Core Insights - Elevance Health, Inc. (ELV) reported Q3 2025 adjusted EPS of $6.03, exceeding the Zacks Consensus Estimate by 21.1%, despite a 29.9% year-over-year decline [1][9] - Operating revenues increased by 12% year-over-year to $50.1 billion, surpassing the consensus mark by 1.2% [1][4] Financial Performance - Premiums reached $41.8 billion, a 13.5% increase year-over-year, exceeding both the consensus estimate of $41 billion and the internal estimate of $40.2 billion [4] - Product revenues grew 4.6% year-over-year to $6.2 billion, slightly missing the Zacks Consensus Estimate of $6.3 billion but beating the internal estimate of $6.1 billion [4] - Net investment income rose 13.4% year-over-year to $625 million, surpassing the consensus mark of $449 million and the internal estimate of $476.5 million [5] - Total expenses increased by 12.7% year-over-year to $49.3 billion, exceeding the internal estimate of $47.7 billion [5] Segment Performance - Health Benefits segment reported operating revenues of $42.2 billion, a 10% increase year-over-year, beating the consensus estimate of $41.5 billion [7] - Carelon segment's operating revenues surged 33% year-over-year to $18.3 billion, exceeding both the consensus estimate of $18 billion and the internal estimate of $17.4 billion [9] - Corporate & Other segment's operating revenues more than doubled year-over-year to $149 million, with an operating loss of $81 million, narrower than the previous year's loss of $999 million [11] Membership and Enrollment - Medical membership stood at approximately 45.4 million as of September 30, 2025, a 0.9% decline year-over-year, primarily due to a decrease in Medicaid membership [3] Cash Flow and Capital Deployment - Cash and cash equivalents were $8.7 billion, a 5.1% increase from the end of 2024 [12] - Elevance Health repurchased shares worth $875 million in Q3 2025, with a remaining capacity of approximately $7.2 billion under its buyback authorization [14] 2025 Outlook - The company maintains its adjusted EPS guidance at around $30, indicating a 9.2% decline from 2024 [15] - Medical enrollment is forecasted to be between 45.8 million and 46.6 million in 2025 [16]

Financial Data and Key Metrics Changes - Elevance Health reported third quarter GAAP diluted earnings per share of $5.32 and adjusted diluted earnings per share of $6.03, reflecting enhanced medical cost management and expense discipline [14][15] - Total operating revenue for the quarter was $50.1 billion, up 12% year over year, driven by higher premium yields and growth in Medicare Advantage membership [15] - The consolidated benefit-expense ratio was 91.3%, aligned with expectations, while Medicaid performance faced pressure from elevated acuity and utilization [15][16] Business Line Data and Key Metrics Changes - In Medicare Advantage, approximately 55% of members will be in four-star or higher contracts for the 2027 payment year, up from about 40% for 2026, indicating improvement in STAR ratings [8] - CarelonRx revenue grew 20% year over year, driven by strong momentum with large clients, while Carelon Services grew by more than 50% [17] - The ACA market is experiencing higher acuity, and the anticipated expiration of enhanced subsidies could significantly impact membership in 2026 [9][10] Market Data and Key Metrics Changes - Medicaid operating margin is expected to be modestly negative for 2025, with a decline of at least 125 basis points anticipated for 2026 due to elevated acuity and utilization trends [16][20] - The company expects a high single-digit decline in full-year operating margin for the ACA market, while commercial group business margins remain consistent with prior expectations [16][50] Company Strategy and Development Direction - The company is focused on lowering the total cost of care and improving member experience through an integrated clinical and benefits approach, leveraging value-based care [6][10] - Elevance Health is committed to disciplined capital allocation, balancing investment and growth with consistent shareholder returns, including share repurchases [12][13] - The company is investing in technology, particularly AI, to enhance member and provider experiences, aiming for long-term growth [34][38] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by rising medical and pharmacy costs and regulatory changes impacting coverage for millions of Americans [6] - The company is approaching 2026 with a prudent and practical posture, setting expectations that reflect current realities and uncertainties [7][22] - Management is confident in the strategy and execution, aiming for sustainable value for stakeholders despite a dynamic external environment [13][22] Other Important Information - The company is expanding external relationships and scaling pharmacy, behavioral health, and specialty care management, embedding value-based care principles throughout [9][10] - By year-end, over 10 million members will have access to the AI-enabled virtual assistant, enhancing access and engagement [11] Q&A Session Summary Question: Medicaid margin outlook and state discussions - Management discussed the expectation of a 125 basis point decline in Medicaid margins for 2026, driven by elevated acuity and utilization trends, and noted constructive conversations with states regarding rate adequacy [24][28][27] Question: Investment spending impact on 2026 - Management clarified that several hundred million dollars of investment is planned for technology adoption, Carelon expansion, and operational initiatives, which are expected to enhance long-term growth [32][34] Question: ACA membership impact from subsidy expiration - Management indicated that if enhanced subsidies expire, a material contraction in the ACA marketplace is expected, leading to lower enrollment and higher premium increases [41][45] Question: Medicaid membership outlook - Management anticipates a modest decline in Medicaid membership for 2026 due to ongoing re-verification processes and state program changes [75][76] Question: Medicaid coding trends and provider engagement - Management is actively working with providers to ensure accurate clinical documentation and is taking steps to improve oversight and compliance [81][84]

Financial Data and Key Metrics Changes - Elevance Health reported third quarter GAAP diluted earnings per share of $5.32 and adjusted diluted earnings per share of $6.03, reflecting enhanced medical cost management and expense discipline [14] - Total operating revenue for the quarter was $50.1 billion, up 12% year-over-year, driven by higher premium yields and growth in Medicare Advantage membership [15] - The consolidated benefit-expense ratio was 91.3%, aligned with expectations, while the Medicaid operating margin is expected to be modestly negative for the full year 2025 [15][16] Business Line Data and Key Metrics Changes - In Medicare Advantage, approximately 55% of members will be in four-star or higher contracts for the 2027 payment year, up from about 40% for 2026, indicating improved STAR performance [8] - CarelonRx revenue grew 20% year-over-year, driven by strong momentum with large clients, while Carelon Services grew by more than 50% [17] - The integrated medical pharmacy model and advocacy solutions are driving higher retention and expanded fee-based relationships in the commercial segment [17] Market Data and Key Metrics Changes - The ACA market is experiencing higher acuity, and the anticipated expiration of enhanced subsidies could significantly impact membership in 2026 [9] - Medicaid performance is under pressure from elevated acuity and utilization, with disenrollment concentrated among lower acuity members due to stricter eligibility reviews [15][16] - The company expects a high single-digit decline in full-year operating margin for the ACA business, while commercial group margins are expected to remain consistent with prior expectations [16] Company Strategy and Development Direction - The company is focused on lowering the total cost of care and improving member experience through an integrated clinical and benefits approach [6] - Elevance Health is committed to disciplined capital allocation, balancing investment and growth with consistent shareholder returns, prioritizing share repurchases [13] - The company is investing in technology, particularly AI, to enhance member and provider experiences, aiming for long-term growth [34][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by rising medical and pharmacy costs and regulatory changes impacting coverage [6] - The company is approaching 2026 with a prudent and practical posture, planning for at least a 125 basis point decline in Medicaid margins due to elevated acuity and utilization trends [7][20] - Management remains confident in the long-term growth algorithm, expecting 2027 to mark a return to a more balanced earnings growth profile [22][72] Other Important Information - The company is integrating recent acquisitions to expand Carelon's capabilities while maintaining a strong balance sheet to support growth objectives [20][13] - The company is proactively working with state partners on rate alignment and operational enhancements to ensure the sustainability of Medicaid programs [10][20] Q&A Session Summary Question: Medicaid margin outlook and state discussions - Management discussed the expectation of a 125 basis point margin decline next year, with ongoing discussions with states about affordability and program changes [24][28] Question: Investment spending impact on 2026 - Management clarified that several hundred million dollars of investment is aimed at technology adoption, Carelon scaling, and operational improvements, which are expected to enhance long-term growth [32][34] Question: ACA membership impact from subsidy expiration - Management indicated that if enhanced subsidies expire, a material contraction in the ACA marketplace is expected, leading to lower enrollment and higher premium increases [41][45] Question: Medicaid membership and revenue outlook - Management anticipates a modest decline in Medicaid membership in 2026 due to ongoing normalization following the redetermination process [75] Question: Medicaid risk pool shifts and coding trends - Management noted that elevated acuity and utilization pressures are impacting Medicaid margins, with ongoing efforts to improve coding accuracy and compliance [82][84]

Financial Data and Key Metrics Changes - Elevance Health reported third quarter GAAP diluted earnings per share of $5.32 and adjusted diluted earnings per share of $6.03, reflecting enhanced medical cost management and expense discipline [12][14] - Total operating revenue for the quarter was $50.1 billion, up 12% year over year, driven by higher premium yields and growth in Medicare Advantage membership [14][15] - The consolidated benefit-expense ratio was 91.3%, aligned with expectations, while Medicaid performance faced pressure from elevated acuity and utilization [14][15] Business Line Data and Key Metrics Changes - In Medicare Advantage, approximately 55% of members will be in four-star or higher contracts for the 2027 payment year, up from about 40% for 2026, indicating improvement in STAR ratings performance [6][15] - CarelonRx revenue grew 20% year over year, driven by strong momentum with large clients, while Carelon Services grew by more than 50% due to robust organic growth [16][17] - The ACA market is expected to face challenges due to the anticipated expiration of enhanced subsidies, which could significantly impact membership in 2026 [8][14] Market Data and Key Metrics Changes - Medicaid operating margin is expected to be modestly negative for 2025, with a projected decline of at least 125 basis points in 2026 due to ongoing acuity and utilization trends [15][18] - The company anticipates a high single-digit decline in full-year operating margin for the ACA business, while commercial group margins are expected to remain consistent with prior expectations [15][16] - The anticipated expiration of enhanced subsidies could lead to a material contraction in the ACA marketplace, affecting overall membership [40][41] Company Strategy and Development Direction - The company is focused on lowering the total cost of care and improving member experience through an integrated clinical and benefits approach, leveraging value-based care [4][10] - Elevance Health is committed to disciplined capital allocation, balancing investment and growth with consistent shareholder returns, including share repurchases [11][18] - The company is investing in technology adoption, Carelon capabilities, and operational initiatives to enhance performance and support long-term growth [30][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic external environment but expressed confidence in the company's strategy and execution to drive sustainable value [11][20] - The company is proactively working with state partners on rate alignment and program improvements to ensure the sustainability of Medicaid programs [9][26] - Management expects 2026 to be a trough year for Medicaid margins, with a return to a more balanced earnings growth profile anticipated in 2027 [24][66] Other Important Information - The company is integrating recent acquisitions to expand Carelon's capabilities while maintaining a strong balance sheet to support growth objectives [11][18] - The company is embedding AI and digital tools across operations to enhance member and provider experiences, aiming for improved affordability and operational performance [30][35] Q&A Session Summary Question: Medicaid margin outlook and state discussions - Management indicated that Medicaid margins are expected to be slightly negative for 2025, with a projected decline of at least 125 basis points in 2026 due to elevated acuity and utilization trends [22][24] - Discussions with states are constructive, with states exploring ways to reduce overall Medicaid program costs and improve affordability [25][26] Question: Investment spending impact on 2026 - The company plans to make several hundred million dollars in discrete investments to advance strategic goals, which are expected to impact EPS positively in the long term [29][30] Question: ACA membership impact from subsidy expiration - If enhanced subsidies expire, a material contraction in the ACA marketplace is expected, leading to lower enrollment and higher premium increases [40][41] Question: Medicaid risk pool shifts and coding trends - Management noted that elevated acuity and utilization pressures have led to a below-breakeven Medicaid operating margin, with ongoing efforts to improve coding accuracy and compliance [76][78] Question: State partners considering benefit adjustments - States are looking at various levers, including potential program changes, to improve affordability in Medicaid, with adjustments typically aligning with new contract years [81][83]

Core Insights - Elevance Health reported a third quarter net income of nearly $1.2 billion, reflecting a 17.8% increase from $1 billion in the same period last year [4][3] - Total revenues for the third quarter rose by 12.4% to $50.7 billion, driven by higher premium yields and growth in Medicare Advantage membership [4][7] Financial Performance - The benefit expense ratio increased to 91.3%, up 180 basis points year over year, primarily due to elevated costs in the Medicare business [5] - Operating revenue for the third quarter was up 12% to $50.1 billion, influenced by recent acquisitions and growth in health benefits segments [7] Membership and Services - Elevance ended the third quarter with 45.4 million health plan members, a slight decrease of less than 1% compared to the previous year, attributed to lower BlueCard and Medicaid membership [7] - The Carelon health services business experienced significant growth, with operating revenue increasing by 33% to $18.3 billion, supported by acquisitions and scaling of risk-based solutions [7] Strategic Focus - The company emphasized disciplined execution and a focus on affordability and member experience through value-based care partnerships and AI-enabled digital solutions [6]

Elevance Health 3Q 2025 Earnings Presentation October 21, 2025 Key Highlights 1. See "GAAP Reconciliation" on slides 12 and 13 herein. 3Q 2025 Results & 1 2025 Outlook Elevance Health third quarter operational results consistent with expectations 2026 Considerations Providing insight into key planning assumptions; earnings guidance to be set in January: Strategic Focus 3 Areas 2 2 • Benefit expense ratio of 91.3% in line with revised outlook • Adjusted diluted EPS1 of $6.03 reflects ~$1 of higher net invest ...

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 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]

Industry Overview - The U.S. healthcare services market is projected to grow from $8.77 trillion in 2024 to $9.25 trillion in 2025, driven by telehealth, digital health, workforce shortages, and changes in reimbursement models [1] - CVS Health and Elevance Health are major players in this competitive market, each with extensive reach and diversified services [1][2] CVS Health Analysis - CVS Health, valued at $90.32 billion, is experiencing revenue growth across all operating segments, with a focus on restoring Aetna to target margins through organizational realignment and technology enhancements [2][3] - The company is enhancing its pharmacy services by acquiring certain Rite Aid pharmacies and implementing a new pharmacy model, CostVantage, to address reimbursement pressures [6][7] - CVS is investing $20 billion over the next decade in digital health initiatives, aiming for $500 million in cost savings in 2025 [7] - The company has a strong cash flow generation and is focused on improving financial performance in its Health Care Delivery segment [4][7] Elevance Health Analysis - Elevance Health, with a market cap of $70.71 billion, is facing challenges due to shifts in Medicaid and ACA membership, leading to increased medical costs and a downward revision of its 2025 EPS outlook to $30 [2][8] - The company closed Q2 2025 with 45.6 million medical members, a decrease of approximately 200,000, and a consolidated benefit expense ratio of 88.9%, up 260 basis points from the previous year [10][13] - Elevance is showing strength in its Medicare Advantage portfolio and is working to stabilize trends in high-cost areas through streamlined processes and AI-enabled tools [11][12] Financial Performance and Projections - CVS Health's EPS for 2025 is projected to grow by 16.6% to $6.32, with estimates trending upward [20][21] - In contrast, Elevance Health's EPS estimate for 2025 is $30.15, reflecting an 8.8% decrease, with estimates having declined by 12.4% in the last 90 days [22] - Year-to-date, CVS shares have increased by 59.4%, while Elevance shares have decreased by 15.9% [16] Conclusion - CVS Health is positioned for long-term growth with its digital investments and restructuring efforts, while Elevance Health faces challenges in the ACA and Medicaid markets, making CVS the stronger investment option [22][23]

Core Insights - Elevance Health, Inc. is facing challenges from rising medical costs, slower Medicaid recovery, and increased utilization, leading to a reduced outlook for 2025 [1][5] - The company reported a significant increase in benefits expenses and cost of products sold in the first half of the year [1] Financial Performance - Benefits expense surged nearly 18% to over $72 billion, while cost of products sold increased almost 19% to $10.3 billion [1] - The second-quarter benefit expense ratio reached 88.9%, up 260 basis points year over year, with a projected full-year ratio of about 90% compared to 88.5% in 2024 [2][9] Membership and Growth - Commercial individual memberships rose 9.7% in the first half of 2025, following a 25.6% increase in 2024, indicating strong growth in the commercial segment [3][9] - Carelon's revenue is expected to grow nearly 30% in 2025, driven by a 60% surge in Carelon Services [4][9] Competitive Landscape - Other companies in the health benefits space, such as UnitedHealth Group and Centene Corporation, are also experiencing pressure from rising medical costs [6] - UnitedHealth's medical care ratio deteriorated to 89.4%, while Centene's health benefits ratio reached 93%, indicating industry-wide challenges [7] Valuation and Estimates - Elevance's shares have declined 20.7% year-to-date, compared to a 3.9% decline in the industry [8] - The forward price-to-earnings ratio for Elevance is 9.19, significantly lower than the industry average of 14.57, with a Zacks Consensus Estimate for 2025 earnings at $30.59 per share, reflecting a 7.4% decline from the previous year [10][11]