Elevance Health's first-quarter losses in its Medicaid and Medicare businesses were partially offset by gains in its commercial plans.
The company’s membership dropped 3.9% to 46.2 million enrollees, compared with 48.1 million in the same period last year, executives told financial analysts during its first-quarter earnings call Thursday. Medicaid redeterminations and changes to its geographic footprint drove the membership decline.
Related: Elevance Health, CD&R to form primary care company
The healthcare company operates Blue Cross Blue Shield plans in 14 states.
The health insurance industry is facing a wave of operational and financial pressures. Companies have been reporting higher medical costs and utilization since last June, which has negatively affected Medicare Advantage businesses. The industry is also now a year into Medicaid redeterminations after halting the process during the COVID-19 public health emergency.
Elevance’s individual health exchange membership in the first quarter jumped 32.3% year-over-year to 1.2 million enrollees. Its employer group membership also rose 0.8% to nearly 24.3 million members.
Executives said the Medicaid business performed in line with expectations. Medicaid membership contracted 21.5% to 9.3 million individuals. The company estimates 90% of their members have completed the redetermination process.
“The majority of members who have lost coverage for administrative reasons have not yet returned. We're seeing a gradual increase in Medicaid re-enrollment and anticipate continued uptick in rejoinder rates as more Medicaid beneficiaries recognize their need to re-enroll,” said President and CEO Gail Boudreaux. She said the company continues reaching out to members to ensure those who lost coverage for procedural reasons are re-enrolled and to assist others with transitioning to its exchange plans.
Elevance also reported a 1.8% decline, to 2 million members, in its Medicare Advantage plans.
Boudreaux said the company is “disappointed” by the Medicare Advantage rate cut issued by the Centers for Medicare and Medicaid Services earlier this month and will look to balance the business' growth and margin.
During the quarter, Elevance Health's net income grew 12.2% to $2.2 billion as revenue increased 1% to $42.6 billion and expenses rose 0.2% to $39.6 billion. The company reported a medical loss ratio of 85.6% for the quarter, a year-over-year improvement from 85.8%, which executives attributed to premium increases to reflect medical cost trends. The company also raised its outlook for full-year earnings to greater than $34.05 per share.
During the call, executives discussed the Change Healthcare outage's impact on the company, which Boudreaux said was not significant. Claims are now flowing as normal, she said.
Elevance executives also highlighted recent deal announcements. Earlier this week, it unveiled plans to form a primary care company with private equity firm Clayton, Dubilier & Rice. Pending approval, Elevance will first have a minority stake in the company, will then assume majority ownership and ultimately will have full ownership in about five years, said Mark Kaye, executive vice president and chief financial officer at Elevance. The new company is expected to have about $4 billion in annualized revenue, he said.
Elevance announced plans in March to acquire Kroger’s specialty pharmacy, which is the sixth-largest in the U.S. Executives said the proposed deal would complement its existing BioPlus and Paragon Healthcare specialty businesses.
