Elevance Health reported a third quarter profit of $1.29 billion as the health insurer added new customers despite a big dip in Medicaid enrollment due to the end of a pandemic-era coverage provision.
Elevance, which sells government and commercial health insurance including Blue Cross and Blue Shield plans in 14 states, Wednesday reported third quarter profits decreased nearly 20% to $1.29 billion compared to $1.6 billion in the year-ago quarter. The dip in net income was due largely to an “operating loss of $741 million in the company’s “corporate & other segment” executives said was driven by “business optimization charges.”
“In the third quarter, we completed a strategic review of our operations, assets, and investments to enhance operating efficiency, refine the focus of our investments in innovation and optimize our physical footprint,” the company said in its earnings report. “This resulted in a net charge of $697 million, comprised of the write-off of certain information technology assets and contract exit costs, a reduction in staff including the relocation of certain job functions, and the impairment of assets associated with the closure or partial closure of data centers and offices.”
Still, revenue jumped 7% to $42.8 billion as overall health plan enrollment grew and the company’s Carelon health services business performed well.
Elevance’s membership grew by 42,000, or 0.1%, to 47.3 million as of September 30, 2023 compared to a year ago.
The growth was driven primarily by “growth in BlueCard, Affordable Care Act health plans, and Medicare Advantage membership, partially offset by attrition in Medicaid due to the resumption of eligibility redeterminations and a new entrant into one of our state Medicaid programs in the third quarter, as well as declines in our Employer Group risk-based business,” Elevance said in its third quarter earnings report.
The end of the U.S. Public Health Emergency in May after three years of the Covid-19 pandemic is impacting health insurers that have a significant business administering Medicaid coverage for states, which are conducting so-called “Medicaid redeterminations.” Medicaid redetermination, also described as Medicaid renewal or Medicaid recertification, is essentially when people are asked to show they are qualified for such coverage.
“During the third quarter of 2023, medical membership decreased by 664 thousand driven by attrition in Medicaid due to the aforementioned dynamics,” Elevance said in its report.
Still, Elevance’s profits and continued growth are figured in the company’s forecast for increased profits with adjusted net income now expected to be “greater than $33.00 per share.” That is more than an earlier forecast for adjusted net income of company “greater than $32.85” per share.
“Elevance Health delivered another quarter of solid performance reflecting the strength and balance of our diversified portfolio of businesses, our continued investments in innovation and growth, and our relentless focus on affordability, simplicity, and customer experience,” said Elevance Health president and chief executive Gail K. Boudreaux. “With affordability a paramount concern for all payors and a more uncertain forward-looking operating environment, we took action during the third quarter that will enhance our ability to act nimbly and operate efficiently.”