Elevance Health reported better-than-expected first quarter results and raised its outlook as it lowered costs. The health insurer said it reduced its benefit expense ratio by 20 basis points and increased its total operating margin to 7.1%. Elevance shares rose to their highest level since late 2022 in late trading on Thursday, up nearly 4%.
Elevance Health posted first-quarter earnings per share (EPS) of $10.64, with revenue increasing 0.9% to $42.3 billion. Both were higher than analysts’ estimates. The company’s benefit expense ratio, which measures the cost of claims to premiums, was 85.6%, an improvement of 20 basis points that also beat forecasts.
The gain was “driven primarily by premium rate adjustments to cover medical cost trend in our Health Benefits business,” Elevance said. Revenue from premiums slipped 0.5% to $35.7 billion, while benefit expenses were down 0.8% to $30.55 billion. Total operating margin rose to 7.1% from 6.8% last year, reflecting disciplined execution of strategic initiatives during a dynamic time for the industry, CEO Gail Boudreaux said. The company now anticipates full-year EPS of greater than $37.20, up from its previous outlook of greater than $37.10