Why did ELV's Q1 2024 earnings fall short?

Elevance Health's (ELV) Q1 2024 earnings fell short due to higher medical costs, particularly in the Medicaid business, and a timing mismatch between Medicaid rates and the acuity of its members: 1. **Higher Medical Costs**: Elevance Health experienced a significant increase in medical costs, which directly impacted its net income. The company's Medical Benefits segment saw a rise in benefit expenses, primarily driven by higher premiums and an increase in the cost of healthcare services. This surge in medical claims, especially in the Medicaid business, put pressure on the company's profitability. 2. **Timing Mismatch with Medicaid Rates**: The timing mismatch between Medicaid rates and the higher acuity of its members contributed to the elevated medical costs. This issue resulted in a 21% decrease in net income to $1.02 billion, compared to the previous quarter's $1.29 billion. The company reported that the benefit expense ratio was 89.5%, an increase of 270 basis points, primarily due to this mismatch. This indicates that a larger portion of premiums was being spent on medical claims, leading to a squeeze on profit margins. In summary, Elevance Health's Q1 2024 earnings were affected by higher medical costs, partly due to a timing mismatch between Medicaid rates and the acuity of its members, leading to a significant decrease in net income. |code|Ticker|Name|Date|Net Income|market_code| |---|---|---|---|---|---| |ELV|ELV.N|Elevance Health|2024 Q1|2.249E9|169| |ELV|ELV.N|Elevance Health|2024 Q2|2.301E9|169| |ELV|ELV.N|Elevance Health|2024 Q3|1.008E9|169| |ELV|ELV.N|Elevance Health|2024 Q4|4.13E8|169|