09:02 AM EDT, 10/17/2024 (MT Newswires) -- Elevance Health ( ELV ) slashed its full-year earnings outlook on Thursday as the health insurer's third-quarter revenue beat Wall Street estimates while bottom-line results missed expectations amid challenges in the Medicaid business.

The company now anticipates adjusted earnings of about $33 per share for 2024, down from its previous guidance of at least $37.20. The current consensus on Capital IQ is for normalized EPS of $37.25. The insurer cited its third-quarter results and the timing mismatch between Medicaid rates and acuity for the outlook change.

Elevance's shares fell 12% in premarket activity.

"We remain confident in the long-term earnings potential of our diverse businesses as we navigate a dynamic operating environment and unprecedented challenges in the Medicaid business," Chief Executive Gail Boudreaux said in a statement. "We expect Medicaid rates will align with the needs of our members in time, and are taking proactive actions to enhance operational efficiencies that will ensure we emerge from this period even stronger."

For the three-month period ended Sept. 30, the company's adjusted EPS fell 6.9% year over year to $8.37, missing the Street's view of $9.65. Operating revenue increased to $44.72 billion from $42.48 billion last year, topping analysts' $43.14 billion estimate.

Medical membership declined 3.3% to 45.8 million, driven by a 19% drop in the Medicaid business, partially offset by gains in Affordable Care Act health plans and commercial employer group fee-based membership. Within its commercial risk-based business, individual membership jumped 30%, while employer group decreased 2.2%. Sequentially, consolidated membership was almost flat.

Overall premiums inclined 4.4% to $36.81 billion. Product revenue advanced about 14%, while service fees slipped 1%. By segment, health benefits revenue rose 4.2% to $38.28 billion while its Carelon division, composed of CarelonRx and Carelon Services, climbed 15% to $13.8 billion.

The benefit-expense ratio came in at 89.5% versus 86.8% in the prior-year quarter. The increase was driven by the timing mismatch between Medicaid rates and higher acuity, the company said.

"The issues impacting the Medicaid business are time-bound and our state partners are working constructively with us on rate renewals," Boudreaux told analysts on an earnings call, according to a Capital IQ transcript. "These short-term headwinds are a byproduct of the large scale and unprecedented mix shifts associated with the end of the public health emergency."

Price: 437.50, Change: -59.46, Percent Change: -11.96