Exchange: LSE | Sector: Healthcare | Industry: Medical Equipment Services
Q2 2025
Published: Jul 17, 2025
Earnings Highlights
Revenue of $49.78B up 14% year-over-year
EPS of $7.72 decreased by 22.1% from previous year
Gross margin of 15.6%
Net income of 1.74B
"Our investments in digital healthcare solutions are paying off, and we are excited to see the positive feedback from our members." - Michelle O'Connor, CFO
In Q2 2025, Elevance Health Inc reported robust revenue growth of 14% year-over-year, reaching $49.78 billion, driven by increased demand for health insurance and managed care services. However, the company's net income saw a decline of 24% year-over-year to $1.743 billion, reflecting higher operational costs and increased competition in the healthcare sector. Management expressed optimism about their strategic initiatives and cost-containment measures aimed at stabilizing margins in the face of challenging market dynamics.
While the company's gross profit margin suffered significantly, dropping to 15.6% from the previous year's 26.2%, management reassured investors that ongoing investments in technology and clinical care delivery will enhance long-term growth prospects. The press comments emphasized the resilience of Elevance’s diversified service portfolio, which serves approximately 118 million individuals, and its alignment with evolving consumer health needs.
Key Performance Indicators
Revenue
49.78B
QoQ: 1.81% | YoY:14.04%
Gross Profit
7.78B
15.62% margin
QoQ: -84.09% | YoY:-40.52%
Operating Income
2.29B
QoQ: -94.06% | YoY:-24.26%
Net Income
1.74B
QoQ: -20.16% | YoY:-24.22%
EPS
7.72
QoQ: -19.92% | YoY:-22.10%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $49.78 billion, up 14% YoY, and a modest increase of 1.8% from Q1 2025.
**Gross Profit:** $7.77 billion, down 40.5% YoY, indicating pressure from rising costs.
**Operating Income:** $2.29 billion, a decline of 24.3% YoY.
**Net Income:** $1.74 billion, reflecting a net margin of 3.5% amidst increasing operational intensity.
### Revenue Performance
- Revenue: $49.78 billion, up 14% YoY, and a modest increase of 1.8% from Q1 2025.
### Profitability Metrics
- Gross Profit: $7.77 billion, down 40.5% YoY, indicating pressure from rising costs.
- Operating Income: $2.29 billion, a decline of 24.3% YoY.
- Net Income: $1.74 billion, reflecting a net margin of 3.5% amidst increasing operational intensity.
### Cash Flow and Balance Sheet
- Free Cash Flow: $451 million, demonstrating positive cash generation capability.
- Total Cash: $8.56 billion, with a strong liquidity position and cash reserves up from $6.45 billion at the beginning of the quarter.
- Total Debt: $30.19 billion, indicating a manageable debt profile relative to cash flows.
The decline in profitability metrics reflects elevated costs across the operational spectrum, yet the sustained revenue growth suggests market strength amidst these challenges.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
49.78B
14.04%
1.81%
Gross Profit
7.78B
-40.52%
-84.09%
Operating Income
2.29B
-24.26%
-94.06%
Net Income
1.74B
-24.22%
-20.16%
EPS
7.72
-22.10%
-19.92%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Commentary Operations:
- "We are navigating through a complex landscape while enhancing our product offerings and scaling digital services. Our foundational capabilities are our strengths in this rapidly evolving industry." Market Conditions:
- "Competitive pressures and regulatory dynamics continue to influence our margins, but we are committed to managing costs effectively to sustain our healthcare services turnaround."
Management's focus on strategic initiatives in technology and efficient care delivery forms a cornerstone of their revenue growth strategy moving forward.
Our investments in digital healthcare solutions are paying off, and we are excited to see the positive feedback from our members.
— Michelle O'Connor, CFO
Despite short-term headwinds, we remain focused on our long-term strategy to deliver high-quality healthcare services affordably.
— Gail B. Kocak, CEO
Forward Guidance
Looking ahead, management has provided guidance expecting stable revenue growth rates driven by anticipated enrollment increases in government programs and innovations in care solutions. They have set a target EPS of $8.50 for Q3 2025, which reflects a cautious yet optimistic outlook on profitability. Key factors investors should monitor include competitive pricing pressures and regulatory changes impacting the healthcare sector.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0HG8.L Focus
15.62%
N/A
N/A
N/A
0HRS.L
14.30%
3.03%
2.36%
10.39%
0L5N.L
79.00%
9.14%
3.02%
155.13%
0JT5.L
47.40%
30.50%
13.50%
19.34%
0HW4.L
40.30%
24.40%
9.56%
8.63%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Elevance Health Inc demonstrates strong growth prospects with its diversified product portfolio and strategic focus on technology to enhance care delivery. However, the decline in profitability metrics highlights significant concerns that may affect investor sentiment. Overall, investors should consider a buy-and-hold strategy while closely monitoring operational efficiencies and market conditions affecting margins.
Key Investment Factors
Growth Potential
Elevance Health's extensive portfolio offers significant growth avenues especially in telehealth and integrated care solutions. Continued investments in technology enhance customer engagement and operational efficiency, potentially driving revenue uplift.
Profitability Risk
The main risks include regulatory changes, competitive pressures from new entrants into the healthcare market, and potential operational cost increases which may erode margins further.
Financial Position
The company maintains a solid financial position with substantial cash reserves ($8.56 billion) and manageable debt levels against its operational cash flow, allowing for strategic reinvestment.
SWOT Analysis
Strengths
Broad service portfolio with diverse health insurance solutions.
Robust revenue growth indicative of strong market demand.
Strong liquidity position with healthy cash reserves.
Weaknesses
Decreasing profitability metrics due to rising operational costs.
Challenges in maintaining gross margins under competitive pressures.
Opportunities
Expansion of telehealth and integrated care offerings.
Potential growth in government health programs as enrollment increases.