ELV Financial Analysis

Analysis Date: 1/24/2025

Business Model

Elevance Health generates revenue primarily through health insurance premiums, pharmacy services, and care delivery services

Revenue Sources

• Premium Revenue ($144.2B in 2024, 82.3% of total revenue)
• Product Revenue ($22.6B in 2024, 12.9% of total revenue)
• Service Fees ($8.4B in 2024, 4.8% of total revenue)

Revenue Distribution by Channel

• Health Benefits: $150.3B (73%)
• CarelonRx: $36.0B (17%)
• Carelon Services: $18.0B (9%)

Income Statement Analysis

• Operating revenue increased 6% YoY driven by higher premium yields and acquisitions
• Operating gain decreased 47.6% YoY due to higher Medicaid cost trends
• Medical loss ratio increased 320 basis points to 92.4% due to higher Medicaid costs

Balance Sheet Analysis

• Cash position strengthened with $8.3B in cash and equivalents
• Total assets increased 7.1% to $116.7B driven by acquisitions

Cash Flow Analysis

• Operating cash flow of $5.8B represents approximately 1.0x net income

Capital Allocation

Capital allocation strategy focuses on: 50% for M&A/organic reinvestment, 30% for share repurchases, and 20% for dividends. In Q4 2024, repurchased 4.5M shares for $1.8B and paid quarterly dividend of $1.63 per share.

Management Commentary

Q4 results demonstrate tangible progress in improving operations

Remain focused on simplifying healthcare experience and deepening Carelon impact

Higher Medicaid cost trends impacting performance

Overall Sentiment: Cautiously optimistic with focus on operational improvements and long-term growth initiatives

Recommendation

Rating: Hold

Reason for Rating: Mixed near-term outlook balanced against strong long-term positioning

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/24/2025, 9:18:39 AM