Elevance Health Inc (NYSE:ELV) stock fell 5.87% (As on July 18, 11:22:17 AM UTC-4, Source: Google Finance) after the company posted weaker-than-expected Q2 earnings and issued a major downgrade to its full-year profit forecast, citing rising medical costs in its Medicaid and ACA businesses. The company’s benefit expense ratio jumped to 88.9%, up 260 basis points from a year ago, driven by higher claims in Medicaid and Affordable Care Act plans. That pressure outweighed improving efficiency, as the operating expense ratio fell to 10.1%, thanks to disciplined cost controls and revenue leverage. Total medical membership dropped by 212,000 from Q1, with declines in Medicaid and ACA coverage offsetting gains in Medicare Advantage. Elevance’s Carelon business, which includes home health and pharmacy services, was a bright spot revenues surged 36% to $18.1 billion, helped by acquisitions and strong product performance in CarelonRx.

Moreover, Net investment income fell 4.3% year over year to $486 million but beat the consensus mark of $464.7 million. The adjusted operating margin deteriorated 170 basis points (bps) year over year to 5%. Total expenses of $47.5 billion rose 16.1% year over year. Carelon segment’s operating revenues amounted to $18.1 billion, which rose 36.1% year over year. Elevance Health exited the second quarter with cash and cash equivalents of $8.6 billion, which rose from the 2024-end level of $8.3 billion. Total assets of $121.9 billion increased from the $116.9 billion figure at 2024-end. Total equity of $43.9 billion grew from the 2024-end level of $41.4 billion. Elevance Health generated net cash flow from operations of $3.1 billion in the first half of 2025, an increase of 26.6% year over year.

ELV in the second quarter of FY25 has reported the adjusted earnings per share of $8.84, beating the analysts’ estimates for the adjusted earnings per share by 3.5%, as per the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 14.3 percent to $49.4 billion in the second quarter of FY25, beating the analysts’ estimates for revenue by 2.6%. Quarterly revenues benefited from rising premiums and product revenues. However, the upside was offset by rising medical cost trends in the ACA and Medicaid business.

The company slashed its full-year EPS guidance to around $30, down from its prior $34.15$34.85 range and well below the Street’s $34.40 consensus. Management earlier expected operating revenues to witness high-single- to low-double-digit growth in 2025 from $175.2 billion in 2024.