Elevance Health, Inc. (NYSE: ELV) reported fourth quarter and full year 2023 results.
“We are pleased to have delivered another year of strong performance in 2023, enabled by our relentless focus on customer experience and affordability, and continued investments in growth and innovation. The balance and resilience of our business coupled with the focused execution of our enterprise strategy supports our confidence in our outlook for 2024, as we continue to optimize the foundation, and scale our flywheel for sustained growth of the enterprise over the long term.”
Gail K. Boudreaux
President and Chief Executive Officer
*Earnings per diluted share (“EPS”)
**Refer to GAAP reconciliation tables.
Consolidated Enterprise Highlights
Operating revenue was $42.5 billion in the fourth quarter of 2023, an increase of $2.8 billion, or 7 percent compared to fourth quarter 2022. Operating revenue was $170.2 billion in 2023, an increase of $14.5 billion, or 9 percent. The increase in the quarter and year was driven by higher premium revenue in our Health Benefits segment and growth in pharmacy product revenue in CarelonRx.
The benefit expense ratio was 89.2 percent in the fourth quarter, an improvement of 50 basis points compared to fourth quarter 2022, and 87.0 percent for the full year, an improvement of 60 basis points year-over-year. The improvement in the quarter and year was driven by premium rate adjustments to cover medical cost trend. Days in Claims Payable was 47.3 days as of December 31, 2023, a decrease of 1.3 days from September 30, 2023, and a decrease of 0.2 days compared to December 31, 2022.
The operating expense ratio was 11.8 percent both in the fourth quarter and for the full year of 2023, an increase of 30 basis points as compared to the fourth quarter of 2022 and an increase of 40 basis points year-over-year. The increase in the quarter was driven by an acceleration of investments for growth and the increase for the full year was driven by business optimization charges recorded in 2023.
Cash Flow & Balance Sheet
Operating cash flow for 2023 was $8.1 billion, or 1.3 times GAAP net income. As of December 31, 2023, cash and investments at the parent company totaled approximately $1.6 billion.
During the fourth quarter of 2023, the Company repurchased 2.0 million shares of its common stock for $929 million, at a weighted average price of $465.63. For the full year of 2023, the Company repurchased 5.8 million shares of its common stock for $2.7 billion, at a weighted average price of $463.53. As of December 31, 2023, the Company had approximately $4.2 billion of Board approved share repurchase authorization remaining. During the fourth quarter of 2023, the Company paid a quarterly dividend of $1.48 per share, representing a distribution of cash totaling $346 million.
Reportable Segment Highlights
Health Benefits is comprised of Individual, Employer Group risk-based, Employer Group fee-based, BlueCard, Medicare, Medicaid, and Federal Health Products & Services businesses.
Operating revenue was $36.5 billion in the fourth quarter of 2023, an increase of $1.5 billion, or 4 percent compared to fourth quarter 2022. Operating revenue was $148.6 billion in 2023, an increase of $10.1 billion, or 7 percent. The increase was primarily driven by higher premium revenue in our Commercial Health Benefits business.
Operating gain totaled $767 million in the fourth quarter of 2023, a decline of 2 percent compared to the fourth quarter of 2022. This was primarily driven by investments made in the quarter to support long-term growth. Operating gain totaled $6.9 billion in 2023, an increase of $866 million, or 14 percent year-over-year. This was primarily driven by premium rate adjustments to reflect medical cost trends.
Medical membership totaled approximately 47.0 million as of December 31, 2023, a decrease of 570 thousand, or 1 percent year-over-year. This was driven by attrition in our Medicaid business associated with the resumption of eligibility redeterminations in the second quarter of 2023 and declines in our Employer Group risk-based business. These membership losses were partially offset by growth in BlueCard, Affordable Care Act health plans, and Medicare Advantage.
During the fourth quarter of 2023, medical membership declined by 364 thousand driven by Medicaid membership attrition associated with redeterminations, partially offset by growth in commercial fee-based members.
Carelon is comprised of CarelonRx and Carelon Services.
Operating revenue in the Carelon segments was $12.4 billion in the fourth quarter of 2023, an increase of $1.5 billion, or 14 percent from fourth quarter 2022. Operating revenue was $48.0 billion in 2023, an increase of $6.6 billion, or 16 percent. The increases for the quarter and the year were driven by growth in pharmacy product revenue in CarelonRx associated with growth in both external pharmacy members served and the acquisition of the BioPlus specialty pharmacy.
Operating gain in the Carelon segments was $592 million in the fourth quarter of 2023, an increase of $78 million, or 15 percent from fourth quarter 2022. The increase in the quarter was primarily driven by improved performance in our Carelon Services businesses. Operating gain was $2.7 billion in 2023, an increase of $252 million, or 10 percent year-over-year. The increase for the full year was primarily driven by higher prescription volumes in CarelonRx associated with growth in external pharmacy members served, the acquisition of the BioPlus specialty pharmacy, and improved performance across our Carelon Services businesses, along with the continued expansion of our post-acute care management business.
