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Elevance Health Inc (NYSE:ELV). has released its financial results for the second quarter of 2025, highlighting significant developments in revenue and earnings performance. This article delves into the details of the company’s quarterly performance and its future guidance, offering a comprehensive analysis for stakeholders.
Elevance Health Falls Short of EPS Expectations in Second-Quarter 2025
Elevance Health reported operating revenue of $49.4 billion for the second quarter of 2025, marking a 14.3% increase from the same period in the previous year. This growth was primarily driven by higher premium yields, recent acquisitions, and expansion in the Medicare Advantage membership. However, the company’s diluted earnings per share (EPS) stood at $7.72, with an adjusted EPS of $8.84, falling short of the expected EPS of $9.16. The disparity in earnings was attributed to elevated medical cost trends in the ACA and Medicaid sectors, which impacted the overall profitability.
Comparing the current performance against expectations, the operating gain for the quarter was $2.4 billion, a decrease from the previous year’s $2.8 billion. This resulted in an operating margin of 4.9%, down from 6.4% in the prior year. The adjusted operating margin also saw a decline, standing at 5.0% compared to 6.7% in 2024. Despite these challenges, Elevance Health managed to return $2.0 billion of capital to shareholders year-to-date, reflecting its commitment to shareholder value.
In terms of segment performance, the Health Benefits segment reported an operating revenue of $41.6 billion, a 12% increase year-over-year. However, the operating gain in this segment declined to $1.6 billion due to higher medical costs. On the other hand, the Carelon segment, which includes CarelonRx and Carelon Services, saw a significant revenue increase of 36% to $18.1 billion, driven by acquisitions and growth in product revenue.
Elevance Health Revises Full-Year 2025 Guidance
Looking ahead, Elevance Health has revised its full-year 2025 guidance, projecting an adjusted diluted EPS of approximately $30.00. This revision accounts for the ongoing impact of rising medical costs and slower rate alignment in Medicaid. The company remains focused on managing these challenges by enhancing efficiency and deploying targeted investments in technology and value-based care delivery.
The company’s strategic outlook emphasizes its commitment to achieving at least 12% average annual growth in adjusted diluted EPS over time. This confidence stems from the embedded earnings potential of its diversified Health Benefits and Carelon businesses. Despite the external pressures, Elevance Health is determined to maintain its operational foundation to support long-term value creation.
Additionally, Elevance Health has outlined its capital allocation strategy, which includes continued share repurchases and dividend payments. As of June 30, 2025, the company had approximately $8.0 billion of Board-approved share repurchase authorization remaining. This strategic focus on capital returns is intended to enhance shareholder value while ensuring financial flexibility to navigate industry challenges.
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