Elevance Health Inc. (ELV): BCG Matrix [11-2024 Updated]
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Elevance Health Inc. (ELV) Bundle
As we delve into the Boston Consulting Group Matrix for Elevance Health Inc. (ELV) in 2024, we uncover a dynamic landscape where the company's strategic segments are categorized into four critical areas: Stars, Cash Cows, Dogs, and Question Marks. With a remarkable 32.2% increase in operating revenue from the Carelon Services segment and a stable contribution of $38.3 billion from Health Benefits, Elevance demonstrates a robust financial position. However, challenges such as losses in the Corporate & Other segment and declining Medicaid membership signal areas of concern. Join us as we explore these segments in detail to understand Elevance's current standing and future potential.
Background of Elevance Health Inc. (ELV)
Elevance Health, Inc. is a prominent health company with a mission to improve the health of humanity. As one of the largest health insurers in the United States, the company serves nearly 46 million medical members through its affiliated health plans as of September 30, 2024. Elevance operates as an independent licensee of the Blue Cross and Blue Shield Association (BCBSA), providing services as the Blue Cross or Blue Shield licensee in 14 states.
The company is licensed to conduct insurance operations in all 50 states, the District of Columbia, and Puerto Rico. Elevance Health offers a comprehensive range of network-based managed care risk-based plans targeting individual, employer group, Medicaid, and Medicare markets. Additionally, it provides various managed care services to fee-based customers, including claims processing, stop-loss insurance, provider network access, medical management, care management, and wellness programs.
Elevance Health's brand portfolio includes several core go-to-market brands such as:
- Anthem Blue Cross/Anthem Blue Cross and Blue Shield - representing Anthem-branded and affiliated Blue Cross and/or Blue Shield licensed plans;
- Wellpoint - uniting select non-BCBSA licensed Medicare, Medicaid, and commercial plans;
- Carelon - encompassing healthcare-related brands and capabilities, including CarelonRx and Carelon Services.
As of September 30, 2024, Elevance Health reported total operating revenue of $130.2 billion for the nine months ended September 30, 2024, reflecting an increase from $127.8 billion in the same period of the previous year. The company has strategically expanded its participation in state- and federally-facilitated marketplaces and is focused on growth within its Health Benefits segment, particularly through its Medicaid and dual-eligible populations.
Elevance Health's operational structure includes four reportable segments: Health Benefits, CarelonRx, Carelon Services, and Corporate & Other. The Health Benefits segment has experienced fluctuating operating gains, primarily impacted by medical cost trends and membership attrition in Medicaid. Elevance Health continues to adapt to regulatory changes and market demands, aiming to enhance its service delivery and financial performance.
Elevance Health Inc. (ELV) - BCG Matrix: Stars
Strong growth in Carelon Services segment, 32.2% increase in operating revenue.
For the three months ended September 30, 2024, the Carelon Services segment reported an operating revenue of $4,638 million, reflecting a 32.2% increase compared to $3,509 million for the same period in 2023.
CarelonRx's acquisition of Paragon boosts prescription volume significantly.
The CarelonRx segment generated operating revenue of $9,143 million for the three months ended September 30, 2024, an increase of 7.3% from $8,518 million in the same period of 2023, driven by the acquisition of Paragon and an increase in prescription volume.
Health Benefits segment shows resilience with 4.2% operating revenue growth.
The Health Benefits segment achieved operating revenue of $38,278 million for the three months ended September 30, 2024, a 4.2% increase from $36,744 million in the prior year.
Increased net investment income by 11.8%, indicating solid investment strategy.
Net investment income rose to $551 million for the three months ended September 30, 2024, marking an 11.8% increase from $493 million in the same period of 2023.
Comprehensive income improved due to favorable market conditions, with net unrealized gains of $887 million.
For the three months ended September 30, 2024, Elevance Health reported other comprehensive income of $898 million, with net unrealized gains on investments amounting to $887 million, significantly improving from a loss of $352 million in the previous year.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Carelon Services Operating Revenue | $4,638 million | $3,509 million | 32.2% |
| CarelonRx Operating Revenue | $9,143 million | $8,518 million | 7.3% |
| Health Benefits Operating Revenue | $38,278 million | $36,744 million | 4.2% |
| Net Investment Income | $551 million | $493 million | 11.8% |
| Comprehensive Income | $898 million | ($348 million) | NM |
| Net Unrealized Gains | $887 million | ($352 million) | NM |
Elevance Health Inc. (ELV) - BCG Matrix: Cash Cows
Health Benefits Segment
The Health Benefits segment remains a stable source of revenue, contributing $38.3 billion in operating revenue for the nine months ended September 30, 2024. This represents an increase of 4.2% compared to the previous year.
CarelonRx Performance
CarelonRx consistently generates high product revenue, reaching $25.98 billion in the same period. The operating gains in CarelonRx increased by 29.8%, reflecting effective cost management and the successful integration of new services.
| Metric | Value (2024) |
|---|---|
| CarelonRx Operating Revenue | $25.98 billion |
| CarelonRx Operating Gain Increase | 29.8% |
Dividend Payments
Elevance Health has demonstrated a strong commitment to returning value to shareholders, with a strong dividend payment of $1.63 per share for the nine months ended September 30, 2024. This is an increase from $1.48 per share in the previous year.
| Dividend Declaration Date | Dividend per Share | Total Dividend Paid |
|---|---|---|
| January 23, 2024 | $1.63 | $379 million |
| April 16, 2024 | $1.63 | $378 million |
| July 16, 2024 | $1.63 | $378 million |
Financial Stability
Elevance Health maintains a low debt-to-capital ratio of 38.2% as of September 30, 2024, ensuring financial stability and allowing for continued investments in their cash cow segments.
| Financial Metric | Value |
|---|---|
| Debt-to-Capital Ratio | 38.2% |
Elevance Health Inc. (ELV) - BCG Matrix: Dogs
Corporate & Other Segment Operating Losses
The Corporate & Other segment of Elevance Health has reported significant operating losses, which increased by 33.7% in the most recent period. The operating loss for this segment was $999 million for the three months ended September 30, 2024.
Decrease in Medical Membership
Medical membership decreased by 3.3%, primarily due to Medicaid membership attrition. This decline reflects a drop of approximately 2,092,000 members in the Medicaid segment, which was driven by eligibility redeterminations and market exits.
Struggles to Maintain Profitability
The company has faced challenges in maintaining profitability across segments with declining membership. The Health Benefits segment reported a decrease in operating gain, primarily due to inadequate Medicaid rates that did not cover rising medical costs, contributing to an overall operating gain of $1,604 million for the three months ended September 30, 2024, down from $1,834 million in the same period of the prior year.
Increased Accruals for Legal Settlements
Elevance Health has seen increased accruals related to legal settlements, significantly impacting its financial performance. The accrual for the Provider Settlement Agreement, associated with the Blue Cross Blue Shield Antitrust Litigation, is estimated at $666 million, recognized in September 2024.
| Financial Metrics | 2024 Q3 | 2023 Q3 | Change |
|---|---|---|---|
| Operating Loss (Corporate & Other) | $999 million | $747 million | +33.7% |
| Total Medical Membership | 45,760,000 | 47,306,000 | -3.3% |
| Medicaid Membership Loss | 2,092,000 members | N/A | N/A |
| Operating Gain (Health Benefits) | $1,604 million | $1,834 million | -12.5% |
| Accrued Legal Settlement | $666 million | N/A | N/A |
Elevance Health Inc. (ELV) - BCG Matrix: Question Marks
Carelon Services faces challenges with rising medical costs and Medicaid membership attrition.
As of September 30, 2024, Elevance Health reported a total medical membership of approximately 45.76 million, reflecting a 3.3% decline compared to the previous year, primarily driven by Medicaid membership attrition of approximately 2.09 million members, or 19.0%. The rising medical costs have put pressure on Carelon Services, as the benefit expense ratio increased to 89.5% for the three months ended September 30, 2024, compared to 86.8% for the same period in 2023.
Future growth potential in expanding behavioral health services amid competitive pressures.
Carelon Services has been focusing on expanding its behavioral health services. For the nine months ended September 30, 2024, the operating revenue for Carelon Services reached $13.19 billion, a 24.8% increase from $10.57 billion in the same period of 2023. This growth indicates substantial demand for mental health services, which is expected to continue amid competitive pressures from other health service providers.
CarelonRx's new service launches may require additional investment to achieve profitability.
CarelonRx, Elevance Health's pharmacy services segment, reported operating revenue of $25.98 billion for the nine months ended September 30, 2024, up 3.9% from $25.01 billion in the same period of 2023. However, the new service launches in this segment may necessitate further investments to enhance market share and achieve profitability, as these services currently consume significant cash resources.
Uncertain regulatory environment could impact future revenue streams from Medicaid.
The uncertain regulatory environment, particularly regarding Medicaid funding and eligibility requirements, poses risks to Elevance Health's revenue streams. The company has experienced a decline in Medicaid membership, which can adversely affect overall revenue and profitability. Future changes in Medicaid policy could significantly impact Carelon Services' operational strategy and financial performance.
Need for strategic focus to convert growth opportunities into stable revenue sources.
To convert the growth opportunities in behavioral health and pharmacy services into stable revenue sources, Elevance Health must strategically focus on enhancing market share while managing costs. For the nine months ended September 30, 2024, the total operating revenue was $130.22 billion, reflecting a 1.9% increase from $127.76 billion in the same period of 2023. However, the company must balance this growth with the need for effective cost management to ensure long-term profitability.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Medical Membership (millions) | 45.76 | 47.30 | -3.3 |
| Medicaid Membership (millions) | 8.93 | 11.02 | -19.0 |
| Benefit Expense Ratio (%) | 89.5 | 86.8 | 3.1 |
| Carelon Services Operating Revenue (billion) | 13.19 | 10.57 | 24.8 |
| CarelonRx Operating Revenue (billion) | 25.98 | 25.01 | 3.9 |
| Total Operating Revenue (billion) | 130.22 | 127.76 | 1.9 |
In summary, Elevance Health Inc. (ELV) demonstrates a dynamic portfolio through the BCG Matrix framework, showcasing its Stars with impressive growth in Carelon Services and Health Benefits, while its Cash Cows provide a solid revenue foundation. However, the company must address the challenges faced by its Dogs, particularly in the Corporate & Other segment, and strategically manage its Question Marks to capitalize on emerging opportunities in the evolving healthcare landscape. By leveraging its strengths and addressing weaknesses, Elevance Health can enhance its market position and drive sustainable growth moving forward.
Updated on 16 Nov 2024
Resources:
- Elevance Health Inc. (ELV) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Elevance Health Inc. (ELV)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Elevance Health Inc. (ELV)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.