Core Insights - Elevance Health, Inc. (ELV) has experienced a significant decline of 20.3% year to date, underperforming compared to industry peers and the S&P 500 Index [1][7] - The stock closed at $293.99, near the lower end of its 52-week range of $273.71–$567.26, potentially presenting an attractive entry point for value investors [1] - Elevance has a market capitalization of $66.2 billion, with peers like UnitedHealth Group and Centene also facing challenges this year [1] Membership and Revenue Challenges - Medicaid membership has decreased by 15.1% in 2024 and an additional 4.1% in the first half of 2025, impacting revenue [4] - Membership in Medicare Supplement and employer group risk-based segments is also declining, with expectations of continued volatility into 2026 due to recent policy changes [4][6] Rising Costs and Margin Pressure - Medical costs are increasing due to higher utilization, leading to a deterioration in the benefit expense ratio, which worsened by 260 basis points year over year to 88.9% in Q2 [5] - The full-year benefit expense ratio is projected to be around 90%, with expectations of further increases in the second half of the year [5] Analyst Sentiment and Earnings Outlook - Management has revised its full-year 2025 adjusted EPS outlook down to approximately $30, from a previous range of $34.15-$34.85, reflecting a decline from the 2024 figure of $33.04 [6] - Analysts have sharply cut 2025 and 2026 EPS estimates, with the current consensus estimate for 2025 EPS at $30.59, indicating a 7.4% decline from the prior year [9] Valuation Metrics - Elevance Health trades at a forward 12-month P/E of 9.24X, significantly below its five-year median of 13.44X and the industry average of 14.32X, indicating investor caution [10] - Despite a steeper sell-off, peers UnitedHealth and Centene command higher multiples of 14.05X and 9.94X, respectively [10] Long-Term Growth Potential - Elevance has solid long-term growth drivers, including product expansion, revenue diversification, and premium increases, which may help mitigate current pressures [11] - The company is reallocating resources to more profitable areas and has a return on invested capital of 9.36%, outperforming the industry average of 5.80% [12] Shareholder Value Initiatives - Elevance maintains consistent dividend payouts with a yield of 2.33%, higher than the industry average of 1.37% [13] - The company repurchased shares worth $379 million in Q2 2025, with approximately $8 billion remaining under its buyback authorization as of June 30, 2025 [13]