George Hill: Hey, good morning, guys, and thanks for taking the question. I — Gail, first I’d like to follow up on Dave’s question on Medicaid and I guess can you talk about where you think we are in the kind of where, in — I guess, in the calendar and the mix of rate determinations versus acuity mix and kind of I guess I’m trying to get a sense for how far behind do you think the kind of the rate repricings are versus the changes in acuity mix from redetermination? And given that you just talked about specialty, I’d love if you could just add a comment on the Kroger deal and if you expect those scripts to transfer over to BioPlus and how you think about the stickiness of those scripts?
Gail Boudreaux: Yeah, George, I think Felicia pretty much covered your question, which is, we think things are quite aligned at this point. So in terms of the acuity and the mix, everything, we have visibility into 75% of our Medicaid premiums. We’ve had very constructive discussions with our states. So, overall, we feel things are lining up. They’re actuarially sound, and our conversations are ongoing. So, I feel very good about our Medicaid business, just to sort of put a finer point on that. In terms of Kroger, I’m going to ask Pete to comment on Kroger and how that’s going to align with our broader pharmacy business.
Peter Haytaian: Yeah, George, thanks for the question on Kroger. And as Gail alluded to it, we’re excited about this deal. It furthers the Carelon and the pharmacy strategy. It certainly is a natural extension of our recent arrangement with BioPlus. And just to give you some background, Kroger Specialty Pharmacy is the largest non-payer-owned specialty pharmacy. They do about 500,000 scripts a year, And it really is a natural complement to what we’re doing with both BioPlus and Paragon, quite frankly. To give you a sense of what this is going to do for us, it’s going to add meaningful scale. It increases our access to more LDDs, limited distribution drugs, which is very important. Certainly strengthens our relationship with manufacturers, enabling us to really provide greater affordability and quality.
And in fact, it has a nice presence in Puerto Rico, which could be very helpful to our MMM business. As it relates to your question on transition of scripts, we feel very good about that. I mean, obviously, in this case with specialty pharmacy, providers and members have choice, but we feel very good about the execution model. We feel very good about the stickiness of the scripts, and we believe the integration and the transition will be straightforward. We expect the arrangement to likely close in Q3 and Q4 this year.
Gail Boudreaux: Next question, please.
Operator: Next, we’ll go to the line up Scott Fidel from Stephens. Please go ahead.
Scott Fidel: Hi, thanks. Just interested if we could double-click on the Carelon Services margins in the first quarter with the 90 basis points of expansion. Anything specifically that you would call out there, and then that pacing does seem to be quite a bit stronger than the full-year guidance where you had sort of called for a flattish to down 30 basis points. So, curious whether you have any updates for us just on how you expect Carelon Services margins to trend for the full year. Thanks.
Mark Kaye: Thank you very much for the question. Margins were better than expected in the first quarter, and that aligned very well to very strong revenue growth in the quarter, given the launch of several new internal risk deals, which we expect to accelerate as the year goes on. We’re not seeking to update our full year guidance at this time, given that both the seasonality of the business continues to evolve as we expand our risk-based revenue and the timing of new product launches is anticipated to result in some transitory quarterly volatility. But let me turn it over to Pete for a couple of minutes to talk about what we’re doing.
Peter Haytaian: Yeah, no, it’s appreciated. And Mark’s really covered it. But think about it this way. We are launching some pretty significant risk arrangements this year. We’ve talked about it, but a full risk arrangement in oncology, a full risk arrangement with the seriously mentally ill. And you should think about this as a natural cadence to launching this throughout the year, and that’s what’s going to impact the margins. So, for example, with the seriously mentally ill, we’re doing this largely with the Medicaid business. It’s not a big bang across all the Medicaid states immediately, as you’d expect. It’s more methodical state by state in ‘24 and ‘25.
Gail Boudreaux: Next question, please.
Operator: Next, we’ll go to the line of Justin Lake from Wolfe Research. Please go ahead.
Justin Lake: Thanks. Good morning. There are some significant changes coming in the Part D space for 2025. I was curious as to your view on what that could mean for premiums. Just maybe you could tell us where you think kind of industry premiums are this year and where how significant that increase could be for 2025.
Gail Boudreaux: I’m going to ask Felicia to address that.
Felicia Norwood: So, good morning, Justin, and thank you for the question. There are significant changes coming for 2025, and I’ll say this, it’s early to provide specifics around what our 2025 strategy is going to be. But as Gail mentioned before, we are going to make sure that we have a very balanced approach as we think about the margins around our Medicare business and focus on those things that we believe bring the highest value to our members as we really work to make sure we have a competitive product in-market that meets the needs of those members that we’re trying to serve with a lot of dynamic changes that are going on in the Medicare environment for 2025. So thank you for the question.
Gail Boudreaux: Next question, please.
Operator: Next, we’ll go to the line of Ann Hynes from Mizuho. Please go ahead.
Ann Hynes: Yeah, thank you. Congrats on retaining the Florida contract, but it looks like you’re actually gaining market share. Can you let us know the membership growth? And also looking ahead over the next couple of years, is there any big state renewal risks for Elevance and alternatively, is there any big RFP opportunities for you? Thanks.
