Elevance's forecast cut signals deeper struggles for US health insurers
The company's shares fell 1% in premarket trading after kicking-off quarterly earnings for U.S. health insurers on a bleak note.
Industry bellwether UnitedHealth (UNH.N), opens new tab usually starts earnings season for U.S. health insurers but has pushed it back to later in the month this quarter as it, Centene (CNC.N), opens new tab and Molina Healthcare (MOH.N), opens new tab cut their annual profit forecasts.
Elevance cut its annual profit forecast to about $30 per share, compared with $34.15 to $34.85 per share it previously expected.
The company forecast full-year medical loss ratio, a closely watched metric which tracks medical costs, to be about 90%, reflecting the ongoing industry-wide trend of higher costs on Medicaid and Obamacare plans.
The industry has come under pressure from tougher regulations and rising costs. Government-focused plans are under strain due to funding pressures, while Medicaid costs are rising without adequate state rate adjustments.
For the quarter, Elevance reported a medical loss ratio, the percentage of premiums spent on medical care, of 88.9% compared to analysts' estimates of 88.70%.
Elevance banks more on commercial and Medicaid health plans, which cover medical expenses for people with low income with about 19.5% of its members coming from Medicaid in 2024.
Shares of peers Centene, CVS Health (CVS.N), opens new tab, Humana (HUM.N), opens new tab and Molina also fell between 1% and 3% premarket after Elevance's results and forecast cut.
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