Metric loss

Elevance shares fall as medical spending metric rises

By the numbers

$38.6 billion

Second quarter revenue increased 14%

$1.65 billion

Net profit for the quarter decreased by approximately 8%

47.1M

Registrations increased by 6% in the second quarter

87%

Q2 medical claims rate fell from 86.8%

Shares of Elevance fell on Wednesday after the release of its second quarter results, as it announced an increase in medical claimsan important measure of health care spending.

Bloomberg reported that the drop was the largest intraday decline in two years for Elevance, formerly known as Anthem.

The Indianapolis-based insurer reported a medical loss ratio of 87% compared to 86.8% in the second quarter of 2021. The medical loss ratio compares the amount an insurer collects in premiums to the amount it spends in medical care. Throughout the COVID-19 pandemic, the MLR has served as a signal of whether care has returned after patients postpone medical appointments and procedures amid the outbreak.

Elevance said the increase in MLR is attributable to a higher mix of members in government-sponsored plans, which tend to have higher MLRs.

Cowen analyst Gary Taylor said in a note Wednesday that while Elevance exceeded analysts’ expectations in a number of key metrics, the results “fall short of the lofty expectations raised by [UnitedHealth Group]” Last week.

Jefferies analyst David Windley said UnitedHealth’s MLR pace was much higher and eclipsed Elevance’s. Windley called the sale an “overreaction,” in a Wednesday note.

UnitedHealth Group reported that its insurance arm, UnitedHealthcare, had an MLR of 81.5%, down from 82.5% in the prior year period.

Patients have tended to delay care during COVID-19 surges, which generally offsets cost increases from infected patients who sought care.

Increased Medicaid enrollment helped drive overall enrollment growth for Elevance in the second quarter. Ongoing pandemic flexibilities have increased Medicaid enrollment for a number of insurers.

Elevance raised its profit forecast for the year and now expects adjusted net income to be above $28.70 per share.

Shares closed Wednesday at $459.54 down from the previous close of $497.43.