Elevance Health Is Latest Insurer To Cut Profit Targets As Costs Surge

Forbes

17-07-2025

Elevance Health Thursday became the latest health insurer to lower its profit forecast for the rest ... More of 2025 due to rising costs in its Medicaid plans and individual policies it sells under the Affordable Care Act.
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 Health 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.
'We are updating our outlook to reflect elevated medical cost trends in ACA and slower rate alignment in Medicaid,' Elevance Health 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.
In its second quarter, Elevance Health said 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.