The paragraph is an introductory segment of the Elevance Health First Quarter 2025 Earnings Conference Call. The operator announces the call protocol and mentions that the call is being recorded. Nathan Rich, the Vice President of Investor Relations, introduces the company's leadership team present on the call, including Gail Boudreaux, the President and CEO, and other key executives like the CFO and various business unit presidents. Gail Boudreaux will start with a review of strategic initiatives and first quarter performance, followed by Mark Kaye's detailed financial results and outlook. A Q&A session will follow their remarks. Non-GAAP measures will be referenced, with reconciliations available on their website, and the call will include forward-looking statements subject to risks and uncertainties affecting potential outcomes.

In the second paragraph of the article, Gail Boudreaux discusses Elevance Health's initiatives in early 2025 to enhance healthcare experiences by making them simpler, more affordable, and human-centric. The organization has invested in transforming care delivery, supporting over 6 million members with patient advocacy solutions and achieving a 95% satisfaction rate. Their digital platform, HealthOS, integrates clinical data for 88,000 providers, facilitating decision-making and reducing administrative processes by eliminating prior authorizations for certain procedures. These efforts aim to reduce complexity, rebuild trust, and provide connected care, addressing physical, behavioral, and social health to drive better outcomes and reduce costs.

The paragraph discusses the expansion of a value-based oncology care model to Medicare Advantage, following previous success in reducing admissions and improving treatment adherence. This expansion is part of broader efforts by Carelon Services to extend its reach, including new post-acute and behavioral health contracts and acquiring CareBridge to enhance home and community-based services. These initiatives aim to provide in-home support, reduce ER visits, and close care gaps, achieving significant monthly savings. The paragraph also highlights positive first quarter results and progress in Medicaid rate alignments, emphasizing a focus on operational efficiency and strategic long-term goals.

The paragraph discusses the strategic initiatives of Elevance Health, highlighting their partnership with states to enhance care delivery through an integrated long-term care model. Their acquisition of Centers Plan for Health Living aims to improve care in New York. The company reports steady performance and strong retention in Medicare Advantage, which supports both margin sustainability and better care coordination. In the commercial sector, their integrated services are gaining traction among employers, anticipating growth by 2026. Despite lower effectuation rates in Individual ACA, they expect solid growth in 2025, supported by expansion into three states to enhance ACA and Medicaid coverage. Carelon, a strategic growth driver, has expanded partnerships with external payers for various care solutions, emphasizing its effective operating model and ability to deliver cost-reducing, simplified care outcomes.

The paragraph highlights Elevance Health's consistent execution of its strategy and its recognition for fostering a strong, value-driven culture. The company was named to prestigious lists such as Fortune's 100 Best Companies to Work For and America's Most Innovative Companies, reflecting its commitment to whole-person health and impactful outcomes. Mark Kaye, the CFO, then provides a financial update, noting strong performance at the start of 2025 with increased earnings per share and medical membership growth, particularly in Medicare Advantage, despite anticipating a moderation in ACA membership in the second quarter.

In the quarter, the company's operating revenue increased by over 15% to $48.8 billion, largely due to higher premium yields in the Health Benefits segment and growth in Medicare Advantage and Individual ACA memberships. Recent acquisitions in pharmacy services and home health also contributed to revenue gains, aligning with the company's strategy to deliver more connected care. The consolidated benefit expense ratio rose to 86.4% due to higher costs in Medicaid, although it was somewhat mitigated by out-of-period Medicaid premium taxes and favorable Medicare Part D seasonality. Utilization in the Health Benefits segment remains high but is aligned with yearly expectations. The company's prudent approach to high-cost trends in Medicare Advantage is also noted. The adjusted operating expense ratio improved to 10.7% due to disciplined expense management. Health Benefits saw a slight decline in operating gain to $2.2 billion because of higher Medicaid costs, while Carelon’s operating gain rose by 34% to $1.1 billion, driven by pharmacy volume growth and enhanced risk-based capabilities.

The company exceeded its expectations for net investment income in the first quarter, attributing the outperformance to factors included in their full-year guidance, although occurring sooner than expected. They maintain their 2025 net investment income projections. The debt-to-capital ratio at the quarter's end was around 41%, allowing for strategic investments. Days in claims payable stood at 44 days, factoring in an acquisition, with a slight sequential increase indicating a prudent reserving approach. Operating cash flow was $1 billion, impacted by timing-related issues anticipated to reverse, keeping their $8 billion cash flow outlook unchanged. The company repurchased 2.2 million shares for $880 million, affirming confidence in share value. They are reiterating their adjusted diluted earnings per share guidance of $34.15 to $34.85, expecting over 60% of it in the year's first half. Subsequently, the operator opens the floor for questions, with A.J. Rice from UBS asking about Medicare Advantage issues.

The paragraph features a discussion with Mark Kaye and Gail Boudreaux about trends in group Medicare Advantage (MA) and the potential impact of the Inflation Reduction Act (IRA). Kaye highlights that Medicare costs have remained elevated but are manageable, aligned with expectations for the first quarter. He notes that flu and respiratory illnesses led to slightly higher utilizations, but these moderated by the end of the quarter. They are closely monitoring data to identify any emerging patterns quickly. Overall, both Kaye and Boudreaux express confidence in their understanding of the trends and cost trajectory as expected. The Operator then introduces the next question from Lance Wilkes from Bernstein.

In the paragraph, Lance Wilkes asks about the growth of Carelon services, specifically regarding cross-sales into the Anthem book of business, sales into Blues, and the progress of specialty pharmacy integration into CarelonRx. Gail Boudreaux acknowledges the strong growth and defers to Pete Haytaian for details. Pete Haytaian highlights the over 60% growth in Carelon services for the quarter, with expectations to maintain at least 50% growth for the year. He discusses balanced internal and external growth, noting expansion in oncology, Medicare, Medicaid, and behavioral health services. He also expresses confidence in continued growth for Carelon services in 2025.

The paragraph discusses the diverse offerings and growth strategy of Carelon services, a part of Elevance Health's portfolio. It highlights the acquisition and integration of businesses like BioPlus and Kroger Specialty Pharmacy into their SpecialtyRx business. The company is managing these changes thoughtfully, focusing on patient and provider experiences while also expanding their infusion businesses. In an earnings call segment, Stephen Baxter from Wells Fargo asks about the exchanges' performance and how it affects membership and profitability. Mark Kaye responds, expressing satisfaction with growth in the individual ACA market and anticipates continued growth in 2025, likely matching or exceeding the market level.

The paragraph discusses the company's membership trends and financial performance, focusing on the effectuation rates, which are below initial expectations due to a surge in passive renewals from Medicaid transitions. Membership attrition is expected in the early part of Q2 2025, but the ACA membership is projected to stabilize afterward. The commercial risk-based membership is predicted to close the year between 4.9 to 5 million members. Financial guidance for 2025 remains unchanged despite these adjustments. In response to Andrew Mok's inquiry, Mark Kaye explains that better-than-expected Medicare Part D medical cost ratio results were driven by factors like the IRA and an unexpectedly large premium tax in one Medicaid state, which affected both the benefit-expense and operating expense ratios but did not significantly impact overall operating earnings.

In the paragraph, Mark Kaye addresses the impact of changes in the Part D Inflation Reduction Act on medical cost trends and the medical loss ratio (MLR) in the first quarter. He explains that starting in 2025, two main factors will affect Part D: the lower $2,000 member maximum out-of-pocket cap and enhanced CMS direct subsidies. These changes shift more cost burden onto health plans earlier in the year but offset some previous burdens with subsidies, thereby altering the usual seasonality. The result is stronger financial performance in the early quarters and lower margins later in the year. This pattern is currently being observed in pricing and forecasting.

The paragraph discusses Medicare-related financial strategies and expectations within a company. It highlights that Part D seasonality now shows a more pronounced progression as more members reach the catastrophic phase of coverage over the year. The company is focused on managing Medicare Advantage membership by targeting growth in specific populations, products, and regions. Gail Boudreaux expresses satisfaction with the growth strategy and its alignment with prior expectations. Ann Hynes, from Mizuho Securities, asks about Medicare trends and 2024 growth assumptions. Mark Kaye responds that current trends align with expectations, emphasizing positive positioning and membership composition in Medicare.

The paragraph is a part of a financial discussion where Ryan Langston from TD Cowen asks about the impact of flu and respiratory trends on the first quarter's Medical Loss Ratio (MLR). Mark Kaye responds that they had anticipated flu trends to follow pre-COVID norms, which are higher than during the pandemic. Despite this, first-quarter flu costs exceeded expectations slightly, but the severity was as expected. He notes that the flu impact on benefit expansion ratios was between 15 and 20 basis points. Gail Boudreaux then invites the next question, and Erin Wright from Morgan Stanley asks about the earnings per share (EPS) cadence and changes in Medicaid state rate dynamics, along with respiratory seasonal effects.

In this section of the article, Mark Kaye discusses the company's favorable results in the first quarter, highlighting key factors that contributed to their performance. These factors include a benefit from the workday calendar that advanced earnings into the first quarter and design changes in the Part D benefit that shifted their earnings schedule for Medicare drug plans to more closely align with their medical benefits business. There's also a front-loaded earnings contribution driven by a shift in membership mix, with lower Medicaid membership and higher ACA growth. Gail Boudreaux reassures that despite the elevated seasonality, the company remains comfortable with their guidance and plans to continue monitoring the situation. Ben Hendrix, from RBC Capital Markets, then asks about the company's visibility into the remainder of the year concerning new Medicare Advantage (MA) members and trend detection.

The paragraph discusses Elevance Health's strategy for engaging new members, as explained by Felicia Norwood, who leads the Government Business sector. The focus is on early engagement, encouraging annual wellness visits, expediting care, and conducting health risk assessments to ensure appropriate care coordination. Elevance Health aims to maintain quality and ensure members have a positive experience by getting them to see their physicians early and establishing care plans promptly. Additionally, Gail Boudreaux highlights the company's focus on HMO products and its aggressive move towards value-based care, which involves increased physician engagement and a higher upside-downside risk percentage.

The paragraph discusses the Medicare strategy of a healthcare organization, emphasizing the importance of member engagement and accurate clinical condition capture. The executive express confidence in their strategic execution related to growth, geography, and product types, which aligns with their expectations. They aim to continue managing patient care effectively, ensuring alignment with value-based providers. When questioned about their Medicare Advantage (MA) bid strategy and the role of Carelon services, the executives highlight their goal of maintaining lifelong members by being a trusted partner and delivering value through MA, especially when compared to Fee for Service. They also indicate that their 2026 bid strategy is still in the early stages of development.

The paragraph discusses the company's strategic approach to enhancing stability and sustainability in their Medicare Advantage program. Felicia and Pete emphasize a focus on targeted, disciplined strategies to address areas of complexity and high cost, especially for individuals with complex conditions. They highlight their value-based care strategy, particularly through Mosaic, and initiatives like post-acute care via CareBridge, in-home care management, and palliative care. Additionally, they mention specialized focus areas on the pharmacy side, such as SpecialtyRx. The goal is to engage government programs efficiently, especially Medicare, by addressing high-cost and complex healthcare challenges, contributing to the company's broader strategy.

The paragraph involves a discussion about RAAF scores and their impact on healthcare benefits and risk adjustment. Sarah asks how the portion of new members with existing RAAF scores compares to historical averages at Elevance and how these scores typically change from the first to the second year of membership. Mark Kaye responds by emphasizing the importance of risk adjustment in aligning member benefits with healthcare needs, noting changes to reimbursement and the risk model over recent years. He highlights the company's focus on accurate documentation to better support clinical needs and maintain a stable marketplace for seniors. Gail Boudreaux adds that the members' expectations align with the company's goals. The discussion then shifts to Justin Lake from Wolfe Research, who asks about Medicaid MLR margin trends and guidance on Medicaid margins, but his specific question is not included in the summary.

The paragraph is a part of a conference call discussion involving executives from a healthcare-related company, where they address questions about financial metrics and expectations. Mark Kaye notes that the benefit expense ratio improved significantly from the fourth quarter of the previous year to the first quarter of the current year, mainly due to workday dynamics and Medicare Part D seasonality changes. He also mentions that while Medicaid trends remain heightened, they are decelerating as predicted, aligning with expectations for stabilization and improvement in Medicaid margins throughout the year. Joanna Gajuk from Bank of America Securities follows up with a question about Medicaid rate outlooks, specifically regarding July rate updates. Felicia Norwood responds by saying the Medicaid team is actively engaging with state partners to ensure rates are actuarially sound, with January and April renewals meeting expectations toward covering cost trends.

The paragraph discusses the impact of the V28 risk adjustment model on Medicare Advantage plans. It highlights that the model changes affect how plan payments are determined based on members' clinical and demographic profiles, particularly in documenting and reporting chronic conditions. These changes were anticipated and have been incorporated into the planning and pricing strategies for 2025. Additionally, earlier in the paragraph, there is reference to a large portion of membership renewals occurring in July, with ongoing discussions with state partners to align renewal rates with the trend observed in the Medicaid book. This includes a commitment to providing regular updates to state partners to ensure alignment with population acuity.

In the paragraph, Gail Boudreaux and Mark Kaye discuss their strategy for managing their Medicare Advantage (MA) business, emphasizing a disciplined approach to benefit design and care coordination. They highlight that operational execution and a diversified portfolio position them well for navigating transitions. Whit Mayo from Leerink Partners asks about trends in care activity or utilization patterns for Group MA compared to Individual MA. Mark Kaye responds that there are no significant changes in cost trends for Group MA, which comprises about 15% of their total MA enrollment. He notes that their MA growth includes a significant contribution from one large Group MA account, with strong retention and a sustainable approach aligned with long-term margin objectives. Overall, utilization patterns are as expected, despite elevated trends early in the year.

In the paragraph, Mark Kaye and Gail Boudreaux of Elevance Health discuss their confidence in managing Part D claims and Medicare Advantage (MA) membership for the year. Kaye highlights that they have achieved a balanced membership mix by focusing on benefit design, risk management, and pricing. They have not observed significant deviations in Part D utilization and assure that any potential increase would be offset by risk corridors, rebates, and contractual measures. Boudreaux reiterates their satisfaction with the year's start, their disciplined approach, and their commitment to making healthcare affordable and accessible.

The company expressed anticipation for updating progress in the future and thanked participants for joining the conference. A replay of the conference will be available until May 22nd, 2025, accessible via specific phone numbers for both domestic and international callers. The conference concluded with gratitude to participants and Verizon Conferencing.

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