Elevance Health Inc. (NYSE: ELV) shares dropped 12% after reporting Q2 2025 earnings below expectations, prompting a significant cut in full-year guidance. Q2 revenue was $49.42 billion, up 14.3% YoY. The Health Benefits segment saw increased premium yields and Medicare Advantage membership, offset by Medicaid losses. Adjusted earnings were $8.84 per share, below the consensus of $9.20.

The benefit expense ratio rose to 88.9%, driven by higher medical costs in the Medicaid business and ACA health plans. Operating expense ratio improved to 10.1%, with adjusted operating expense ratio at 10%, driven by expense leverage and growth in operating revenue. Health Benefits segment operating revenue was $41.6 billion, up 12% YoY.

Elevance Health’s fiscal year 2025 adjusted earnings guidance was lowered to around $30 per share from $34.15-$34.85, below the consensus of $34.40. President and CEO Gail Boudreaux cited elevated medical costs in ACA and slower Medicaid rate alignment. Centene Corp (NYSE: CNC) also withdrew its 2025 EPS guidance due to market challenges.

Industry concerns over elevated medical costs and risk prediction accuracy in government-sponsored programs like Medicaid and ACA have been highlighted by recent events. ELV stock is trading down 11.8% to $303.92. This reflects broader industry challenges faced by health insurers in forecasting risk and pricing accurately.

Read more at Yahoo Finance: Elevance Health Hit By Medicaid Troubles, Trims Outlook