Elevance Calms Wall Street Jitters After UnitedHealth Shake-Up

In a week that had health investors on edge, Elevance Health has emerged as a reassuring voice in the noise. The U.S. health insurer reported lower-than-expected medical costs in the first quarter and confirmed that healthcare demand among older adults is running just as forecasted — a sharp contrast to last week’s stumble from industry giant UnitedHealth.

UnitedHealth (UNH.N) recently shocked the market by slashing its full-year profit forecast and missing quarterly estimates for the first time since the 2008 financial crash. The culprit? High costs tied to its Medicare Advantage plans — particularly for older adults and individuals with disabilities. That announcement triggered a sector-wide selloff.

But just days later, Elevance (ELV.N) delivered a different story. Pre-releasing stronger-than-expected Q1 earnings, the company helped ease sector-wide fears. CFO Mark Kaye admitted that Medicare Advantage costs are still elevated, but emphasized they remain “manageable.”

"UnitedHealth is suffering from a double whammy of exposure in Medicare Advantage and in its value-based care Optum Health operations. Elevance just isn't very big in either of those," explained Morningstar analyst Julie Utterback.

UnitedHealth may have absorbed patients switching from rival Medicare plans — a move that inadvertently backfired. These enrollees, facing higher premiums in Group Medicare, used more medical services than expected, according to Kevin Gade, COO at Bahl & Gaynor (a UnitedHealth investor).

Meanwhile, Elevance's leaner footprint in both Medicare Advantage and value-based care proved to be an advantage.

“On the Optum health side, which was where they had a significant earnings revision at UnitedHealth, Elevance really doesn't have an equivalent business like that,” said UBS analyst AJ Rice.

Optum, UnitedHealth’s value-based care subsidiary, has been struggling with slower profit growth as the model shifts focus to patient outcomes over volume. Elevance, without a similar exposure, dodged that bullet.

The numbers back it up:

• Elevance shares rose 2% to $414 in early Tuesday trading.

• UnitedHealth’s stock remains bruised, down nearly 28% for the week.

• Cigna (CI.N) and CVS Health (CVS.N) also saw slight gains, up between 0.7% and 2.4%.

And Elevance didn’t just calm fears — it stayed confident. The company reiterated its full-year profit outlook of $34.15 to $34.85 per share, while confirming a Q1 adjusted net income of $11.97 per share, well above the expected $11.38.

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One key stat worth watching: the medical loss ratio (MLR) — a key measure of how much premium income goes to patient care — landed at 86.4%, better than the 86.8% analysts projected. Most insurers aim to keep this figure around 80% for optimal efficiency.

CFO Kaye capped it all off by stating, “We have not seen changes in utilization patterns from what we expected.” That’s music to Wall Street’s ears — at least for now.