Another health insurance company cuts its profit forecast, Elevance (ELV.US) crashes after earnings

Elevance (ELV.US) reported third-quarter results that missed Wall Street expectations and lowered its full-year profit forecast on Thursday, due to inadequate Medicaid payments. Shares fell 11.04% to $442.10 before the market opened. The company reported third-quarter revenue of $4.47 billion, up 5.2% year-on-year, topping market expectations; adjusted earnings per share of $8.37, compared to the $9.66 expected by analysts surveyed by Bloomberg. Elevance now expects adjusted profits for the year to be about $33 per share, down from an earlier forecast of $37.20. Elevance's medical loss ratio (a key measure of medical costs) was 89.5%, below Wall Street expectations. The number of days payable claims was 42.8 days as of September 30, 2024, down 5.8 days year-on-year, due to an increase in average daily benefit costs. Elevance said its Medicaid business, which provides safety net health plans for low-income Americans, was facing "unprecedented challenges," as states have removed hundreds of thousands of people from Medicaid plans since the end of the pandemic, and insurers say they are not being paid enough to cover the medical needs of the remaining members. The results could foreshadow broader trouble for the industry, as rising medical costs and reduced government health plan payments are squeezing profits. Elevance is the second insurer to lower its full-year profit forecast this year, after UnitedHealth's forecast on Tuesday disappointed investors.