Gordon Reid Elevance Health Inc ELV-N COMMENT Jul 15, 2025

Trades at a cheaper multiple than leader UNH. Likes it.

Their report last week disappointed--their big problem involves Medicaid with their medical cost ratios were much higher. The street saw it as a misstep due to mis-timing.

See UNH comments. The whole US health insurance industry is in turmoil. The industry itself admits there's a problem with how claims are processed and need to be fixed. These companies are necessary in the US health system, and they are for-profit. ELV hasn't traded at this low a valuation since 2013. Hold on.

It is for profit Blue Cross and Blue Shield Insurance and orchestrates insurance across various drug companies as well as administrates health care for the government. There are a couple of headwinds and needs the fundamentals to validate it. He likes the value.

Certainly some stocks are less vulnerable to issues involving tariffs. What comes to mind are healthcare companies. You could look at some of the beaten-down companies that really didn't do well last year, as they're doing quite well today. Try this name, which he owns.

Has long owned them. Trades at good multiples. Shares are down a lot. Their business is structured differently from UNH, which relies on Medicare/Medicaid, but ELV runs on a fee-based system, which means less exposure to medical losses. He just added more shares today on a dip.

More opportunity than UNH, but also hurt by reimbursement rates. But a lot of ELV's business is fee-based, so they don't take on the full liability of these higher rates. Share have fallen to become an opportunity.

Offer in 14 US states for-profit Blue Cross/Shield, and are the administrators of healthcare for the US government. Also operate a pharmacy benefits manager. Costs have risen unexpectedly, but he feels that's temporary. ELV are crucial to delivering healthcare in the US. 

A challenging stock in a challenging sector. 47 million Americans are covered under their programs; 60% of plans are fee-based, so they pass some of the risk to employers. He expected this set up to partially insulate ELV from what's hitting this industry. He was wrong. Many operations that were delayed by Covid are happening now, while a large cohort of people who lost their jobs became eligible for Medicaid. Before, pricing reflected low utilization, but suddenly that surged and pricing has lagged. Pricing is reactive. There could be a V-shaped bottom in this sector. Maybe.