Elevance Health Plunges 5.14% on Earnings Miss, Rising Costs

On April 28, 2025, Elevance Health's stock experienced a significant drop of 5.14% in pre-market trading, reflecting investor concerns and market dynamics.

Elevance Health's recent stock performance has been influenced by several key factors. The company reported weaker-than-expected third-quarter earnings, with adjusted earnings of $8.37 per share, falling short of analysts' consensus forecast of $9.66. This earnings miss was primarily attributed to elevated medical costs in the Medicaid business. Despite this, the company's revenue increased by 5.3% to $45.1 billion, surpassing the consensus estimate of $43.5 billion. The CEO, Gail Boudreaux, expressed confidence in the long-term earnings potential of the company's diverse businesses, despite navigating a challenging operating environment.

Health insurers, including Elevance Health, are facing significant challenges due to rising medical costs and reduced payouts from the U.S. government. The 2025 rates for Medicare Advantage payments indicated a 0.2% fall in average payments, which could squeeze profit margins for health insurers. Additionally, a shortage of healthcare workers, increased spending on behavioral-health services, and the growing demand for costly GLP-1 weight-loss drugs are further driving up overall healthcare costs.

Elevance Health, along with other health insurers, has also seen a decline in the number of members in high-rated health plans. The Centers for Medicare & Medicaid Services released its star ratings for health plans, and Elevance Health experienced a 21% decline in members in 4-star or higher plans. This decline, along with the earnings miss, has contributed to the recent stock performance of Elevance Health.