Health Insurance and Pharmaceutical Stocks Plummet Amid Cost Concerns

Health insurance and pharmaceutical companies' stock fell Thursday, led by Elevance Health's 12% plunge after it lowered its outlook due to an "unprecedented cost trend." Other medical insurers like Molina Healthcare, Centene Corp., and Cigna Group also dropped, while pharmaceutical companies Abbott Laboratories and Eli Lilly were down nearly 8% and 3%, respectively. The health care sector was the worst-performing sector in the S&P 500.

Health insurance and pharmaceutical companies' stock fell Thursday, led by Elevance Health's 12% plunge after it lowered its outlook due to an "unprecedented cost trend" [1]. Other medical insurers like Molina Healthcare, Centene Corp., and Cigna Group also dropped, while pharmaceutical companies Abbott Laboratories and Eli Lilly were down nearly 8% and 3%, respectively. The health care sector was the worst-performing sector in the S&P 500.

Elevance Health, a medical insurer, reported second-quarter 2025 adjusted earnings that missed analyst expectations and significantly lowered its full-year guidance [4]. The company cited elevated medical cost trends in the Affordable Care Act (ACA) and slower rate alignment in Medicaid as the reasons for the outlook revision. This led to a significant drop in its stock price, making it the worst-performing stock in the S&P 500.

Other medical insurers also felt the impact. Molina Healthcare shares fell about 5%, Centene Corp. dropped 5%, and Cigna Group dipped 5% [1]. Centene had previously pulled its full-year guidance in early July, while UnitedHealth Group pulled its outlook in May [1].

Pharmaceutical companies were also affected. Abbott Laboratories, which makes medicine and nutritional products like Ensure, narrowed its outlook for the year due to declining demand for COVID-19 tests [1]. Shares of Eli Lilly were recently off by 3% [1].

In addition to these corporate developments, a group of Democratic attorneys general sued to block portions of a U.S. Department of Health and Human Services rule set to go into effect next month [2]. The rule changes could lead to nearly 2 million people losing their health insurance and increase premiums and out-of-pocket costs. The lawsuit was filed in federal court in Massachusetts and includes attorneys general from 20 states and Pennsylvania Governor Josh Shapiro.

The health care sector's performance was also affected by President Trump's announcement of tariffs on pharmaceutical imports [3]. The tariffs, which could reach up to 200% after a one-year grace period, are part of Trump's broader strategy to boost domestic production under Section 232 of the Trade Expansion Act of 1962. The move aims to address national security concerns related to high import volumes of pharmaceuticals. The sudden announcement caused volatility in Asian markets, impacting Australian and Indian drugmakers.

The health care sector's performance was also affected by President Trump's announcement of tariffs on pharmaceutical imports [3]. The tariffs, which could reach up to 200% after a one-year grace period, are part of Trump's broader strategy to boost domestic production under Section 232 of the Trade Expansion Act of 1962. The move aims to address national security concerns related to high import volumes of pharmaceuticals. The sudden announcement caused volatility in Asian markets, impacting Australian and Indian drugmakers.

Investors should closely monitor these developments as they could have significant implications for the health care sector and the broader economy.

References:
[1] https://www.investopedia.com/medical-insurers-and-pharma-firms-stock-slipped-thursday-here-s-why-11774523
[2] https://www.reuters.com/legal/government/democratic-attorneys-generals-sue-block-hhs-changes-aca-health-insurance-2025-07-17/
[3] https://www.ainvest.com/news/trump-surprise-tariff-announcement-hits-asian-pharma-companies-2507/
[4] https://finance.yahoo.com/news/elevance-health-hit-medicaid-troubles-140952075.html