Elevance Health's Q1 2025 Earnings Call: Key Contradictions in Medicare and Medicaid Strategies

Medicare Advantage enrollment and retention, Medicare Advantage cost trends and management, Medicaid cost trends acceleration, Medicaid margins and rate expectations, Medicare Advantage bid positioning and cost trends are the key contradictions discussed in Elevance Health's latest 2025Q1 earnings call.



Medicare Trends and Cost Management:
- Medicare costs are reported as elevated but manageable, with the first quarter aligning with the fourth quarter of the previous year and meeting expectations.
- The elevation in costs can be attributed to flu and respiratory illnesses during the quarter, which moderated by the end, and higher cost trends anticipated for the remainder of the year.

Elevated Medicaid Costs and Rate Alignment:
- The consolidated benefit expense ratio increased by 80 basis points year-over-year, mainly due to higher cost trends in the Medicaid business.
- This increase is partially offset by out-of-period Medicaid premium taxes, and efforts to align reimbursement with member acuity levels are underway through ongoing discussions with states.

Carelon Services Growth:
- Carelon Services reported over 60% growth in the first quarter, with significant external growth across various offerings, including post-acute and behavioral health contracts.
- This expansion is driven by the ability to deliver risk-based outcomes to complex populations and the strategic alignment of Carelon's capabilities with client needs.

Financial Performance and Guidance:
- GAAP diluted earnings per share was $9.61, and adjusted diluted earnings per share was $11.97, indicating a more than 10% year-over-year growth.
- The company reaffirmed its guidance for adjusted diluted earnings per share to be in the range of $34.15 to $34.85, with more than 60% of earnings expected in the first half of the year.