Rico in preparation for risk model revisions. This has resulted in a decline of 84,000 members in the mainland and an expected decline of 90,000 members in Puerto Rico. However, this will improve the company's benefit expense ratio and set a strong foundation for future growth. Despite encountering aggressive competition, the company expects to see high single-digit growth in net Medicare Advantage membership on the mainland. Overall, the company has made strategic decisions to position itself for long-term sustainable growth and expects to do well in its Blue markets.

The company is performing well in its Blue markets and is focused on balancing margin and membership growth. They expect to have flat membership in 2024. The company's Carelon division is experiencing significant margin expansion due to their strategy of focusing on high-cost areas and driving capitated risk. In 2023, they saw success with their post-acute care initiative, and in 2024, they plan to continue this trend with initiatives in DME and wound care.

The speaker discusses new offerings in whole health full risk opportunities, such as oncology and Medicaid with behavioral health. They mention significant initiatives and improvements in external growth, with notable wins with the Blues. The speaker is pleased with the trajectory of growth in Carelon. The speaker also addresses the Medicaid redetermination process and mentions expectations for normalization in 2023, but does not provide specific details. They also mention that the guidance for 2024 assumes a return to historical norms for margins in Medicaid.

The outlook for Medicaid membership reflects adjustments to the company's footprint and continued attrition due to redetermination. The company has adjusted its Medicaid retention assumption and believes that ACA will pick up more than initially expected while employer group coverage will gain less. The company's value-based care strategy has remained consistent and more than 60% of members are in value-based care. In Medicare, the percentage is even higher.

The company has multiple-year arrangements with its value-based providers and is always looking for ways to ensure a win-win situation for both parties. They have focused on simplifying the process of sharing data and have seen improvements in outcomes. The company's strategy is to focus on high-cost and complex areas of specialty, such as oncology and mental illness, where they can use their technology and clinical expertise to drive trend. They do not necessarily need to own the providers, but they have assets in Carelon that can enable care providers and have launched new products in various areas.

The speaker discusses Carelon's care provider enablement platforms and their expected contribution to the company's revenue in the long-term. They also mention a focus on value-based care and specialized care, particularly in the Medicare Advantage market. The speaker then addresses a question about Medicare cost trend and the company's view on the market and potential for growth and margin in Elevance within that market.

The reported benefit expense ratio for the company was favorable and in line with their initial full year 2023 guidance range. There were pockets of high utilization in Medicare related to orthopedics and respiratory elements, but these were planned for. The company remains confident in their Medicare Advantage bids for 2024 and pricing for commercial plans. The market for Medicare Advantage is seen as a good long-term market with strong incentives for delivering better outcomes and care. Seniors value stability in their benefits and the company is committed to being in the market for the long-term.

The speaker discusses the decisions made in the current market and how they will benefit the company in the long-term. They have intentionally exited certain programs and markets and have repositioned themselves in Puerto Rico. Despite a hypercompetitive market, the company outperformed in their Blue markets and believes they can continue to grow profitably. They also mention their focus on whole health and continuation of coverage for seniors. The next question asked about the progression towards margin targets in 2025.

The margins in CarelonRx are expected to improve by 40 to 60 basis points in 2024. This is driven by underwriting discipline and pricing actions in commercial, Medicare margin expansion, and operating expense leverage. In 2023, there were significant investments made in BioPlus and Advanced Home Delivery, which put pressure on margins.

The company is expecting an improvement in margin in 2024 due to the launch of BioPlus and Advanced Home Delivery. They are also anticipating growth in commercial risk enrollment, with a focus on both group and individual plans. The individual growth may come from Medicaid, and the acuity of those transitioning into the exchanges is expected to be in line with the current market. The company is optimistic about their ACA business and has seen an expansion in market share and growth in their 14 geographies.

The company has seen significant growth due to Medicaid re-determination and expects this trend to continue in 2024. They have a steady approach to attract these members with the right economics and network strategies. The conversations with states about Medicaid rates and acuity are ongoing and the company is comfortable with the actuarial soundness of the rates. The risk profile of members in the individual exchange marketplace aligns with expectations.

In the paragraph, the operator introduces a question from Ben Hendrix about the margin performance of Carelon services. Peter Haytaian, the representative from the company, responds by stating that they are pleased with the operating performance of Carelon and that they have seen a 70 basis point improvement. He also mentions that the company is launching new at-risk product offerings which will initially have a lower margin but will improve over time. Gail Boudreaux, another representative, adds that they remain confident in their long-term guidance of mid to upper single-digit operating margin. The operator then moves on to the next question from Justin Lake.

The speaker, Mark Kaye, responds to questions about the company's positive prior year development in the fourth quarter, stating that it was largely offset by premium rebates and reserve reestablishment. He also addresses the company's reserves and comfort level, as well as their long-term target margin ranges for commercial, Medicaid, and Medicare Advantage. The next question is about enrollment.

The speaker discusses the decline in risk enrollment for 2024, attributing it to both commercial risk and expected Medicaid redeterminations. They also mention the success of commercial repricing and higher retention rates in January renewals. The next question is about the revenue growth of CarelonRx, which is expected to be lower in 2024 compared to 2023. The speaker mentions the BioPlus acquisition as a contributing factor, but does not fully explain the decrease in growth expectations.

The speaker discusses the growth of around 18.6% in 2023, which exceeded initial guidance and was primarily driven by the BioPlus acquisition and drug mix trends. They express excitement for the momentum in the business and mention strategic levers such as Specialty Pharmacy, Advanced Home Delivery, and new product launches. The speaker also notes strong retention and success in attracting mid-sized accounts. The final question from George Hill is about MA margins.

Mark Kaye, CEO of Elevance Health, was asked about the company's margin expansion in the MA segment. He declined to provide specific guidance but stated that the company is comfortable with their overall guidance for 2024 of 25 to 50 basis points. He also mentioned that the management team is focused on maintaining a balance between growth and returning capital to stockholders through a 50/50 allocation of free cash flow towards M&A or organic reinvestment and returning capital through share repurchases or dividends. CEO Gail Boudreaux closed the call by expressing confidence in the company's strategy and diverse set of businesses for the future.

The operator thanks the participants for their interest in Elevance Health and announces that a recording of the conference will be available for replay until February 23, 2024. The replay system can be accessed by dialing a specific number and the conference is now concluded. Participants are thanked for using Verizon conferencing and can now disconnect.

This summary was generated with AI and may contain some inaccuracies.