Core Insights - Elevance Health Inc (NYSE:ELV) experienced its largest single-day percentage gain since May 2024, reporting profits of $547 million, although this was not sufficient to recover from its worst day since March 2020 due to proposed Medicare Advantage payment rate increases of only 0.09% for 2027 [1] - The stock is currently near a trendline with historically bullish implications, which may assist in reducing its 14.2% year-over-year deficit [1] Technical Analysis - According to Schaeffer's Senior Quantitative Analyst, ELV is within 0.75 of its 100-day moving average's 20-day average true range (ATR), having remained above this level 80% of the time over the last two weeks and 80% of the past 42 trading sessions. This pattern has historically led to an average gain of 5.7% one month later [3] - A similar upward movement from the current position could push ELV back above $363 [3] Market Sentiment - The health insurance stock's 50-day put/call volume ratio at major exchanges is higher than 99% of annual readings, indicating that an unwinding of pessimism could provide positive momentum for the shares [4] - Options for ELV are currently affordably priced, with a Schaeffer's Volatility Index (SVI) of 33% ranking in the 27th percentile of annual readings, suggesting that the stock has exceeded option traders' volatility expectations over the past year [5]

Core Insights - Elevance Health, Inc. (ELV) reported Q4 2025 adjusted EPS of $3.33, exceeding the Zacks Consensus Estimate by 7.3% and reflecting a 3.1% year-over-year increase [2] - Operating revenues increased by 9.6% year over year to $49.3 billion, although this figure fell short of consensus estimates by 0.5% [2] Financial Performance - The quarterly earnings were bolstered by strong premium growth, with premiums totaling $40.7 billion, a 12.3% year-over-year increase [5][10] - The Carelon division experienced a significant revenue increase of 27% year over year, reaching $18.7 billion, driven by acquisitions and scaling risk-based services [10][11] - Health Benefits segment revenues rose 11% year over year to $41.8 billion, surpassing estimates [8] Membership and Enrollment - Medical membership stood at approximately 45.2 million as of December 31, 2025, a decline of 1.1% year over year, primarily due to a drop in Medicaid membership [4] - Medicare Advantage membership growth partially offset the decline in overall medical membership [4] Expenses and Margins - Total expenses increased by 10.5% year over year to $49.5 billion, exceeding estimates [6] - The adjusted operating margin deteriorated by 110 basis points year over year to 0.8% [6] Cash Flow and Capital Deployment - Elevance Health reported cash and cash equivalents of $9.5 billion, a 14.5% increase from the end of 2024 [13] - The company generated net cash flow from operations of $4.3 billion in 2025, a decline of 26.1% from the previous year [14] - Share buybacks amounted to $471 million in Q4, with a remaining capacity of approximately $6.7 billion [15] Full-Year Results and Outlook - For the full year 2025, revenues reached $197.6 billion, up from $175.2 billion in 2024, driven by increased premium yields [16] - The company anticipates adjusted EPS for 2026 to be at least $25.50, indicating a 15.8% decline from 2025 [17] - Operating revenues are expected to see a low-single digit decline in 2026, with medical enrollment projected between 43.2 million and 43.9 million [18]

Core Viewpoint - Elevance Health's fourth-quarter earnings report indicates challenges related to Medicare, yet the stock is experiencing a rise despite the disappointing guidance for 2026 [1]. Group 1: Earnings Performance - Elevance Health reported fourth-quarter earnings that fell short of Wall Street's expectations, contributing to concerns about its future performance in the Medicare sector [1]. Group 2: Stock Market Reaction - Despite the earnings miss and lowered guidance, shares of Elevance Health are poised to recover from previous losses, suggesting investor optimism or market factors influencing stock performance [1].

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 ...