What Happened?
Shares of health insurance provider Elevance Health (NYSE: EVH) fell 3.2% in the morning session after the company reported third-quarter results showing that rising medical costs squeezed profits, despite an increase in revenue. Although operating revenue grew 12.4% year on year to $50.71 billion, the company's profitability declined. The operating gain in its Health Benefits segment reportedly fell sharply to $0.6 billion from $1.6 billion in the same period a year ago, driven by higher medical expenses. The company's benefit expense ratio—which measures how much of its premium revenue is spent on medical care—increased, with the rise attributed to cost trends in its Medicare business. As a result of these pressures, quarterly adjusted earnings per share dropped to $6.03 from $8.37 in the previous year's quarter, overshadowing the fact that both revenue and earnings beat Wall Street's expectations.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Elevance Health? Access our full analysis report here.
What Is The Market Telling Us
Elevance Health’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 26 days ago when the stock dropped 3% on the news that the U.S. Commerce Department initiated a national security investigation into medical equipment and devices, raising concerns about potential tariffs. The probe, conducted under Section 232 of the Trade Expansion Act, examines whether imports of items like syringes, infusion pumps, and surgical instruments pose a national security risk. Such investigations can pave the way for new import duties, creating a significant overhang for the sector. The goal of potential tariffs would be to boost domestic manufacturing by increasing the cost of foreign goods. This development has introduced new uncertainty for the industry, leading to broad-based declines in the stocks of major manufacturers, including Baxter International and GE HealthCare, as investors weigh the potential impact on supply chains and costs.
Elevance Health is down 4.8% since the beginning of the year, and at $347.95 per share, it is trading 23.1% below its 52-week high of $452.69 from April 2025. Investors who bought $1,000 worth of Elevance Health’s shares 5 years ago would now be looking at an investment worth $1,176.
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