Elevance Health experienced a modest profit increase in 2023 but performance declined for the fourth quarter, the insurance company announced Wednesday.
Notably, Elevance Health reported that costs and utilization were within its projections, in contrast to what rivals UnitedHealth Group and Humana recently disclosed about unexpected increases that dinged their finances last year.
Related: UnitedHealth reports cost pressures from utilization spike
During the fourth quarter, Elevance Health net income fell 5.2% to $831 million as revenue grew 6.8 % to $42.65 billion and expenses rose 7.1% to $41.65 billion. For the full year, net income eked up 1.7 % to $6 billion, revenue improved 9.4% to $171.34 billion and expenses increased 9.8% to $163.63 billion.
"We are positioned to deliver another year of strong earnings growth in line with our long-term target in 2024 while continuing to invest in our future," Elevance Health President and CEO Gail Boudreaux said during a call with investment analysts Wednesday.
Here are five highlights from Elevance Health's 2023 earnings:
1. Medical loss ratio
Elevance Health recorded an 89.2% medical loss ratio in the fourth quarter and an 87% MLR for the year, both improvements from 2022. The company, which operates Blue Cross Blue Shield plans in 14 states, covered nearly 47 million people as of Dec. 31, down 570,000 from a year before.
2. Utilization and costs
Medical costs in the Medicare segment “continue to develop as we expected,” Boudreaux said.
Elevance Health’s relatively stable medical loss ratio for the fourth quarter reflects its smaller Medicare Advantage presence relative to UnitedHealth Group and Humana, Scott Fidel, managing director at the investment bank Stephens, wrote in a note to investors Wednesday. Elevance Health had 2 million Medicare Advantage members last year, about one-quarter as many as industry leader UnitedHealth Group and one-third as many as Humana.
"We remain confident that our Medicare Advantage bids for 2024 and our pricing commercial do reflect appropriate projections for utilization and medical cost trends," Chief Financial Officer Mark Kaye said.
3. Medicare Advantage enrollment
Elevance Health characterized the recently concluded open enrollment period as strong, but Boudreaux acknowledged membership is expected to be “roughly flat” for the 2024 plan year.
4. Commercial membership
Membership in Elevance Health's individual and employer-sponsored plans rose 1.4% to 31.8 million, and the company expects to add 750,000 new policyholders this year.
5. Medicaid redeterminations
States unwinding the Medicaid continuous coverage policy created early in the COVID-19 pandemic contributed to Elevance Health's Medicaid membership declining by about 1 million to 47 million last year.
Consistent with the broader trend, the vast majority of Elevance Health Medicaid enrollees lost coverage for procedural reasons—such as states being unable to reach them—not because the authorities determined they no longer qualified for the program. About 30% of its former Medicaid members switched to other Elevance Health insurance products, Boudreaux said.
Elevance Health shares closed at $473.67 on the New York Stock Exchange Wednesday, a 0.3% increase from the prior day.