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Will Carelon Growth Aid Elevance Health's (ELV) Q2 Earnings?
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Elevance Health Inc. (ELV - Free Report) is set to report its second-quarter 2023 results on Jul 19, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for second-quarter earnings per share of $8.82 suggests a 9.7% increase from the prior-year figure of $8.04. The consensus mark declined by a penny over the past week. The consensus estimate for second-quarter revenues of $41.6 billion indicates an 8% increase from the year-ago reported figure.
Elevance Health beat the consensus estimate for earnings in all the prior four quarters, with the average being 3.2%. This is depicted in the graph below:
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at ELV’s previous-quarter performance first.
Q1 Earnings Rewind
In the last reported quarter, the health benefits company’s adjusted earnings per share of $9.46 beat the Zacks Consensus Estimate by 2.2%, primarily due to growing premiums stemming from rate increases coupled with membership growth across its Medicaid and Medicare Advantage businesses. Also, rising prescription volumes and expanding post-acute care business in Carelon added to the positives. However, the upside was partly offset by an elevated expense level.
Elevance Health’s second-quarter revenues are likely to have benefited from higher premiums and solid contributions from its Health Benefits and Carelon units. The rising memberships attributable to ELV’s Medicare Advantage, Medicaid, Vision and Dental Administration businesses are expected to have provided an impetus to the second quarter’s performance.
The increased memberships are expected to have benefited the health insurer’s premium generation. The Zacks Consensus Estimate for total premiums indicates 7.3% growth from the year-ago period while our estimate suggests a 5.4% increase in the second quarter. Our estimate for gross profits indicates a 10.6% increase in the June quarter.
Our estimate for Carelon brand’s operating revenues for the second quarter indicates a 7.4% year-over-year increase while its operating income is expected to grow 15.7% from a year ago. Growing prescription volumes is likely to have aided the results. Also, an expanding post-acute care business and strong care delivery business performance are expected to have contributed to the upside.
Meanwhile, its Health Benefits Business is likely to have been driven by rate adjustments and membership growth. Our estimate for the segment’s operating revenues for the second quarter indicates a 7.4% year-over-year increase. We expect a 15.7% improvement in operating income from the segment in the second quarter. This is likely to have positioned the company’s bottom line for a year-over-year increase in the to-be-reported quarter.
However, its expenses are likely to have remained elevated in the quarter, due to substantial investments in digital capabilities and platforms. We expect total expenses to have jumped more than 5% year over year in the second quarter, slightly reducing profit margins, making an earnings beat uncertain. Increased benefit expenses, cost of products sold and operating costs are likely to have led to higher total expenses.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Elevance Health this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -1.24%. This is because the Most Accurate Estimate currently stands at $8.72 per share, lower than the Zacks Consensus Estimate of $8.82 per share.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Elevance Health currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Elevance Health, here are some companies from the broader medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for SI-BONE’s earnings per share for the to-be-reported quarter suggests an improvement of 22.2% from the year-ago period. SIBN beat earnings estimates thrice in the past four quarters and missed once, the average surprise being 11.1%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +1.88% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 98 cents per share, indicating 14% year-over-year growth. AZN beat earnings estimates in all the past four quarters, the average surprise being 8.1%.
Community Health Systems, Inc. (CYH - Free Report) has an Earnings ESP of +33.72% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Community Health’s bottom line for the to-be-reported quarter indicates an improvement of 88.5% from the year-ago period. The consensus mark for CYH’s revenues is pegged at more than $3 billion, implying 2.9% year-over-year growth.
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Will Carelon Growth Aid Elevance Health's (ELV) Q2 Earnings?
Elevance Health Inc. (ELV - Free Report) is set to report its second-quarter 2023 results on Jul 19, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for second-quarter earnings per share of $8.82 suggests a 9.7% increase from the prior-year figure of $8.04. The consensus mark declined by a penny over the past week. The consensus estimate for second-quarter revenues of $41.6 billion indicates an 8% increase from the year-ago reported figure.
Elevance Health beat the consensus estimate for earnings in all the prior four quarters, with the average being 3.2%. This is depicted in the graph below:
Elevance Health, Inc. Price and EPS Surprise
Elevance Health, Inc. price-eps-surprise | Elevance Health, Inc. Quote
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at ELV’s previous-quarter performance first.
Q1 Earnings Rewind
In the last reported quarter, the health benefits company’s adjusted earnings per share of $9.46 beat the Zacks Consensus Estimate by 2.2%, primarily due to growing premiums stemming from rate increases coupled with membership growth across its Medicaid and Medicare Advantage businesses. Also, rising prescription volumes and expanding post-acute care business in Carelon added to the positives. However, the upside was partly offset by an elevated expense level.
Now let’s see how things have shaped up before the second-quarter earnings announcement.
Q2 Factors to Note
Elevance Health’s second-quarter revenues are likely to have benefited from higher premiums and solid contributions from its Health Benefits and Carelon units. The rising memberships attributable to ELV’s Medicare Advantage, Medicaid, Vision and Dental Administration businesses are expected to have provided an impetus to the second quarter’s performance.
The increased memberships are expected to have benefited the health insurer’s premium generation. The Zacks Consensus Estimate for total premiums indicates 7.3% growth from the year-ago period while our estimate suggests a 5.4% increase in the second quarter. Our estimate for gross profits indicates a 10.6% increase in the June quarter.
Our estimate for Carelon brand’s operating revenues for the second quarter indicates a 7.4% year-over-year increase while its operating income is expected to grow 15.7% from a year ago. Growing prescription volumes is likely to have aided the results. Also, an expanding post-acute care business and strong care delivery business performance are expected to have contributed to the upside.
Meanwhile, its Health Benefits Business is likely to have been driven by rate adjustments and membership growth. Our estimate for the segment’s operating revenues for the second quarter indicates a 7.4% year-over-year increase. We expect a 15.7% improvement in operating income from the segment in the second quarter. This is likely to have positioned the company’s bottom line for a year-over-year increase in the to-be-reported quarter.
However, its expenses are likely to have remained elevated in the quarter, due to substantial investments in digital capabilities and platforms. We expect total expenses to have jumped more than 5% year over year in the second quarter, slightly reducing profit margins, making an earnings beat uncertain. Increased benefit expenses, cost of products sold and operating costs are likely to have led to higher total expenses.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Elevance Health this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -1.24%. This is because the Most Accurate Estimate currently stands at $8.72 per share, lower than the Zacks Consensus Estimate of $8.82 per share.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Elevance Health currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Elevance Health, here are some companies from the broader medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
SI-BONE, Inc. (SIBN - Free Report) has an Earnings ESP of +1.21% and is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SI-BONE’s earnings per share for the to-be-reported quarter suggests an improvement of 22.2% from the year-ago period. SIBN beat earnings estimates thrice in the past four quarters and missed once, the average surprise being 11.1%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +1.88% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 98 cents per share, indicating 14% year-over-year growth. AZN beat earnings estimates in all the past four quarters, the average surprise being 8.1%.
Community Health Systems, Inc. (CYH - Free Report) has an Earnings ESP of +33.72% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Community Health’s bottom line for the to-be-reported quarter indicates an improvement of 88.5% from the year-ago period. The consensus mark for CYH’s revenues is pegged at more than $3 billion, implying 2.9% year-over-year growth.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.