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Can Higher Costs Affect Elevance Health's (ELV) Q4 Earnings?
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Elevance Health, Inc. (ELV - Free Report) is set to report its fourth-quarter 2023 results on Jan 24, before the opening bell. This time around, the company’s overall earnings performance is likely to have received a boost from higher segmental profits, only to be undone by reduced total medical memberships and higher costs.
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter earnings per share of $5.55 suggests a 6.1% increase from the prior-year figure of $5.23. The consensus mark remained stable over the past week. The consensus estimate for fourth-quarter revenues of nearly $41.8 billion indicates a 5.4% increase from the year-ago reported figure.
Elevance Health beat the consensus estimate for earnings in all the trailing four quarters, with the average surprise being 2.9%. 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.
Q3 Earnings Rewind
In the last reported quarter, this health benefits company’s adjusted earnings per share of $8.99 beat the Zacks Consensus Estimate by 6.4%, primarily due to improved premium revenues in the Health Benefits business, higher growth in external pharmacy members served and the buyout of BioPlus. However, the upside was partly offset by an elevated expense level.
Elevance Health’s fourth-quarter revenues are likely to have benefited from higher premiums and solid contributions from its Health Benefits and Carelon units. The rising memberships in Vision and Dental businesses are expected to have provided an impetus to the fourth quarter’s performance.
The Zacks Consensus Estimate for total premiums indicates 3.2% growth from the year-ago period’s $33.6 billion, while our estimate is pegged at almost $34 billion. Also, the consensus mark for product revenues indicates 25.6% year-over-year growth, while our model predicts a more than 21% increase.
The Zacks Consensus Estimate for Carelon brand’s operating income for the fourth quarter indicates a 14.1% year-over-year increase, while our estimate suggests 13% growth. The results are likely to be supported by growth in its post-acute care services business and the solid performance of its Behavioral Health business. The BioPlus acquisition is also expected to have played a major role in this.
Meanwhile, its Health Benefits business is likely to have been driven by premium rate adjustments. The Zacks Consensus Estimate for the segment’s operating income for the fourth quarter indicates almost 12% year-over-year growth, while our estimate suggests a 16.7% jump. This is likely to have positioned the company’s bottom line for a year-over-year increase.
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 nearly $40 billion in the fourth quarter, reducing profit margins and making an earnings beat uncertain.
Increased benefit expenses, cost of products sold and interest expenses are likely to have led to higher total expenses. We expect operating expenses to be higher than $4.6 billion in the quarter. Also, the Zacks Consensus Estimate for total medical membership indicates a 0.5% decrease from a year ago, while our model predicts a 0.2% fall.
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 0.00%. This is because the Most Accurate Estimate currently stands at $5.55 per share, in line with the Zacks Consensus Estimate.
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 #2.
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 Centene’s bottom line for the to-be-reported quarter is pegged at 42 cents per share, which has remained stable over the past week. The consensus mark for CNC’s revenues is pegged at more than $36 billion, signaling 1.4% year-over-year growth.
Celldex Therapeutics, Inc. (CLDX - Free Report) has an Earnings ESP of +30.03% and a Zacks Rank #3.
The Zacks Consensus Estimate for Celldex’s bottom line for the to-be-reported quarter has improved 7.1% in the past 30 days. CLDX beat earnings estimates in two of the past four quarters, met once and missed on the other occasion.
Arvinas, Inc. (ARVN - Free Report) has an Earnings ESP of +17.19% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Arvinas’ earnings per share for the to-be-reported quarter indicates an 18% year-over-year improvement. ARVN beat earnings estimates in two of the past four quarters and missed on the other occasions.
Image: Bigstock
Can Higher Costs Affect Elevance Health's (ELV) Q4 Earnings?
Elevance Health, Inc. (ELV - Free Report) is set to report its fourth-quarter 2023 results on Jan 24, before the opening bell. This time around, the company’s overall earnings performance is likely to have received a boost from higher segmental profits, only to be undone by reduced total medical memberships and higher costs.
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter earnings per share of $5.55 suggests a 6.1% increase from the prior-year figure of $5.23. The consensus mark remained stable over the past week. The consensus estimate for fourth-quarter revenues of nearly $41.8 billion indicates a 5.4% increase from the year-ago reported figure.
Elevance Health beat the consensus estimate for earnings in all the trailing four quarters, with the average surprise being 2.9%. 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.
Q3 Earnings Rewind
In the last reported quarter, this health benefits company’s adjusted earnings per share of $8.99 beat the Zacks Consensus Estimate by 6.4%, primarily due to improved premium revenues in the Health Benefits business, higher growth in external pharmacy members served and the buyout of BioPlus. However, the upside was partly offset by an elevated expense level.
Now, let’s see how things have shaped up before the fourth-quarter earnings announcement.
Q4 Factors to Note
Elevance Health’s fourth-quarter revenues are likely to have benefited from higher premiums and solid contributions from its Health Benefits and Carelon units. The rising memberships in Vision and Dental businesses are expected to have provided an impetus to the fourth quarter’s performance.
The Zacks Consensus Estimate for total premiums indicates 3.2% growth from the year-ago period’s $33.6 billion, while our estimate is pegged at almost $34 billion. Also, the consensus mark for product revenues indicates 25.6% year-over-year growth, while our model predicts a more than 21% increase.
The Zacks Consensus Estimate for Carelon brand’s operating income for the fourth quarter indicates a 14.1% year-over-year increase, while our estimate suggests 13% growth. The results are likely to be supported by growth in its post-acute care services business and the solid performance of its Behavioral Health business. The BioPlus acquisition is also expected to have played a major role in this.
Meanwhile, its Health Benefits business is likely to have been driven by premium rate adjustments. The Zacks Consensus Estimate for the segment’s operating income for the fourth quarter indicates almost 12% year-over-year growth, while our estimate suggests a 16.7% jump. This is likely to have positioned the company’s bottom line for a year-over-year increase.
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 nearly $40 billion in the fourth quarter, reducing profit margins and making an earnings beat uncertain.
Increased benefit expenses, cost of products sold and interest expenses are likely to have led to higher total expenses. We expect operating expenses to be higher than $4.6 billion in the quarter. Also, the Zacks Consensus Estimate for total medical membership indicates a 0.5% decrease from a year ago, while our model predicts a 0.2% fall.
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 0.00%. This is because the Most Accurate Estimate currently stands at $5.55 per share, in line with the Zacks Consensus Estimate.
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 #2.
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:
Centene Corporation (CNC - Free Report) has an Earnings ESP of +3.65% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Centene’s bottom line for the to-be-reported quarter is pegged at 42 cents per share, which has remained stable over the past week. The consensus mark for CNC’s revenues is pegged at more than $36 billion, signaling 1.4% year-over-year growth.
Celldex Therapeutics, Inc. (CLDX - Free Report) has an Earnings ESP of +30.03% and a Zacks Rank #3.
The Zacks Consensus Estimate for Celldex’s bottom line for the to-be-reported quarter has improved 7.1% in the past 30 days. CLDX beat earnings estimates in two of the past four quarters, met once and missed on the other occasion.
Arvinas, Inc. (ARVN - Free Report) has an Earnings ESP of +17.19% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Arvinas’ earnings per share for the to-be-reported quarter indicates an 18% year-over-year improvement. ARVN beat earnings estimates in two of the past four quarters and missed on the other occasions.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.