Elevance Health execs say claims flow is back to normal following Change cyberattack

UPDATED: March 18 at 1:28 p.m.

Elevance Health executives said Thursday that the insurer is back to normal in terms of claims flow following the cyberattack on Change Healthcare, which led to widespread disruption in claims processing.

Chief Financial Officer Mark Kaye said on the company's earnings call Thursday morning that the team acted nimbly to disconnect from Change's services when the hack was revealed, protecting members' and clients' data. Initially, this led to a decrease of between 15% and 20% in "the daily volume of electronic data receipts from providers," largely linked to claims.

However, he said that the company has invested significant manpower over the past several weeks to catch up in claims volumes.

"We are effectively caught up on claims receipts and are now working to complete all necessary claims adjudication and processing activities," Kaye said.

CEO Gail Boudreaux said that the company was not as significantly impacted as some, as Elevance Health does not process prior authorization or pharmacy claims through Change's platform.

"I'm really proud of our teams and how they responded to this issue that occurred with Change quickly and effectively, first to protect our members and their data, and also help our care providers maintain their operations and cash flow," she said.

Elevance Health's first-quarter profit grew by double digits year over year, reaching $2.2 billion, according to its earnings report released Thursday morning.

That's an increase of 12.9% from the first quarter of 2023, when the company reported $1.99 billion in profit. Revenue was also up slightly, reaching $42.6 billion compared to the $42.2 billion reported in the prior year quarter.

Elevance Health beat the Street on profit but did fall short of analysts' predictions on revenue, according to Zacks Investment Research.

“First quarter results reflect disciplined execution of our strategic initiatives during a dynamic time for our industry," CEO Gail Boudreaux said in the press release. "We are making significant progress expanding Carelon’s capabilities, scaling our flywheel for enterprise growth, and delivering results for all stakeholders."

The company reported $37.3 billion in operating revenue at its health benefits arm, which was on par with the prior year quarter. Elevance Health said premium increases were offset by decreases in Medicaid membership caused by the redetermination process and changes to its geographic footprint.

As of March 31, Elevance Health's plans had about 46.2 million members, a decrease of 1.9 million or 4% compared to the first quarter of 2023. Much of that was driven by Medicaid, though the company said growth in commercial and Affordable Care Act exchange enrollment helped offset some of the decreases in Medicaid.

Meanwhile, at the company's Carelon arm, operating revenue reached $12.1 billion, up by about $600 million or 5% compared to the first quarter of 2023. That growth was backed by expansion within CarelonRx, the company's pharmacy benefit manager, as well as new risk-based capabilities within Carelon Services.

In the release, Boudreaux also called out Elevance's new partnership with private equity firm Clayton, Dubilier & Rice, which was announced earlier this week, as a highlight for Carelon.

"Earlier this week, we also announced the next step in our journey to expand access to high-quality, patient-centered, value-based care in our local markets," she said. "This strategic partnership with Clayton, Dubilier & Rice has the potential to accelerate innovation in care delivery, enhance healthcare experiences, and improve health outcomes, all while advancing our value-based care and physician enablement strategy.”

On the back of the performance in the first quarter, Elevance boosted its guidance for the year to at least $37.20 in earnings per share.