Elevance Health Inc.

ticker: ELV step: 01 generated: 2026-05-12 source: quick-research

Elevance Health, Inc. (ELV) — Business Overview

Business Description

Elevance Health (rebranded from Anthem in 2022) is the largest Blue Cross Blue Shield (BCBS) licensee in the US — operating BCBS plans in 14 states + various national Medicare Advantage + Medicaid + commercial businesses. The company is the #2 US health insurer by membership (UnitedHealth #1) and has been pivoting toward integrated healthcare services through Carelon (its own healthcare services brand: CarelonRx PBM + Carelon Services + Carelon Behavioral Health). FY25 revenue $167.1B (+11%). The defining 2026 narrative: like UnitedHealth + CVS-Aetna, Elevance is navigating Medicare Advantage rate-cycle pressure + Medicaid acuity trend deterioration. Q1 2026 results showed early stabilization with raised 2026 guidance.

Revenue Model

Four reportable segments:

• Health Benefits (~85% of revenue, $150B+ in FY24) — Anthem-branded BCBS commercial + individual; Medicare Advantage; Medicare Supplement; Medicaid managed care; Federal Employee Program (FEP); BlueCard.
• CarelonRx (~10%) — Pharmacy benefit manager; specialty pharmacy; infusion services. Replacing IngenioRx (in-house PBM).
• Carelon Services (~4%) — Carelon Behavioral Health, Carelon Insights (data/analytics), Carelon Post Acute Solutions.
• Carelon Other / Corporate (~1%) — Various smaller services.

Revenue components: ~70-75% premiums (health plans), ~20% pharmacy/services, ~5% interest income.

Products & Services

• Anthem Blue Cross Blue Shield: Commercial group + individual + Medicare + Medicaid in 14 states (California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia, Wisconsin).
• Empire BCBS, Anthem BC: Various BCBS plans.
• Medicare Advantage: Anthem-branded; selectively retracting from underperforming plans in 2026.
• Medicaid Managed Care: 7M+ Medicaid members across ~25+ states.
• Federal Employee Program (FEP): Federal government employee health plans.
• CarelonRx PBM: Drug benefit management for Anthem members + 3rd-party plans.
• Carelon Behavioral Health: Mental health / substance use; one of largest US behavioral health companies.
• Carelon Specialty Pharmacy + Infusion: Specialty drug fulfillment + home/center infusion services.
• CarelonInsights: Data analytics + decision-support tools.

Customer Base & Go-to-Market

• Members: 46M+ medical members; 7M+ Medicaid; ~9M+ Medicare-related (MA + supplement + Part D).
• Employer Customers: Most Fortune 500 + multi-state employers; ASO + risk-based.
• Government: 32% of consolidated revenue from US government agencies (Medicare + Medicaid + Federal Employee Program).
• BCBS Geographic Footprint: 14 BCBS states.

Distribution: Direct enterprise sales (large employers); broker/consultant channels (SMB); Medicare broker channels; Medicaid contract bidding with states.

Competitive Position

Elevance competes in three overlapping markets:

Health Insurance:

• UnitedHealth Group (UNH) — Larger; better Medicare Advantage positioning.
• CVS Health (Aetna) — Similar vertical integration with CarelonRx + Carelon Services.
• Humana — Pure-play Medicare Advantage leader.
• Cigna — Smaller; PBM via Express Scripts.

PBM (CarelonRx):

• Express Scripts (Cigna) — Larger PBM competitor.
• OptumRx (UnitedHealth) — Direct competitor.
• CVS Caremark — Direct competitor; together Big 3 PBMs cover ~80% of US scripts.

Behavioral Health (Carelon):

• Magellan Health (Centene) — Direct competitor.
• Acadia Healthcare — Smaller behavioral.

Structural advantages:

1. BCBS scale + brand recognition — Anthem-branded BCBS plans in 14 states; multi-decade member relationships.
2. Vertical integration via Carelon — Internal PBM + behavioral + services = similar moat to UNH/Optum + CVS/Aetna.
3. National scale + state-specific BCBS franchise — Provides both national + local market presence.
4. 32% government revenue — Provides counter-cyclical buffer to commercial cycle.

Active risks:

• Medicare Advantage rate-cycle pressure — CMS proposed flat 2027 MA payment increases; ELV deliberately shedding MA membership in 2026 (high-teens % decline) to focus on profitable HMO + DSNP.
• Medicaid margins underwater — FY26 guide projects ~-1.75% operating margin; acuity trend deterioration + state rate lag.
• MLR elevated at 90.2% — Higher medical-cost trend than historical norms.
• Revenue declining in 2026 — Low single-digit % decline guided as ELV de-emphasizes underperforming risk-based businesses.

Key Facts

• Founded: 1944 (Anthem Insurance Companies); 2004 BCBS aggregation; rebranded Elevance 2022
• Headquarters: Indianapolis, Indiana
• Employees: ~104,000+
• Exchange: NYSE
• Sector / Industry: Health Care / Health Care Plans
• Market Cap: ~$95B
• FY2024 Revenue: $175.2B
• FY2025 Revenue: $167.1B (Health Benefits decline; Medicare Advantage attrition)
• Medical Members: ~46M+
• Medicaid Members: ~7M+
• Medicare Advantage Members: Declining ~17% in 2026 to focus on profitable mix
• BCBS States: 14
• FY2026 Operating Revenue Guide: Low single-digit % decline
• FY2026 Medical Loss Ratio: 90.2% ± 50 bps
• Dividend Yield: ~1.7%
• CEO: Gail Boudreaux

ticker: ELV step: 04 generated: 2026-05-12 source: quick-research

Elevance Health, Inc. (ELV) — Financial Snapshot

Income Statement Summary

Q1 2026 + FY26 Guide

Cash Flow & Capital Allocation (FY2025)

Key Ratios (approximate)

• P/E: ~11x (FY26E adjusted EPS ~$36–38) | EV/EBITDA: ~9x | FCF Yield: ~7%
• Revenue Growth (FY25): -5% (deliberate)
• Adjusted EPS Growth: ~+6%
• Medical Loss Ratio: ~89-90% (elevated)
• Dividend Yield: ~1.7% | Buyback Yield: ~3%+
• ROE: ~12% (depressed by MLR pressure)

Growth Profile

FY25 was a transition year for Elevance:

• Operating revenue +3% Q4 but full-year flat-to-down as ELV deliberately reduced underperforming risk-based businesses (especially Medicare Advantage)
• Health Benefits segment Q4 +11% on Medicare Advantage temporary boost + commercial enrollment
• Carelon services growing
• MLR rising on Medicare + Medicaid acuity trends + IRA Part D dynamics

The 2026 setup:

• Deliberate revenue decline as ELV exits underperforming Medicare Advantage plans (-17% MA membership)
• MLR 90.2% target — elevated but stabilizing
• Q1 2026 results raised guidance — early signs of MA + Medicaid pricing/cost balance improving
• Carelon services continued growth
• Strategic focus on profitable HMO + DSNP Medicare + commercial + Carelon

The defining narrative: ELV is following the same playbook as UNH + Aetna — exit unprofitable MA membership, focus on margin recovery, accept temporary revenue decline.

Forward Estimates

FY2026 Guide:

• Operating Revenue: Low single-digit % decline
• MLR: 90.2% ± 50 bps
• Adjusted EPS: Raised in Q1 (specifics not disclosed)

Bull case: Medicare Advantage rate cycle improves in 2027; Medicaid state rate increases catch up to acuity; Carelon scaling drives mix toward services; multiple expands to 14x P/E. Bear case: Medicare Advantage rate cycle worsens; Medicaid margins stay negative; PBM regulation impacts CarelonRx; multiple compresses to 8-9x P/E. Consensus targets ~$450–520 vs. trading ~$405–435 (~10–25% implied upside).

ticker: ELV step: 12 generated: 2026-05-12 source: quick-research

Elevance Health, Inc. (ELV) — Investment Catalysts & Risks

Bull Case Drivers

1. Q1 2026 results raised guidance — Early operational stabilization; $1.8B Q1 profit; FY26 EPS guide raised.
2. Deliberate Medicare Advantage de-risking (-17% membership) — ELV proactively exiting underperforming MA plans + IRA-impacted Part D plans; concentrating on profitable HMO + DSNP. Margin recovery expected through 2026-27.
3. BCBS scale + brand moat — 14 BCBS states + Anthem brand + 46M+ members = irreplaceable competitive position.
4. Carelon services growing — Internal PBM + Behavioral Health + Insights = same vertical integration strategy as UnitedHealth Optum + CVS Caremark.
5. Cheap valuation (~11x FY26 P/E) — Discount to UNH (~17x) + CVS (~10x); reflects Medicare Advantage cycle pressure already priced in.
6. 4.5%+ combined capital return yield — Dividend (~1.7%) + buybacks (~3%+); sustainable through cycle.
7. 32% revenue from government — Counter-cyclical buffer to commercial economic cycles.
8. Q4 2025 Health Benefits +11% YoY — Sequential momentum suggests cycle bottoming.

Bear Case Risks

1. Medicare Advantage rate cycle uncertainty — CMS proposed essentially flat 2027 MA payments + IRA effects; ELV's MA business hit hardest in industry (deliberately exited).
2. Medicaid margins at -1.75% — Acuity trend deterioration + state rate lag; could continue through 2026.
3. MLR elevated at 90.2% — Multi-year medical cost trend remains above historical norms.
4. PBM regulation tail risk — Bipartisan congressional pressure on PBM rebate retention; could impact CarelonRx materially.
5. 2026 revenue declining low single-digit % — Operating revenue contraction creates negative narrative even though deliberate.
6. Operating cash flow vs. peer comparison — ELV cash conversion is below UNH peer; suggests less operating leverage from scale.
7. CEO succession risk — Gail Boudreaux has been CEO since 2018; eventual succession transition.
8. State Medicaid rate negotiations — Long lag between acuity trend + rate increases; multi-quarter margin pressure.

Upcoming Events

• Q2 2026 earnings (mid-July 2026): Mid-year guide check + MA membership trajectory.
• Q3 2026 earnings (mid-October 2026): Open enrollment results.
• CMS 2027 MA rate finalization (April 2027): Multi-year impact on Anthem MA profitability.
• Medicare Advantage open enrollment (Oct-Dec 2026): 2027 plan year member additions.
• PBM regulation Senate/House votes: Ongoing through 2026-27 Congress.
• State Medicaid rate negotiations: Quarterly updates by state.
• Annual dividend hike: Typical Q1 cadence.

Analyst Sentiment

Consensus rating is Hold / Buy (~55% Buy, 40% Hold, 5% Sell). Price targets cluster $450–520 vs. trading ~$405–435 (~10–25% implied upside). Bull case targets ~$580 on Medicare Advantage rate cycle improvement + Carelon scaling; bear case ~$320 on continued cycle deterioration + PBM regulation. Morgan Stanley, BofA, Wells Fargo maintain Buy/Overweight; UBS at Neutral; Goldman at Buy; Citi at Buy.

Research Date

Generated: 2026-05-12