Elevance Health, Inc.

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Good morning, and welcome to Elevance Health's second quarter 2024 earnings call. This is Steve Tunnell, Vice President of Investor Relations, and with us this morning on the earnings call are Gail Boudreau, President and CEO, Mark Kay, our CFO, Pete Haitayan, President of Carelon, Morgan Kendrick, President of our Commercial Health Benefits Business, and Felicia Norwood, President of our Government Health Benefits Business. Gail will begin the call with a brief discussion of the quarter and recent progress against our strategic initiatives. Mark will then discuss our financial results and outlook in greater detail. After our prepared remarks, the team will be available for Q&A. During the call, we will reference certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available on our website, ElevanceHealth.com. We will also be making some forward-looking statements on this call. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of Elevance Health. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to carefully review the risk factors discussed in today's press release and in our quarterly filings with the SEC. I will now turn the call over to Gail.

Thank you, Steve, and good morning, everyone. We appreciate you joining today's earnings call. This morning, we reported second quarter results, including adjusted diluted earnings per share of $10.12, reflecting 12% growth year on year. These results reflect thoughtful execution in a dynamic operating environment, as well as the unique strengths of our enterprise, including the power of our diverse set of businesses. We have reaffirmed our full year adjusted diluted earnings per share guidance of at least $37.20, which represents 12% growth year over year. We have prudently maintained our full year outlook given industry-wide dynamics we are navigating in our Medicaid business and the investments we are making to support business transformation and deepening capabilities within CarillonRx. Our health benefits segment demonstrated balance and resilience in the quarter. In commercial, we continued to make progress on our margin recovery initiative and are delivering solid membership growth, notably in our individual ACA business, which has grown substantially year over year. We've also extended our momentum in national accounts where the business is tracking to historically high retention levels and new customer acquisition remains strong. Year to date, we've consolidated business with additional existing employer group clients who previously only worked with us on a slice of their business. a testament to the unique value we deliver to the market. In Medicaid, we are pleased with our recent new business wins and re-procurement success, positioning us for future growth. We launched the Indiana Pathways for Aging program just weeks ago and are proud to be the largest payer in this important program in our home state, serving nearly 40% of all eligible Hoosiers. Indiana Pathways plays directly to our strengths, serving populations with chronic and complex needs. We were also privileged to be awarded the CanCare Kansas Medicaid RFP this quarter, working in partnership alongside two blue partners as Healthy Blue. Turning to Medicaid redeterminations, while nearly all of our members have had their eligibility redetermined since the process resumed last year, our work is not done. With approximately 70% of coverage losses attributable to administrative challenges, we continue our proactive outreach to members to maximize access to care and minimize barriers to whole health. We expect disenrolled members to re-enroll throughout the year, albeit on a longer lag than expected when redeterminations resume last year. We are seeing the percentage of returners steadily increase, especially in our blue states, where we offer both commercial and Medicaid health plans. As a result of redeterminations, our Medicaid membership mix has shifted, resulting in increased acuity, and we are working actively with our state partners to ensure rates remain actuarially sound. In Medicare, we were pleased with the recent ruling regarding our challenge of the initial 2024 star ratings. As a result, our enterprise weighted average rating has increased to four star, and we now expect approximately 56% of our members will be in plans rated at least four star or in contracts too new to be rated that will be reimbursed similarly in payment year 2025. This outcome will help offset funding cuts to the Medicare Advantage program for the second consecutive year, which we believe will result in increased premiums and or reduced benefits for seniors and people with disabilities who rely on Medicare Advantage for their health and well-being. For our part, we maintained our disciplined approach to 2025 bids. We will be offering highly valued and competitive benefits as we seek to balance growth and margins and remain focused on building an attractive and sustainable Medicare Advantage business for the long term. In our health services businesses, we are making progress on our key strategic priority to scale our enterprise flywheel for growth. Carillon Services delivered robust growth in operating revenue and earnings in the quarter as we gained traction with external clients both through new business wins and the expansion of risk-based services to existing customers. For example, we recently secured a significant win with an existing Blue Cross Blue Shield partner and deployed new behavioral and medical benefit management services to state and third-party payer clients. These awards are a testament to the value we deliver and an affirmation of our strategy of proving value internally before driving growth externally. Turning to Carillon Rx, we are integrating recent acquisitions and scaling key value drivers as we invest to control the levers that matter to deliver greater value and enhance consumer experiences for our members. Our margin performance in the second quarter reflects elevated investment, specifically around infrastructure and service levels. as we remain committed to providing best-in-class home delivery and specialty Rx services. We see significant opportunity to grow and scale these assets and remain excited about the growth potential of Care One Rx. We are making progress on our enterprise strategy in 2024 to accelerate capabilities and services, invest in high growth opportunities and optimize our health benefits business and have robust long-term growth potential embedded in each of these imperatives. We are delivering strong and accelerating growth in CAROLINE services with a long runway ahead. Meanwhile, our guidance for 2024 embeds significant investment in growth, notably in CAROLINE Rx, and government health plan operating margins below their long-term average with meaningful upside to our targets. Our focused execution reflects our confidence in Carillon as our flywheel for enterprise growth and the embedded earnings power of our businesses, which together will enable us to deliver strong growth in adjusted diluted earnings per share over the long term. In closing, I want to thank our community partners who share our purpose and dedication, as well as our associates who work hard every day to make Elevance Health a lifetime trusted health partner for the members we are privileged to serve. Their collective passion is reflected in recent external recognition, including as one of America's greatest workplaces in 2024 by Newsweek, where Elevance Health earned five out of five stars, as well as our inclusion among the best companies to work for for 2024 by U.S. News & World Report. With that, I'd like to turn the call over to our CFO, Mark Kay, to discuss our financial results and outlook in greater detail.