When a Healthcare Giant Gets Sick: Elevance Health's 20% YTD Decline
Based in Indianapolis, IN, Elevance carries a market capitalization of $66.2 billion. Its peers like UnitedHealth Group Incorporated UNH and Centene Corporation CNC have also stumbled this year, in some cases even more sharply. In fact, UnitedHealth's sheer weight in the health insurance space has dragged down the sector on multiple occasions, while Centene has also contributed to the selling pressure.
Price Performance – ELV, UNH, CNC, Industry & S&P 500
What's Dragging Down ELV Stock?
Several headwinds are hitting Elevance simultaneously. Medicaid membership has shrunk 15.1% in 2024 and another 4.1% in the first half of 2025, erasing members and the revenues they bring. Medicare Supplement and employer group risk-based memberships in the commercial business are also slipping. The situation is likely to remain choppy into 2026, especially with the GOP's recently passed tax-and-policy package, which slashes Medicaid funding and overhauls Affordable Care Act eligibility and enrollment rules.
Meanwhile, medical costs are climbing as utilization grows, compressing margins. In the second quarter, the company's benefit expense ratio worsened 260 basis points year over year to 88.9%. Full-year benefit expense ratio is expected at approximately 90%, with the second half likely to witness steeper jumps.
Investor sentiment soured further as management cut its full-year 2025 outlook. The company now expects adjusted EPS to be around $30, lower than the previously forecasted range of $34.15-$34.85, down from the 2024 reported figure of $33.04. Its peers, such as UnitedHealth and Centene, also lowered their expectations for the current year.
Adding to the unease, President Donald Trump's sharp criticism of pharmacy benefit managers (PBMs) in his push to lower drug prices has put companies with PBM exposure — including Elevance, UnitedHealth and Cigna — under a regulatory and political cloud. Centene sidestepped potential trouble by exiting its PBM operations a few years ago, executing the move as part of its broader value-creation strategy.
Analysts Turn Cold for ELV
Over the past month, 2025 and 2026 earnings estimates have each seen double-digit downward revisions, 16 and 14 cuts, respectively, with no upgrades in sight. The current Zacks Consensus Estimate calls for 2025 EPS of $30.59, a 7.4% decline from the prior year, despite revenue projections implying a 12.4% gain.
The company's earnings track record has been mixed, beating expectations twice in the past four quarters but missing twice as well, for an average surprise of negative 2.3%.
Elevance Health, Inc. Price, Consensus and EPS Surprise
Elevance Health, Inc. price-consensus-eps-surprise-chart | Elevance Health, Inc. Quote
ELV's Valuation: Cheap, But for a Reason?
At a forward 12-month P/E of 9.24X, Elevance Health trades well below both its five-year median of 13.44X and the industry average of 14.32X, a valuation gap that reflects investor caution. UnitedHealth and Centene, despite suffering steeper sell-offs, command higher multiples of 14.05X and 9.94X, respectively.
Why the Long Game Still Works
Despite the near-term turbulence, Elevance retains solid long-term growth levers. Product expansion, revenue diversification, rate hikes, and selective growth in commercial lines should help offset pressures. Premium increases and a sharper focus on optimizing the government business position the company to benefit from structural healthcare trends, including rising health spending, an aging population and the growing burden of chronic disease.
The company reallocates resources to more profitable areas and makes prudent acquisitions. ELV's return on invested capital of 9.36% is higher than the industry average of 5.80%, which indicates that the company is more efficient in generating returns from its capital than the industry.
Its consistent dividend payouts and stock repurchases boost shareholders' value. Elevance's dividend yield of 2.33% is higher than the industry average of 1.37%. ELV bought back shares worth $379 million in the second quarter alone. It had a leftover capacity of roughly $8 billion under its share buyback authorization as of June 30, 2025.
To Conclude
While Elevance's beaten-down valuation and strong long-term industry tailwinds might tempt bargain hunters, the near-term outlook remains clouded by shrinking memberships, rising medical costs, regulatory risks and deteriorating analyst sentiment. With earnings estimates moving sharply lower and the stock currently carrying a Zacks Rank #5 (Strong Sell), investors may want to stay on the sidelines until the company's fundamentals show clearer signs of recovery.
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UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report
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