Elevance Health stock was down more than 8% in midday trading Wednesday following second-quarter results that beat estimates but were not enough to satisfy investors looking for a stronger recovery.
Elevance posted adjusted earnings of $7.45 a share on revenue of $49.8 billion. Wall Street was looking for profit of $6.21 and revenue of $48.8 billion. On the back of the latest results, the company hiked its full-year adjusted earnings guidance to "at least $27" in 2026, up from $26.75 a share previously.
Another important metric that gauges an insurer's medical spending -- the medical cost ratio -- came in at 89.7%, beating expectations of 90.1%.
Elevance's health insurance portfolio is spread across the commercial market and government programs such as Medicare Advantage, which offers health benefits to seniors, and Medicaid, which provides coverage for lower-income beneficiaries.
Elevance said the improved spending ratio on health benefits was led in part by its Medicare Advantage business, but the company continued to call out elevated spending in its Medicaid portfolio, an area where investors had hoped for some relief.
CEO Gail Boudreaux said the company plans to exit Medicaid markets in Washington, D.C., and elsewhere over the next 12 to 18 months "where we do not see a path to sustainable performance."
The lack of improvement "in Medicaid trend is likely to remain the focus & pressure the stock," Cantor Fitzgerald analyst Sarah James wrote in a Wednesday note.
Medicare is a huge source of business for large insurers, and for Elevance it comprised nearly 26% of operating revenue in the health benefits segment during the first quarter. As with industry peers, Elevance shares fell sharply in January when federal Medicare officials initially proposed a lower-than-expected rate increase for insurers. Elevance has left some Medicare markets this year in an effort to improve margins.
Elevance's results come a day ahead of those due from the monster of the industry, UnitedHealth Group. Shares of UnitedHealth fell about 1% Wednesday morning, while industry peers Centene and Molina Healthcare saw theirs drop more than 3%.
Write to Catherine Dunn at catherine.dunn@dowjones.com and Mackenzie Tatananni at mackenzie.tatananni@barrons.com
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July 15, 2026 13:39 ET (17:39 GMT)
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