The author has an honours degree in economics and politics with a focus on economic development. With 36 years of experience in executive management he has extensive knowledge of insurance/reinsurance, Global and Asia Pacific markets, climate change and ESG. He invests in his personal capacity.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and ...

Core Viewpoint - Elevance Health anticipates a slight decline in revenue for 2026 and projects full-year profit below Wall Street expectations, indicating ongoing challenges from elevated medical costs impacting insurers [1] Group 1: Financial Forecast - The company expects total operating revenue to decrease by a low-single-digit percentage in 2026, raising investor concerns following UnitedHealth's similar revenue decline announcement [3] - The forecast includes a low-double-digit decline in membership for certain plans, partially offset by increased premiums and growth in Carelon, its health services division [3] Group 2: Market Conditions - The outlook reflects continued pressure in the Medicaid sector, contributing to a negative market sentiment and stock selloff [4] - Health insurers are facing persistently high medical costs due to increased demand for behavioral health services and specialty drugs, which have elevated costs over the past two years [5] Group 3: Membership and Policy Changes - The company anticipates a sicker member pool in its Obamacare business due to the expiration of enhanced tax credits that previously supported plan purchases [6] - The expiration of these tax credits, which capped out-of-pocket premiums at 8.5% of income, is expected to lead to higher premiums for millions, potentially discouraging healthier individuals from enrolling [7] Group 4: Regulatory Impact - Shares of health insurers fell after the U.S. health insurance agency announced a rate increase of only 0.09% for Medicare Advantage plans, which was below expectations [8]

Core Insights - The company aims for at least 12% adjusted EPS growth by 2027, with a 2026 adjusted diluted EPS guidance of at least $25.50, reflecting prudent assumptions and strategic repositioning [1][22][24] - The focus for 2026 is on execution and repositioning, with an emphasis on improving care coordination and managing costs effectively [2][9] Financial Performance - Adjusted diluted EPS for Q4 was $3.33, with a full-year EPS of $30.29, benefiting from favorable tax items and solid underlying performance [16][18] - Operating revenue for Q4 reached $49.3 billion, a 10% increase year-over-year, driven by premium rate adjustments and acquisitions [18] - The consolidated benefit expense ratio was 93.5% for Q4 and 90% for the full year, aligning with guidance [18] Membership and Market Dynamics - The company ended the year with 45.2 million members, a decrease of approximately 500,000, primarily due to Medicaid membership declines [17] - Medicaid operating margin is expected to be approximately -1.75% in 2026, with improvements anticipated as rates adjust to current experiences [5][20] - Medicare Advantage membership is projected to decline in the high teens percentage range in 2026, reflecting deliberate portfolio actions [6][20] Strategic Initiatives - The company is enhancing analytics to identify high-cost treatment patterns and improve care coordination, particularly in Medicaid [11][10] - Investments are being made in specialty pharmacy management and behavioral health support to strengthen care management programs [12][11] - The company is focused on maintaining operational discipline while investing in technology and simplifying the member experience [23][25] Long-term Outlook - The long-term enterprise margin target is set at 5% to 6%, with health benefits targeting mid-single-digit margins [9][24] - The company is recalibrating long-term margin expectations to reflect the current business mix and operating environment [25][54] - Confidence in achieving at least 12% adjusted EPS growth in 2027 is based on multiple independent levers and disciplined execution across various segments [24][49]

Financial Performance - Adjusted diluted EPS for Q4 was reported at $3.33, with a full-year EPS of $30.29, benefiting from greater tax favorability and non-recurring items contributing $3.75 per share [1] - Q4 operating revenue reached $49.3 billion, reflecting a 10% year-over-year increase, driven by premium rate adjustments and acquisitions [4][7] - Operating cash flow for 2025 was $4.3 billion, with a target of at least $5.5 billion for 2026, and the company returned $4.1 billion to shareholders in 2025 [4][9] Guidance and Future Outlook - Elevance Health set a 2026 adjusted diluted EPS guidance of at least $25.50, with expectations to return to at least 12% adjusted EPS growth in 2027 [2][6][23] - The company anticipates 2026 to be a trough year for Medicaid, expecting an operating margin of approximately -1.75% and a decline of about 750,000 Medicaid members [5][10][12] - Medicare Advantage membership is expected to decline in the high teens percentage range, while targeting at least a 2% margin [5][13] Membership and Market Positioning - The company ended 2025 with 45.2 million members, a decrease of about 500,000 year-over-year, primarily due to lower Medicaid membership [8] - For the individual ACA business, Elevance expects at least 900,000 members by year-end 2026, with a 10% increase in membership coming out of open enrollment [14] - In commercial segments, employer group risk membership is projected to decline in the high single-digit percentage range due to deliberate pricing decisions [15] Operational Strategies - Executives emphasized "execution and repositioning" as key themes for 2026, focusing on portfolio actions across Medicaid, Medicare Advantage, and the individual ACA market [3] - Carelon is expected to see strong demand, particularly in high-cost areas, but near-term growth may be moderated by lower health plan membership [16] - The company updated its long-term enterprise margin target to 5%–6%, with mid-single-digit margins targeted for health benefits and Carelon segments [19][20]

Earnings Overview - Elevance Health reported fourth-quarter 2025 revenues of $49.3 billion, a 10% increase year over year, but below the consensus estimate of $49.82 billion [1] - The operating revenue for the full year 2025 was $197.6 billion, reflecting a 13% increase [1] - Adjusted earnings per share for the fourth quarter were $3.33, surpassing the consensus of $3.10 [2] Expense Ratios - The benefit expense ratio for the fourth quarter was 93.5%, an increase of 110 basis points, attributed to higher medical costs in Affordable Care Act plans and Medicare Part D seasonality [2] - For the full year, the benefit expense ratio was 90%, up 150 basis points year over year [2] - The operating expense ratio was 11% in the fourth quarter and 10.6% for the full year [3] Segment Performance - The Health Benefits segment generated operating revenue of $41.8 billion in Q4 2025, an 11% increase driven by higher premium yields and Medicare Advantage membership growth [4] - Medical membership totaled approximately 45.2 million as of December 31, 2025, a 1% decrease year over year due to Medicaid attrition [4] - Carelon's operating revenue was $18.7 billion, up 27%, driven by growth in CarelonRx and the acquisition of CareBridge [5] Future Guidance - For fiscal 2026, Elevance Health expects adjusted earnings to be at least $25.50 per share, below the Wall Street estimate of $26.90 [9] - The company forecasts a mid-single-digit decline in sales due to lower premiums and anticipates a benefit expense ratio of 90.2% +/- 50 basis points [9] - Year-end medical enrollment is projected to be between 43,175 and 43,875, down from 45,232 in 2025 [9] Market and Regulatory Environment - The company anticipates a significant decline in Medicare Advantage membership, projected to be in the high teens percentage range for 2026 [7] - Concerns were raised regarding the proposed payment rates for Medicare in 2027, which are expected to be significantly lower than anticipated [10]

Elevance Health (NYSE:ELV) Q4 2025 Earnings call January 28, 2026 08:30 AM ET Company ParticipantsA.J. Rice - Managing Director and Equity ResearchAndrew Mok - Director, Equity ResearchBen Hendrix - VP and Assistant VPDave Windley - Managing DirectorFelicia Norwood - President, Government Health BenefitsGail Boudreaux - President and CEOLisa Gill - Managing DirectorMark Kaye - CFOMorgan Kendrick - President, Commercial Health BenefitsNathan Rich - VP of Investor RelationsPete Haytaian - President of Carelon ...

Elevance Health (NYSE:ELV) Q4 2025 Earnings call January 28, 2026 08:30 AM ET Company ParticipantsA.J. Rice - Managing Director and Equity ResearchAndrew Mok - Director, Equity ResearchBen Hendrix - VP and Assistant VPDave Windley - Managing DirectorFelicia Norwood - President, Government Health BenefitsGail Boudreaux - President and CEOLisa Gill - Managing DirectorMark Kaye - CFOMorgan Kendrick - President, Commercial Health BenefitsNathan Rich - VP of Investor RelationsPete Haytaian - President of Carelon ...

Elevance Health (NYSE:ELV) Q4 2025 Earnings call January 28, 2026 08:30 AM ET Speaker18Ladies and gentlemen, thank you for standing by, and welcome to the Elevance Health Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, where participants are encouraged to present a single question. If you wish to ask a question, please press star then one on your telephone keypad. You will hear a prompt that you have bee ...

Company News - ASML's ADRs rose 5% after reporting orders significantly exceeding investor expectations, driven by increased demand for AI computing workloads [3][5][17] - Seagate's stock increased by 8% following a strong second-quarter earnings report that surpassed expectations, along with a positive outlook [3] - Texas Instruments gained 7% after providing a favorable outlook, indicating improved demand in industrial and data center markets [3] - AT&T's shares rose 3% after reporting fourth-quarter profit and revenue that exceeded analysts' estimates, attributed to strong broadband subscriber growth [3] - C3.ai's stock surged 15% amid reports of merger talks with Automation Anywhere [3] - F5 Inc. jumped 8% after raising its revenue forecast for the fiscal year [3] - New Oriental Education's ADRs rose 6% after beating second-quarter estimates and increasing its annual net revenue forecast [3] - Corning's shares fell 3% after reporting fourth-quarter results and providing a disappointing outlook [3] - Elevance Health dropped 6% after giving an adjusted profit forecast for 2026 that fell short of Wall Street expectations [3] - Qorvo's stock fell 10% after issuing a weaker-than-expected outlook [3] Industry Trends - The tech sector is experiencing a rally, driven by strong earnings from semiconductor and memory companies, which is boosting the AI trade [1][4][6] - The Magnificent Seven stocks are mostly higher, with Nvidia, Alphabet, and Amazon showing gains, while Meta and Apple experienced slight declines [3] - The semiconductor, memory, and storage sectors are seeing significant gains due to positive earnings reports, particularly from ASML, Seagate, and Texas Instruments [3][4] - Asian equities are also benefiting from the tech rally, with notable gains in TSMC and SK Hynix [5][13] - The demand for AI memory is driving earnings growth for companies like SK Hynix, indicating a strong market for AI-related technologies [5][14]

3 Strategic Focus Areas Elevance Health 4Q 2025 Earnings Presentation January 28, 2026 Key Highlights 1 2025 Results Elevance Health fourth quarter operational results consistent with expectations 2 2026 Guidance & 2027 Outlook 2026 adjusted diluted EPS1 guidance of at least $25.50 2027 adjusted diluted EPS1 to grow at least 12%, off our ending 2026 earnings baseline Fourth Quarter & Full Year 2025 Results | Elevance Health | 4Q 2025 | 4Q 2024 | Change | 2025 | 2024 | Change | | --- | --- | --- | --- | --- ...