Elevance Health 2025 Q2 Earnings Misses Targets as Net Income Drops 24%

Elevance Health (ELV), ranking 190th by market capitalization, reported its fiscal 2025 Q2 earnings on July 16th, 2025. The total revenue of Elevance Health increased by 13.4% to $49.78 billion in 2025 Q2, up from $43.89 billion in 2024 Q2. However, Elevance Health's earnings per share (EPS) declined significantly, with net income down 24.2% to $1.74 billion, and EPS falling 22.2% to $7.71, missing analysts' expectations. The company revised its FY 2025 adjusted diluted EPS guidance to approximately $30.00, reflecting the ongoing impacts of elevated medical cost trends in ACA and Medicaid.

Revenue

Elevance Health saw a robust increase in total operating revenue, reaching $49.42 billion. Premiums were notably strong, contributing $41.27 billion to the total. Product revenue added $6.04 billion, and service fees amounted to $2.11 billion. Net investment income was $486 million, offset by net losses on financial instruments totaling $131 million. The comprehensive revenue growth underscores the company's strategic efforts across multiple segments.

Earnings/Net Income

Elevance Health's EPS declined 22.2% to $7.71 in 2025 Q2 from $9.92 in 2024 Q2. Meanwhile, the company's net income declined to $1.74 billion in 2025 Q2, down 24.2% from $2.30 billion reported in 2024 Q2. The significant drop in EPS indicates a challenging financial quarter for the company.

Post-Earnings Price Action Review

The strategy of purchasing Elevance Health shares after revenue surpasses expectations on the financial report release date and holding for 30 days yielded a 13.77% return over the past three years. Despite outperforming the benchmark return of 84.45% by a notable margin, the strategy effectively captured short-term gains but fell short in long-term performance. The Sharpe ratio of 0.09 and a maximum drawdown of 0% reveal low risk-adjusted returns with no notable losses during the backtested period. This suggests that while the strategy is beneficial for short-term gains, it may not provide sustained advantages in the long run.

CEO Commentary

"In the second quarter, Elevance Health made meaningful progress in delivering an experience that is simple and personal to those we serve, while advancing our efforts to enhance efficiency across the healthcare system. We are updating our outlook to reflect elevated medical cost trends in ACA and slower rate alignment in Medicaid. We remain focused on managing healthcare costs, deploying targeted investments in advanced technology and value-based care delivery, and reinforcing the operational foundation that supports long-term value creation. With the embedded earnings power of our diversified Health Benefits and Carelon businesses, we remain confident in achieving at least 12% average annual growth in adjusted diluted EPS over time." Gail K. Boudreaux, President and Chief Executive Officer.

Guidance

Elevance Health expects 2025 GAAP net income per diluted share to be approximately $24.10 and adjusted net income per diluted share to be approximately $30.00. The company is revising its FY 2025 adjusted diluted EPS guidance to around $30.00, reflecting the ongoing impacts of elevated medical cost trends in ACA and Medicaid.

Additional News

Elevance Health recently declared a third-quarter dividend of $1.71 per share, payable on September 25, 2025, to shareholders of record at the close of business on September 10, 2025. Furthermore, the company repurchased 0.9 million shares of its common stock for $379 million during Q2 at a weighted average price of $410.05, demonstrating a commitment to returning capital to investors. Additionally, Elevance Health is under legal scrutiny, facing a False Claims Act lawsuit alleging improper broker incentives in Medicare Advantage sales, which could impact future enrollment stability. These developments highlight the company's focus on shareholder returns and the challenges posed by regulatory issues.