Health insurer Elevance books $700 million charge on job cuts, office closures

(Reuters) -Elevance Health on Wednesday reported a nearly $700 million charge due to job cuts and write-offs from some technology assets after a strategic review in the third quarter to shield itself against several hits to its business next year.

The health insurer cited “a more uncertain forward-looking operating environment” as the reason for its strategic review, which resulted in costs related to contract exits and a reduction in staff, including the relocation of certain job functions.

The company did not immediately respond to a Reuters request for additional details on the job cuts.

Health insurers had warned of a jump in medical costs earlier this year, as older adults opted for elective surgeries that were otherwise delayed during the pandemic.

Insurers are also expected to take a hit from lower government payouts in their Medicare Advantage plans in 2024.

Net income attributable to non-controlling interests fell to $1.29 billion, or $5.45 per share in the quarter ended Sept. 30, from $1.60 billion, or $6.62 per share, a year earlier.

The company, however, posted a better-than-expected adjusted quarterly profit helped by lower-than-expected medical costs.

Excluding items, the company made a profit of $8.99 per share, above analysts’ estimates of $8.44 per share, according to LSEG data.

Elevance’s medical loss ratio, the percentage of claims paid to premiums collected, was 86.8% for the third quarter compared with 86.4% in the previous quarter. Analysts had expected a ratio of 87.32%, according to LSEG data.

On an adjusted basis, the company now expects full-year profit of more than $33 per share, compared with its previous forecast of over $32.85 per share. Analysts were expecting a profit of $32.93 per share, according to LSEG data.

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