Core Insights - Elevance Health reported third-quarter profit that exceeded Wall Street estimates, indicating strong financial performance [1] Financial Performance - The company successfully managed to keep medical costs in check, contributing to its better-than-expected profit results [1]

Financial Performance - Operating revenue for Q3 2025 was $50.1 billion, an increase of 12.0% from Q3 2024[5] - Diluted EPS for Q3 2025 was $5.32, with adjusted diluted EPS at $6.03[5] - Total revenues for the three months ended September 30, 2025, increased by 12.4% to $50,711 million compared to $45,106 million in 2024[38] - Health Benefits operating revenue for the three months ended September 30, 2025, rose by 10.4% to $42,246 million from $38,278 million in 2024[46] - Carelon's operating revenue reached $18.3 billion in Q3 2025, a 33% increase compared to the prior year quarter[23] - Carelon Services segment reported a significant increase in operating revenue of 57.9%, reaching $7,324 million for the three months ended September 30, 2025[46] - Net income for the three months ended September 30, 2025, was $1,187 million, reflecting a 17.8% increase from $1,008 million in 2024[38] - Operating revenue for the nine months ended September 30, 2025, increased by 13.9% to $148,273 million, compared to $130,215 million in 2024[59] Expense and Margin Analysis - The benefit expense ratio increased to 91.3%, up 180 basis points year-over-year, primarily due to cost trends in the Medicare business[9] - The operating margin for the Health Benefits segment was 1.4%, down from 4.2% in the prior year[14] - Operating expenses as a percentage of total operating revenue decreased to 10.5% for the three months ended September 30, 2025, compared to 11.8% in 2024[38] - The company’s benefit expense as a percentage of premiums increased to 91.3% for the three months ended September 30, 2025, compared to 89.5% in 2024[38] - Adjusted operating expense ratio for the three months ended September 30, 2025, was 10.4%, an increase of 100 basis points compared to 9.4% in 2024[59] Shareholder Returns - The company returned $3.3 billion of capital to shareholders year-to-date[5] - Shareholders' earnings per diluted share increased by 22.0% to $5.32 for the three months ended September 30, 2025, from $4.36 in 2024[38] - Shareholders' net income for the three months ended September 30, 2025, was $1,189 million, representing a 17.0% increase compared to $1,016 million in 2024[56] - The company expects shareholders' earnings per diluted share for the full year 2025 to be approximately $24.70[59] Cash Flow and Assets - Operating cash flow was $4.2 billion year-to-date, a decrease of $0.9 billion year-over-year[11] - Cash and cash equivalents at the end of the period increased to $8,713 million from $7,866 million in 2024[42] - Total assets as of September 30, 2025, were $122,749 million, up from $116,889 million at the end of 2024[40] Risks and Uncertainties - The company emphasizes that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projections[63] - Key risks include trends in healthcare costs, reduced enrollment, and the impact of large-scale medical emergencies[63] - There are concerns regarding compliance with complex regulations related to Medicare and Medicaid programs, which could affect revenue[63] - The company faces competitive pressures and must adapt to changes in the industry to develop strategic growth opportunities[63] - Risks associated with mergers, acquisitions, and joint ventures are acknowledged, which could impact future performance[63] - The potential negative effects of substantial outstanding indebtedness and increased interest rates on financing costs are noted[63] - There are risks related to international operations and the ability to attract and retain employees in a competitive market[63] - The company warns of possible restrictions on dividend payments from subsidiaries and the need for adequate capital levels[63]

Core Insights - Global equity markets experienced broad positive returns in Q3 2025, driven by resilient corporate earnings, enthusiasm for AI, and the U.S. Federal Reserve's first interest rate cut of the year [3][21] - Emerging markets, particularly China, led the gains, supported by a U.S. trade truce and strength in the tech sector [3][4] - The Polaris Global Equity Composite gained 5.04% (net of fees) for the quarter, underperforming the MSCI World Index, which returned 7.36% [5][6] Market Performance - Developed markets saw weaker currencies benefiting export-oriented indices, with Japan's TOPIX Index up 11.0% and the U.K.'s FTSE All-Share Index up 6.9% [4] - The U.S. market, represented by the S&P 500 Index, gained over 8%, primarily due to tech and communication stocks [4] - France and Germany underperformed due to geopolitical and fiscal concerns, with tepid growth projections under new U.S. trade policy [4] Sector Analysis - The healthcare sector was the best performer, with notable gains from pharmaceutical stocks, while financials, consumer discretionary, and IT also contributed positively [5][6] - Health insurers faced challenges, with UnitedHealth Group and CVS Health posting over 10% returns, while Elevance Health's shares dropped sharply due to profit guidance cuts [7] - In IT, Samsung Electronics excelled with strong performance in HBM technology and a significant deal with Tesla for AI chip manufacturing [11] Company Highlights - United Therapeutics Corp. was a top contributor to portfolio performance, driven by positive clinical trial results for its drug Tyvaso, potentially adding $4-5 billion in peak sales [6] - AbbVie, Inc. expects high single-digit revenue growth through 2029, with flagship drugs projected to exceed $31 billion in sales by 2027 [6] - The Carlyle Group Inc. outperformed in the financial sector, up over 20% due to strong fee-based credit and secondaries business [8] Investment Strategy - The current economic environment is characterized by a "two-speed" economy, with a concentrated AI-driven boom amidst subdued growth in other sectors [21][22] - Financials are seen as attractive due to stable net interest margins and loan growth, while defensives like consumer staples and healthcare are expected to perform well [22] - Opportunities in economically-sensitive sectors are being explored, with a focus on industrials benefiting from AI integration and supply chain modernization [22][23]

Core Insights - Elevance Health, Inc. (ELV) is scheduled to report its Q3 2025 results on October 21, 2025, with earnings estimated at $4.97 per share and revenues of $49.5 billion [1][6] Earnings Estimates - The earnings estimate for Q3 2025 has seen one upward revision and two downward revisions, indicating a year-over-year decline of 40.6% [2] - The revenue estimate for Q3 2025 suggests a year-over-year increase of 10.7% [2] - For the full year 2025, the revenue consensus is $197.36 billion, reflecting a 12.6% year-over-year rise, while the EPS consensus is $29.96, indicating a 9.3% year-over-year decrease [3] Earnings Performance - Elevance's earnings have beaten the consensus estimate in two of the last four quarters, with an average surprise of negative 2.3% [3] Earnings Prediction Model - The current Earnings ESP for Elevance is +3.36%, but it holds a Zacks Rank of 4 (Sell), making an earnings beat uncertain [4] Revenue Drivers - The consensus estimate for product revenues indicates a 7.7% growth from the previous year's $5.9 billion, while premiums are expected to increase by 11.5% year-over-year [5][6] Cost and Expense Outlook - Elevated costs and benefit expenses are anticipated to impact profit margins negatively, with total expenses expected to rise around 9% year-over-year in Q3 [9] - The benefit expense ratio is estimated at 91.6, higher than the previous year's 89.5 [9] Segment Performance - The Health Benefits segment's operating income is projected to decrease by 45.5% year-over-year, with declining Medicaid memberships affecting premium growth [10]

Core Viewpoint - The market anticipates Elevance Health (ELV) will report a year-over-year decline in earnings despite higher revenues for the quarter ending September 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - Elevance Health is expected to report quarterly earnings of $4.97 per share, reflecting a year-over-year decrease of 40.6%, while revenues are projected to reach $49.5 billion, an increase of 10.7% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised 1.57% higher in the last 30 days, indicating a collective reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +3.36% for Elevance Health, suggesting analysts have recently become more optimistic about the company's earnings prospects [12]. Historical Performance - In the last reported quarter, Elevance Health was expected to post earnings of $9.16 per share but delivered $8.84, resulting in a surprise of -3.49%. Over the last four quarters, the company has beaten consensus EPS estimates twice [13][14]. Investment Considerations - Despite a positive Earnings ESP, Elevance Health carries a Zacks Rank of 4, making it challenging to predict an earnings beat conclusively [12]. Investors should consider other factors beyond earnings results when evaluating the stock [15][17].

Core Points - A lawsuit is currently pending against Elevance Health, Inc. (NYSE: ELV) regarding alleged violations of securities laws [2] - The plaintiff claims that Elevance misrepresented its monitoring of cost trends and the adequacy of premium rates negotiated with states, particularly concerning patients remaining on Medicaid [2] - An amended complaint was filed on October 7, 2025, urging investors who purchased shares prior to April 2024 to contact the Shareholders Foundation for further information [3] Summary by Sections Lawsuit Details - The lawsuit alleges that Elevance Health, Inc. misled investors about its financial guidance and the management of costs associated with Medicaid patients [2] - It is claimed that sicker patients with higher acuity remained on Medicaid, leading to increased per-patient costs that were not adequately reflected in Elevance's financial forecasts [2] Investor Information - Investors who purchased shares of Elevance Health, Inc. before April 2024 and still hold them are encouraged to reach out to the Shareholders Foundation for options regarding the lawsuit [1][3] - The Shareholders Foundation provides services related to shareholder issues and informs investors about securities class actions and legal news [3]

Economic Engagements - Brazil's Finance Minister Fernando Haddad is preparing for potential bilateral discussions at the upcoming G-20 meeting, indicating an active diplomatic agenda [2] - A recent conversation between President Lula and former President Trump was described as "good," suggesting opportunities for further talks with Bessent next week [2] Domestic Economic Indicators - Brazil's FGV Inflation IGP-DI for September showed a month-over-month increase of 0.36%, slightly below the estimated 0.40%, but an acceleration from the previous month's 0.20% [3] AI Economic Impact - San Francisco Federal Reserve President Mary Daly stated that an AI bubble is unlikely to destabilize the financial system, highlighting AI's potential to significantly enhance national productivity [4] - Daly noted no evidence of mass job displacement due to AI, suggesting a gradual impact on the labor market [5] Target Price Revisions - Wells Fargo has raised target prices for several major technology companies, including Microsoft (MSFT) to $675 from $650, and Advanced Micro Devices (AMD) to $275 from $185, reflecting strong confidence in their performance [6] - Other tech upgrades include Meta Platforms (META) with a target price increase to $837 from $811, and Alphabet Inc. (GOOG) to $236 from $187 [7] - In the healthcare sector, UnitedHealth Group (UNH) received a new target price of $400, up from $267, while Humana Inc. (HUM) was raised to $347 from $344, and Elevance Health, Inc. (ELV) to $412 from $330 [8]

Core Insights - Elevance Health, Inc. (NYSE:ELV) is highlighted as one of the stocks with the lowest P/E ratios on the NYSE [1] - Cantor Fitzgerald has reaffirmed its Overweight rating and set a price target of $400 for Elevance Health, indicating confidence in the company's future performance [2] - The company’s weighted-average estimate for 2026 Marketplace rates is only about 40 basis points away from proposed rates, with most initial state authorizations aligning closely with payor plans [2] - Less than 25% of members currently have final rates, and political factors may still influence outcomes related to the CMS Marketplace Integrity & Affordability Final Rule [3] - Elevance Health has reiterated its 2025 earnings outlook, projecting a benefit expense ratio near 90% and earnings of $24.10 per diluted share, with an adjusted basis projection of approximately $30.00 [4] Business Segments - Elevance Health operates through four main business segments: Health Benefits, CarelonRx, Carelon Services, and Corporate & Other [4]

Core Viewpoint - Elevance Health is set to release its third quarter 2025 financial results on October 21, 2025, at 6:00 a.m. EDT, followed by a management conference call at 8:30 a.m. EDT to discuss the results and outlook [1] Financial Results Release - The financial results will be available on October 21, 2025, at 6:00 a.m. EDT [1] - A conference call will take place at 8:30 a.m. EDT on the same day to review the results and future outlook [1] Access Information - Participants are advised to access the conference call at least 15 minutes prior to its start [1] - Domestic access number: 888-947-9963 with access code 3972058 [1] - International access number: 312-470-0178 with access code 3972058 [1]

Core Insights - Artisan Partners' Artisan Select Equity Fund reported returns of 6.77%, 6.76%, and 6.80% for its Investor Class, Advisor Class, and Institutional Class respectively in Q2 2025, underperforming the S&P 500 Index which returned 10.94% [1] Company Analysis: Elevance Health, Inc. - Elevance Health, Inc. has experienced significant stock price pressure, with a one-month return of -0.01% and a 52-week decline of 38.73%, closing at $318.61 per share with a market capitalization of $71.744 billion as of September 29, 2025 [2] - The decline in Elevance's Medicaid business is attributed to a drop in its contribution to normalized profits from approximately 15% to 5% over the past year, largely due to enrollment volatility caused by the COVID-19 pandemic [3] - The Medicaid program saw a 32% increase in membership during the pandemic, peaking at 95 million enrollees, followed by a 17% decline as reverification resumed, leading to a shift in the health profile of remaining enrollees and squeezing Medicaid margins [3] - State-level premium rates for Medicaid are currently being renegotiated higher, which is expected to normalize margins for Elevance Health as the company moves through 2025 and 2026 [3]