11:48 AM EDT, 07/17/2024 (MT Newswires) -- Elevance Health ( ELV ) on Wednesday reported better-than-expected second-quarter results despite a double-digit decline in memberships for Medicaid plans, while Chief Executive Gail Boudreaux said the health insurer maintained its full-year earnings outlook.

The company expects adjusted earnings of "at least" $37.20 per share for 2024. It previously called for "greater than" $37.20 in EPS. The consensus on Capital IQ is for normalized EPS of $37.28.

"We have prudently maintained our full-year outlook given industry-wide dynamics we are navigating in our Medicaid business and the investments we are making to support business transformation and deepening capabilities within CarelonRx," Boudreaux said during an earnings call, according to a Capital IQ transcript. "Our guidance for 2024 embeds significant investment in growth, notably in CarelonRx and government health plan operating margins below the long-term average with meaningful upside to our targets."

The stock was down 6.1% in Wednesday's trading session.

For the three-month period ended June 30, the insurer's adjusted EPS climbed 12% to $10.12, surpassing the Street's view of $10.01. Operating revenue slipped 0.4% year over year to $43.22 billion, ahead of analysts' estimate of $42.9 billion. The decline was due to attrition in Medicaid membership which was partially offset by higher premium yields and growth in CarelonRx product revenue.

Medical membership declined 4.6% to 45.8 million, driven by a 23% decline 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 climbed 35%, while employer group decreased 3.1%. Sequentially, consolidated membership was down 0.6%.

Overall premiums fell 3.2% to $35.42 billion. Product revenue advanced 14%, while service fees jumped 18%. By segment, health benefits revenue slid 2.2% to $37.16 billion while its Carelon division rose 10% to $13.3 billion.

The benefit-expense ratio came in at 86.3%, an improvement of 10 basis points from the prior-year quarter.

Elevance is "closely monitoring" acuity and cost trends, especially in Medicaid and is "working collaboratively with states to ensure rates remain actuarially sound," Chief Financial Officer Mark Kaye said on the call. The company forecasts Medicaid utilization to increase in the second half and its full-year benefit expense ratio to be in the upper half of its initial guidance range, Kaye told analysts.

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