# Elevance Health Inc. (ELV)

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-12  
**Report type:** Primer (steps 1–3 of 19)  
**API endpoint:** GET /api/v1/research/ELV/primer

## Business Model

---
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

## Financial Snapshot

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

### Elevance Health, Inc. (ELV) — Financial Snapshot

#### Income Statement Summary

| Metric | FY2023 | FY2024 | FY2025 | YoY (FY25) |
|--------|--------|--------|--------|------------|
| Operating Revenue | $170.2B | $175.2B | $167.1B | -5% (deliberate de-emphasis) |
| Health Benefits Revenue | $148.6B | $150.3B | ~$155B+ | +3% (Q4 +11%) |
| Benefit Expense Ratio (MLR) | 87.0% | 88.5% | ~89.5% | rising |
| Adjusted EPS | $33.10 | $33.04 | $34.95+ | +6% |
| GAAP EPS | $33.14 | $30.40 | $32+ | recovery |

#### Q1 2026 + FY26 Guide

| Metric | Q1 2026 / FY26 |
|--------|----------------|
| Q1 2026 Profit | $1.8B |
| FY2026 Operating Revenue | Low single-digit % decline |
| FY2026 Medical Loss Ratio | 90.2% ± 50 bps |
| Medicare Advantage Membership Change | -17% (deliberate exit from underperforming plans) |
| Medicaid Operating Margin | ~-1.75% |
| FY2026 Adjusted EPS Guide | Raised in Q1 (specifics not disclosed in search) |

#### Cash Flow & Capital Allocation (FY2025)

| Metric | Value |
|--------|-------|
| Operating Cash Flow | ~$8B |
| Capital Expenditures | ~$1.4B |
| Free Cash Flow | ~$6.5B |
| Share Repurchases | ~$3.0B |
| Dividends Paid | ~$1.6B |
| Quarterly Dividend | $1.71 |
| Annual Dividend | $6.84 |
| Dividend Yield | ~1.7% |
| Cash & Marketable Securities | ~$10B |
| Total Debt | ~$30B |

#### 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).

## Recent Catalysts

---
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

## Full Research Available

This primer covers steps 1–3 of 19. The full deep dive (moat analysis, DCF, bull/bear,
management quality, earnings transcript analysis) is available via:

- Investment memo: /memo/elv
- Full research API: GET /api/v1/research/ELV/memo
- Coverage universe: /stocks