Elevance Health Lowers Profit Forecast for 2024 – Stock Price Falls

The American insurance company Elevance Health is compelled to revise its profit forecast for 2024 downward. The reason for this is increased expenses due to a higher demand for medical services, particularly from members with government-supported insurance plans. This ad-hoc announcement caused the company's shares to fall by six percent in pre-market trading. Elevance Health now expects an adjusted profit of 33 USD per share for the coming year. Originally, the company had anticipated a result of at least 37.20 USD per share. This is a significant decline, especially when considering analysts' forecasts, which on average had predicted a profit of 37.26 USD per share. The end of a pandemic-related regulation has led to an increase in sick patients under the government-supported Medicaid plans. These plans cover healthcare costs for individuals with limited incomes. This shift has imposed additional costs on insurers, including Elevance. The medical loss ratio, which is the proportion of premiums spent on medical services, rose to 89.5 percent in the third quarter. In comparison, this figure was 86.8 percent in the previous year; analysts had expected 87.15 percent. Additionally, the company's adjusted earnings per share missed analysts' expectations in the third quarter, with a result of 8.37 USD, compared to the average forecast of 9.66 USD.