Elevance Health Thursday became the latest health insurer to lower its profit forecast for the rest … More
Elevance Health Thursday became the latest health insurer to lower its profit forecast for the rest of 2025 due to rising costs in its Medicaid plans and individual policies it sells under the Affordable Care Act.
Citing the “ongoing and industry-wide impact of elevated cost trends in ACA and Medicaid,” Elevance said it now expects adjusted net income per diluted share to be approximately $30.00. That compares to an earlier forecast of 2025 adjusted diluted earnings per share of $34.15 to $34.85.
Elevance, which is the nation’s second largest health insurer behind UnitedHealth Group’s UnitedHealthcare, is best known for its operation of Anthem brand Blue Cross and Blue Shield plans in 14 states. In addition, Elevance manages Medicaid via contracts with multiple states and also sells individual coverage under the ACA known as Obamacare. The company also has a growing Carelon healthcare services business.
“We are updating our outlook to reflect elevated medical cost trends in ACA and slower rate alignment in Medicaid,” Elevance president and chief executive Gail K. Boudreaux said in a statement accompanying earnings. “While the external environment continues to evolve, we are focused on the areas within our control – 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.”
The Elevance Health report comes after government-subsidized health insurance provider Centene withdrew its 2025 financial guidance earlier this month due to higher costs in the individual health plans it sells under the Affordable Care Act as well as rising expenses from enrollees in its Medicaid plans.
Centene’s announcement was only the latest from a parade of health insurance companies that have struggled in the last two years to control costs of subscribers in plans subsidized by the government. Just last week, Molina Healthcare lowered its earnings guidance for the rest of the year in the face of cost pressures in all three of the government-subsidized health insurance programs it helps manage: Medicaid, Medicare Advantage and individual coverage under the ACA, also known as Obamacare.
And in May, UnitedHealth suspended its financial outlook for the rest of the year and replaced its top executive as the parent of UnitedHealthcare grapples with rising healthcare costs in its Medicare Advantage business. Medicare Advantage plans contract with the federal government to provide health benefits to seniors.
Medicare Advantage plans also contributed to struggles last year for Humana and CVS Health, which elevated a new chief executive in part to help gain control of its struggling Aetna health insurance business. CVS is also exiting the individual health insurance business, leaving about 1 million Aetna members in 17 states looking for new coverage in 2026.
In Elevance’s case, its second quarter net income fell 24% to $1.7 billion from $2.3 billion in the year ago quarter thanks in part to rising costs. Total revenues were up 14% to $49 billion.
Like other health insurance plans, Elevance is seeing higher benefits expenses, reporting that its benefit expense ratio, which is the percentage of premium revenue that goes toward medical costs, “was 88.9 percent, an increase of 260 basis points year over year, reflecting higher medical cost trend primarily in our Medicaid business and ACA health plans.” In the first quarter, the benefit expense ratio was 86.4%.
Elevance said its health benefits segment operating revenue was up 12% to $41.6 billion “driven primarily by higher premium yields, recently closed acquisitions, and growth in our Medicare Advantage membership, partially offset by lower Medicaid membership.”
Elevance ended the second quarter with 45.6 million health plan members, which was down about 212,000 compared to the first quarter of this year, the company said.
Meanwhile, the company’s Carelon health services business, which includes the pharmacy benefit management company CarelonRx, continues to grow. Its operating revenue was up 36%, or $4.8 billion, to $18.1 billion in the second quarter compared to the year-ago period thanks to “acquisitions in home health and pharmacy services, growth in CarelonRx product revenue, and the scaling of innovative risk-based capabilities in Carelon Services,” the company said.
