Elevance Health became the latest insurer to adjust its 2025 outlook, citing elevated medical cost trends in the Affordable Care Act marketplace and slower rate alignment in Medicaid.
The firm lowered its profit outlook for the year to $30 per share from previous estimates of between $34.15 and $34.85 per share, which sent its stock plummeting following the announcement.
Centene Corp. also recently trimmed its estimates, pointing to lower-than-anticipated market growth and a significantly higher prevalence of illness. Meanwhile, TD Cowen reduced its price target on Molina Healthcare to $283 from $369 after the company warned of elevated medical utilization across all three of the company’s business lines expected to continue through the remainder of the year.
Elevance President and CEO Gail Boudreaux said the company is dealing with health care cost volatility by focusing on targeted investments, cost management and an emphasis on creating long-term value while external factors are shifting. The insurer is putting particular focus on high-cost areas like specialty care, post-acute care and some outpatient settings. Boudreaux also noted the company has repriced its ACA plans to account for higher costs.
"We recognize that revising guidance for the second consecutive year is disappointing, and we remain committed to transparency and strong execution as we continue to navigate unprecedented cost trends affecting multiple lines of business," Boudreaux said. "We remain confident in the strength of our enterprise, the impact of our investments and our ability to create long-term value through operational discipline, innovation and our commitment to whole health transformation."
Elevance Health's medical loss ratio was 88.9% in the second quarter, up from 86.4% in the first quarter, reflecting expected pressures in the ACA and Medicaid markets. The insurer reported 45.6 million members as of Q2, down by about 212,000 due to lower Medicaid enrollment and lower effectuation rates in the ACA marketplaces.
Elevance is the nation’s second-largest health insurer behind UnitedHealthcare and is best known for its operation of Anthem brand Blue Cross and Blue Shield plans in 14 states.
The outlook actions come at a time when elements of Medicaid and the ACA are under scrutiny in the One Big Beautiful Bill Act (OBBBA) signed into law by President Trump earlier this month. The legislation aims to reduce federal healthcare spending by $1 trillion over the next 10 years through additional eligibility rules on government health plans and discontinuing ACA premium subsidies.
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