Elevance Health Inc (NYSE:ELV) stock fell 1.08% (As on April 20, 11:41:51 AM UTC-4, Source: Google Finance) after the company raised its annual earnings forecast and beat quarterly profit estimates, aided by lower medical costs in its health insurance business. Medical membership of Elevance Health, as of Mar 31, 2023, totaled 48.1 million, which rose 2.9% year over year in the first quarter but came slightly lower than the estimate of 48.2 million. The improvement came on the back of strong Medicaid, Medicare Advantage, commercial fee-based and ACA health plan businesses. The positives were partially offset by attrition in employer group risk-based business. The benefit expense ratio of ELV improved 30 basis points (bps) year over year to 85.8% compared with our estimate of 85.7%. Premiums of $35,868 million rose 9.4% year over year in the quarter under review, higher than the estimate of $35,233.9 million. Product revenues climbed 21.8% year over year to $4,022 million. Net investment income of $387 million grew 7.5% year over year but lagged the estimate of $393.9 million. The total operating margin improved 40 bps year over year to 6.8% in the first quarter.

Moreover, Elevance Health exited the first quarter with cash and cash equivalents of $10,142 million, which jumped from the 2022-end level of $7,387 million. Total assets of $109 billion increased from the $102.8 billion figure as of Dec 31, 2022. Long-term debt, less current portion, was $25,201 million, up from $22,349 million at 2022-end. Total equity of $37,460 million increased from the 2022-end level of $36,330 million. Net cash provided by operating activities for the first quarter was $6,469 million, up from the year-ago level of $2,541 million.

ELV in the first quarter of FY 23 has reported the adjusted earnings per share of $9.46, beating the analysts’ estimates for the adjusted earnings per share of $9.26, according to Refinitiv IBES estimates. The company had reported the adjusted revenue growth of 10.7 percent to $42.17 billion in the first quarter of FY 23, beating the analysts’ estimates for revenue of $40.83 billion. This is driven by higher premium revenue due to membership growth in Medicaid and Medicare Advantage and premium rate increases in the Health Benefits business. Operating revenue increased 10.6% to $41.89 billion, attributable to growth in pharmacy product revenue within CarelonRx driven by growth in members served and script volume.

FY23 Elevance Health expects adjusted net income to exceed $32.70 per share compared to the consensus of $32.79.