Elevance Health, Inc. (NYSE: ELV) reported robust financial results for the first quarter of 2025, showcasing notable growth in operating revenue but facing some margin compression. The company posted 1Q 2025 operating revenue of \(48.8 billion, representing a 15.4% increase from \)42.3 billion in 1Q 2024, driven by higher premium yields in the Health Benefits segment, acquisitions, and growth in Medicare Advantage and Individual ACA memberships. This strong top-line growth aligns with Elevance’s strategic vision of being a lifetime trusted health partner and elevating health beyond healthcare through personalized and innovative care solutions.
Adjusted operating gain increased 4.1% year-over-year to $3.3 billion, though operating margin softened to 6.5% from 7.1% a year earlier. This margin decline was primarily due to an 80 basis point increase in the benefit expense ratio to 86.4%, reflecting higher Medicaid medical cost trends despite some offset from out-of-period premium taxes. The operating expense ratio improved by 70 basis points to 10.9%, demonstrating effective cost management and operational leverage amidst expanding revenue.
On earnings per diluted share (EPS), the company reported \(9.61 for 1Q 2025 (adjusted EPS \)11.97), nearly flat compared to \(9.59 (adjusted EPS \)10.83) in 1Q 2024. Despite the slight decrease in net income by 2.8% year-over-year to $2.18 billion, the EPS growth reflects a 3.0% reduction in diluted shares outstanding to 227.2 million shares.
From a cash flow perspective, operating cash flow declined by approximately \(1 billion year-over-year to \)1.0 billion in 1Q 2025, influenced by timing-related working capital items. Nevertheless, Elevance maintained a strong balance sheet with cash and investments totaling approximately $1.4 billion at the parent company as of March 31, 2025.
Elevance returned significant capital to shareholders, repurchasing 2.2 million shares at a weighted average price of \(395.78 for \)880 million and paying dividends of \(1.71 per share, totaling \)386 million. The company has an $8.4 billion share repurchase authorization still available as of the end of Q1.
Segment Highlights: - Health Benefits segment revenue rose 11.2% to \(41.4 billion, with operating gain dipping 3.1% to \)2.2 billion due to Medicaid cost trends. Medical membership reached approximately 45.8 million, a marginal increase from year-end 2024 driven by Medicare Advantage and commercial risk-based membership growth. - Carelon segment revenue surged 38% to \(16.7 billion, fueled by acquisitions in home health and pharmacy services and growth in CarelonRx product revenue. Operating gain increased 34% to \)1.1 billion.
Looking back, the company’s prior earnings calls emphasized its commitment to improving healthcare outcomes via digital innovation, cost efficiencies, and product diversification. These Q1 results indicate continued execution on these themes with tangible growth and controlled expense metrics.
Financial Impact Perspective: Using FY 2024 financial data as a baseline, the \(6.5 billion revenue increase in Q1 2025 represents around 3.7% of FY 2024 total revenue of approximately \)176.8 billion. The adjusted operating gain increase of \(0.2 billion in Q1 points to ongoing operating leverage, though margin pressure warrants monitoring. Forward-looking, Elevance reaffirmed FY 2025 adjusted diluted EPS guidance between \)34.15 and $34.85.
Elevance Health remains well positioned in the healthcare industry amid evolving market dynamics, leveraging growth in Medicare Advantage, strategic acquisitions, and digital healthcare solutions while managing cost pressures effectively.
For further details, refer to the full SEC filing: Elevance Health Q1 2025 Earnings Release.
Tags: #ElevanceHealthQ12025 #HealthcareRevenueGrowth #MedicareAdvantageExpansion #CarelonSegmentGrowth #HealthcareMarginAnalysis