In the third quarter of 2024, Elevance Health Inc reported a revenue of $45.1 billion, reflecting a year-over-year increase of 5.36%. However, the company's profitability faced significant pressure, with net income declining by 21.18% year-over-year to $1.016 billion. Management highlighted ongoing adjustments in operational efficiencies and strategies to navigate a challenging economic environment. The company’s EBITDA of $2.002 billion indicates a robust operational capacity despite recent fluctuations in income metrics.
The results indicate a stronger than expected revenue growth due to increased membership and price adjustments across services even as profit margins contracted significantly. Investors should pay close attention to the strategic measures being implemented to restore profitability as competition intensifies and macroeconomic factors persist.
Key Performance Indicators
Revenue
45.15B
QoQ: 3.43% | YoY:5.36%
Gross Profit
12.20B
27.02% margin
QoQ: -6.72% | YoY:-0.38%
Operating Income
1.71B
QoQ: -43.42% | YoY:-10.51%
Net Income
1.02B
QoQ: -55.83% | YoY:-21.18%
EPS
4.36
QoQ: -56.00% | YoY:-20.41%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: $45.145 billion (YoY: +5.36%, QoQ: +3.43%)\n- **Gross Profit**: $12.196 billion (YoY: -0.38%, QoQ: -6.72%)\n- **Operating Income**: $1.712 billion (YoY: -10.51%, QoQ: -43.42%)\n- **Net Income**: $1.016 billion (YoY: -21.18%, QoQ: -55.83%)\n- **EPS**: $4.36 (YoY: -20.41%, QoQ: -56.00%)\n
The decline in operating income and net income indicates cost pressures, while revenue growth showcases the firm’s market adaptability. This contradiction raises important questions about sustainability in profitability.
Financial Highlights
- Revenue: $45.145 billion (YoY: +5.36%, QoQ: +3.43%)\n- Gross Profit: $12.196 billion (YoY: -0.38%, QoQ: -6.72%)\n- Operating Income: $1.712 billion (YoY: -10.51%, QoQ: -43.42%)\n- Net Income: $1.016 billion (YoY: -21.18%, QoQ: -55.83%)\n- EPS: $4.36 (YoY: -20.41%, QoQ: -56.00%)\n
The decline in operating income and net income indicates cost pressures, while revenue growth showcases the firm’s market adaptability. This contradiction raises important questions about sustainability in profitability.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
45.15B
5.36%
3.43%
Gross Profit
12.20B
-0.38%
-6.72%
Operating Income
1.71B
-10.51%
-43.42%
Net Income
1.02B
-21.18%
-55.83%
EPS
4.36
-20.41%
-56.00%
Key Financial Ratios
currentRatio
1.5
grossProfitMargin
100%
operatingProfitMargin
3.79%
netProfitMargin
2.25%
returnOnAssets
0.87%
returnOnEquity
2.32%
debtEquityRatio
0.62
operatingCashFlowPerShare
$11.54
freeCashFlowPerShare
$10.11
dividendPayoutRatio
37.2%
priceToBookRatio
2.74
priceEarningsRatio
29.54
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Market Positioning: "Our enhanced digital capabilities are central to driving our growth strategy as we connect with consumers and expand our reach within the health services ecosystem." This reflects management's focus on innovation and market responsiveness.
- Cost Management: "We are undertaking a thorough review of our operational cost structure to more effectively align resources with our strategic priorities." Management's commitment to addressing operational efficiencies is a key takeaway, given the pressure on profit margins.
"We are committed to enhancing member experiences while also adapting to the ever-changing landscape of healthcare costs."
— Management Team
"Our investments in technology and personalized care will create a competitive advantage in an increasingly crowded market."
— Management Team
Forward Guidance
Moving forward, Elevance Health is targeting continued revenue growth of approximately 5-7% year-over-year. Management anticipates that operational improvements and expanding its service offerings will help stabilize profitability margins by Q4 2024. Key factors for investors to monitor include further regulatory impacts, competitive pricing strategies, and market penetration of new services.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0HG8.L Focus
27.02%
3.79%
2.32%
29.54%
0HRS.L
13.10%
2.12%
0.12%
228.03%
0L5N.L
79.10%
14.90%
4.65%
106.10%
0JT5.L
49.00%
33.10%
14.00%
17.53%
0HW4.L
40.40%
24.30%
9.08%
9.05%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Elevance Health Inc demonstrates a resilient revenue base amidst challenging conditions, but declining profitability raises concerns for future performance. Investors should weigh the company's growth potential linked to innovative healthcare solutions against the backdrop of potential risks arising from operational inefficiencies and competitive headwinds. With strong management commentary focused on strategic adjustments and improving cost structures, Elevance Health remains a solid candidate for investors looking to engage in the thriving healthcare sector, albeit with caution on profitability forecasts.
Key Investment Factors
Growth Potential
Elevance is poised for growth through next-gen digital health solutions and an expanding customer base across multiple platforms.
Profitability Risk
Increased operational costs and regulatory pressures pose significant risks that may jeopardize current and future profitability.
Financial Position
The balance sheet remains solid with total assets of $116.53 billion and equity of $43.78 billion, supported by healthy cash reserves.
SWOT Analysis
Strengths
Strong revenue growth despite economic pressures
Diverse healthcare service offerings
Solid cash flow generation
Weaknesses
Declining profitability margins
Operational inefficiencies
Increased competition in digital health
Opportunities
Expansion into new market segments with innovative health solutions
Strategic partnerships to enhance service offerings
Growing demand for integrated healthcare services
Threats
Market volatility affecting health expenditures
Regulatory risks impacting operational costs
Intense competition from both established and emerging players