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Can Elevance's (ELV) Q3 Earnings Beat on Carelon Strength?
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Elevance Health Inc. (ELV - Free Report) is set to beat on earnings for the third quarter of 2023, the results for which are scheduled to be released on Oct 18, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for third-quarter earnings per share of $8.45 suggests a 12.2% increase from the prior-year figure of $7.53. The consensus mark remained stable over the past week. The consensus estimate for third-quarter revenues of $42.5 billion indicates a 7.3% 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 2.8%. This is depicted in the graph below:
Our proven model predicts a likely 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, which is precisely the case here.
Earnings ESP: Elevance Health has anEarnings ESP of +0.09%. This is because the Most Accurate Estimate is currently pegged at $8.46 per share, higher than the Zacks Consensus Estimate of $8.45. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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.
Q2 Earnings Rewind
In the last reported quarter, this health benefits company’s adjusted earnings per share of $9.04 beat the Zacks Consensus Estimate by 2.5%, primarily due to premium rate hikes in the Health Benefits business and a growing customer base within its Medicaid and Medicare businesses. Expanding external pharmacy members provided strength to pharmacy product revenues in the CarelonRx business, while the BioPlus acquisition in the quarter under review also contributed to the quarterly performance. However, the upside was partly offset by escalating costs.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
Factors Driving Q3 Performance
Elevance Health’s third-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 Commercial Individual, Medicare Advantage, Medicaid, Vision and Dental Administration businesses are expected to have provided an impetus to the third 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 6% growth from the year-ago period’s $33.7 billion.
Our estimate for Carelon brand’s operating income for the third quarter indicates an almost 8.9% year-over-year increase. The results are likely to have been supported by the increasing prescription volumes. Additionally, the expansion of the post-acute care business and the strong performance of the care delivery business are expected to have added 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 income for the third quarter indicates an almost 14% year-over-year increase. This is likely to have positioned the company’s bottom line for not only a year-over-year increase but also an earnings beat.
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 to more than $38 billion in the third quarter, partially reducing profit margins. Increased benefit expenses and interest expenses are likely to have led to higher total expenses.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Medical space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
Apellis Pharmaceuticals, Inc. (APLS - Free Report) has an Earnings ESP of +13.77% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Apellis’ earnings per share for the to-be-reported quarter indicates a 49.1% year-over-year improvement. APLS beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 1.4%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +5.43% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 82 cents per share, which improved 3.8% in the past 30 days. AZN beat earnings estimates in each of the past four quarters, the average surprise being 8.4%.
Centene Corporation (CNC - Free Report) has an Earnings ESP of +15.34% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Centene’s bottom line for the to-be-reported quarter indicates an increase of 15.4% from the year-ago period. The consensus mark for CNC’s revenues is pegged at $36.2 billion, signaling 0.8% year-over-year growth.
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Can Elevance's (ELV) Q3 Earnings Beat on Carelon Strength?
Elevance Health Inc. (ELV - Free Report) is set to beat on earnings for the third quarter of 2023, the results for which are scheduled to be released on Oct 18, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for third-quarter earnings per share of $8.45 suggests a 12.2% increase from the prior-year figure of $7.53. The consensus mark remained stable over the past week. The consensus estimate for third-quarter revenues of $42.5 billion indicates a 7.3% 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 2.8%. This is depicted in the graph below:
Elevance Health, Inc. Price and EPS Surprise
Elevance Health, Inc. price-eps-surprise | Elevance Health, Inc. Quote
What the Quantitative Model Suggests
Our proven model predicts a likely 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, which is precisely the case here.
Earnings ESP: Elevance Health has anEarnings ESP of +0.09%. This is because the Most Accurate Estimate is currently pegged at $8.46 per share, higher than the Zacks Consensus Estimate of $8.45. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Elevance Health currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
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.
Q2 Earnings Rewind
In the last reported quarter, this health benefits company’s adjusted earnings per share of $9.04 beat the Zacks Consensus Estimate by 2.5%, primarily due to premium rate hikes in the Health Benefits business and a growing customer base within its Medicaid and Medicare businesses. Expanding external pharmacy members provided strength to pharmacy product revenues in the CarelonRx business, while the BioPlus acquisition in the quarter under review also contributed to the quarterly performance. However, the upside was partly offset by escalating costs.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
Factors Driving Q3 Performance
Elevance Health’s third-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 Commercial Individual, Medicare Advantage, Medicaid, Vision and Dental Administration businesses are expected to have provided an impetus to the third 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 6% growth from the year-ago period’s $33.7 billion.
Our estimate for Carelon brand’s operating income for the third quarter indicates an almost 8.9% year-over-year increase. The results are likely to have been supported by the increasing prescription volumes. Additionally, the expansion of the post-acute care business and the strong performance of the care delivery business are expected to have added 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 income for the third quarter indicates an almost 14% year-over-year increase. This is likely to have positioned the company’s bottom line for not only a year-over-year increase but also an earnings beat.
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 to more than $38 billion in the third quarter, partially reducing profit margins. Increased benefit expenses and interest expenses are likely to have led to higher total expenses.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Medical space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
Apellis Pharmaceuticals, Inc. (APLS - Free Report) has an Earnings ESP of +13.77% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Apellis’ earnings per share for the to-be-reported quarter indicates a 49.1% year-over-year improvement. APLS beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 1.4%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +5.43% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 82 cents per share, which improved 3.8% in the past 30 days. AZN beat earnings estimates in each of the past four quarters, the average surprise being 8.4%.
Centene Corporation (CNC - Free Report) has an Earnings ESP of +15.34% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Centene’s bottom line for the to-be-reported quarter indicates an increase of 15.4% from the year-ago period. The consensus mark for CNC’s revenues is pegged at $36.2 billion, signaling 0.8% year-over-year growth.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.