Elevance Health (ELV) UBS Global Healthcare Conference 2024 summary

Strategic investments and outlook

• Ongoing investments in generative AI and digital capabilities are expected to drive sustainable operational efficiencies, with incremental spending in these areas factored into 2024 and 2025 outlooks.

• 2025 is anticipated to be split, with headwinds in the first half and recovery in business performance and margins in the second half.

• Net investment income is expected to be a headwind in 2025 due to a lower interest rate environment and higher interest expense.

• Preliminary 2025 outlook is described as prudent, with more detailed guidance to be provided in January.

• Long-term growth targets include at least 12% adjusted diluted EPS growth annually, with about one-third from capital deployment.

Medicaid business trends and recovery

• Medicaid cost trends are running high, with increases in the 6% to 15% range, mainly due to higher acuity and redetermination cycles.

• Rate increases in 2024 are the highest in a decade, but reimbursement still lags medical costs, and margin pressure is expected to persist into 2025.

• Rate renewals in January and July 2025 are expected to drive improvement, but full margin recovery will take time.

• Proactive actions include disciplined expense management, fraud prevention, and close collaboration with states to address rate inadequacies.

• Membership declines help offset some rate increase pressures, but actuarially sound rates are necessary for margin normalization.

Medicare Advantage (MA) positioning

• Expectation for individual MA membership growth slightly above market rates in 2025, driven by strong retention and benefit stability.

• Actions taken ahead of 2024 positioned the business for long-term sustainability, allowing a more targeted approach for 2025.

• Some MA products made non-commissionable for new sales in select markets to manage disruption and optimize growth mix.

• Margins in MA are expected to remain below the 3% to 5% target in 2025, with only slight improvement anticipated.

• Achieving target margins will require continued medical management, disciplined bidding, and appropriate reimbursement.