Optional product analytics
With your permission, we use privacy-limited analytics to understand which research journeys work. We do not run advertising trackers or session replay. You can change this choice in Preferences. Read the Privacy Policy.
Bull: Accelerated Carelon service growth and favorable demographic shifts drive higher Medicare Advantage enrollment, pushing EPS growth above historical averages and expanding margins.
Deceleration in Medicare Advantage enrollment growth or slower Carelon service adoption across the Anthem member base.
Elevance Health is a mature compounder demonstrating consistent cash flow generation, driven by its Anthem and Carelon brands. Long-term stability is anchored by structural advantages in healthcare services, scale, and disciplined capital return.
Elevance Health is a mature compounder demonstrating consistent cash flow generation, driven by its Anthem and Carelon brands. Long-term stability is anchored by structural advantages in healthcare services, scale, and disciplined capital return.
Scale advantages driven by a massive member base in Anthem.
Network effects within the integrated Anthem and Carelon ecosystems.
Strong Buy with a base target of $632.32, driven by a deep margin of safety and a resilient core business.
Elevance Health, Inc., together with its subsidiaries, operates as a health benefits company in the United States. The company operates in four segments: Health Benefits, CarelonRx, Carelon Services, and Corporate & Other. It offers a variety of health plans and services to individual, employer group risk-based and fee-based, BlueCard, Medicare, Medicaid, and FEP members; health products; a broad array of fee-based administrative managed care services; and specialty and other insurance products and services, such as stop loss, dental, vision, and supplemental health insurance benefits. The company also operates in the pharmacy services business; and markets and offers pharmacy services, including home delivery and specialty pharmacies, claims adjudication, formulary management, pharmacy networks, rebate administration, a prescription drug database, and member services, as well as infusion services and injectable therapies through ambulatory infusion centers. In addition, it provides healthcare related services and capabilities, including specialty care enablement and utilization management support for specialized clinical domains; behavioral health and comprehensive care management services; palliative care services and management; virtual care; and payment integrity, subrogation, clinical data exchange through its HealthOS platform, research and data, reporting and clinical analytics, information technology, and business process support services, as well as manages home health, post-acute institutional management, and durable medical equipment costs; and supports plans in managing home and community-based services. The company provides its services under the Anthem Blue Cross and Blue Shield, Wellpoint, and Carelon brands. The company was formerly known as Anthem, Inc. and changed its name to Elevance Health, Inc. in June 2022. Elevance Health, Inc. was incorporated in 2001 and is based in Indianapolis, Indiana.
A severe scenario where elevated MLR persists due to structural shifts in medical utilization, compounded by adverse Medicare rate changes, significantly compressing operating margins below their historical norms.
Scale advantages driven by a massive member base in Anthem.
Network effects within the integrated Anthem and Carelon ecosystems.
High switching costs and deep integration for enterprise clients.
Economic profit is supported when reported returns exceed the company cost-of-capital hurdle.
Unavailable
FCFF DCF remains positive at the base case: base FCFF $7.2B after capex $1.2B, with terminal value at 78.4% of enterprise value. No FCF cliff is projected unless capex/ or materially resets.
Monitor earnings quality, guidance, and valuation-sensitive operating metrics.
Monitor earnings quality, guidance, and valuation-sensitive operating metrics.
Monitor earnings quality, guidance, and valuation-sensitive operating metrics.
Disciplined capital return through share repurchases and stable dividends.
Aging demographics expanding the total addressable Medicare Advantage market.
Political pressure forcing tighter regulatory scrutiny and fee cuts.
Disciplined capital return through share repurchases and stable dividends.
Core holding given the mature compounder profile and a deep discount to intrinsic value.
Reassess if forward P/E gap vs peers narrows to less than 2 turns or MLR permanently deteriorates.
Quality compounder trading at an unwarranted discount to peers like UNH.
Strong Buy. Despite structural valuation artifacts in the DCF models, the forward earnings approach confirms a substantial margin of safety anchoring at 14x.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
Sustained high utilization drives MLR up while reimbursement cuts squeeze operating margins. PBM competition limits Carelon's expected growth contribution, weighing on valuation.
Sustained elevated medical utilization drives MLR structurally higher, compressing operating margins permanently below historical averages.
Aggressive legislative action slashes Medicare Advantage and Medicaid reimbursement rates, effectively stunting top-line growth.
Intense PBM competition limits Carelon's ability to win new external mandates, stalling the long-term margin-expansion thesis.
The five developments that would weaken our investment case.
Persistent upward drift in medical utilization signals unpriced healthcare inflation and elevated inpatient demand across commercial and government plans. Sustained medical cost overruns reduce underwriting profit margins and force painful commercial repricing cycles that dampen membership growth.
Current:Managed within baseline target corridors as of 2026-05-13
Alert ifMedical loss ratio increases by more than 100 basis points sequentially over two consecutive quarters
Regulatory cuts to government healthcare programs compress premium yields faster than benefit designs can adjust. Reduced reimbursement squeezes operating margins across core senior and low-income demographics, forcing benefit reductions that drive member switching and constrain top-line revenue momentum.
Current:Active Medicare Advantage and Medicaid funding schedules as of 2026-05-13
Alert ifA formal federal reduction of more than 1.0% in Medicare Advantage or Medicaid benchmark rates over a calendar year
Inability to capture external health services mandates stalls the high-margin diversification thesis away from pure risk-based insurance. Stagnation in services removes an essential driver of structural margin expansion, capping corporate returns on capital and triggering a valuation re-rating.
Current:Stable health services expansion as of 2026-05-13
Alert ifCarelon external contract revenue growth decelerates below 2.0% over an annual period
Structural margin degradation reflects inability to pass along rising hospital and prescription drug costs to employers and plan sponsors. Persistent compression below historical norms impairs earnings power, restricting free cash flow allocation toward technology investments and capital return programs.
Current:4.1% for the period ended 2025-12-31
Alert ifOperating margin declines below 3.5% over two consecutive quarters
Curtailing share repurchases reveals operating cash flow constraints and forces reliance entirely on organic top-line expansion for EPS compounding. Reduced share retirement eliminates an important EPS booster, making valuation multiples vulnerable to deceleration in baseline insurance underwriting earnings.
Current:Active share repurchase execution as of 2026-05-13
Alert ifAnnual share repurchase spending decreases by more than 30% year-over-year
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Project SBC-adjusted EPS, discount each year's earnings at cost of equity, then add a Gordon-growth terminal value.
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
Apply a terminal P/E to the dated forward EPS path, then discount that future share value back to the analysis date.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and at , then adjust for signed per current share.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
Multiply the peer median PEG by this stock's forecast growth to derive an implied forward P/E, then apply it to forward EPS.
Discount the explicit dividend path and its Gordon-growth terminal value at cost of equity.
Solve for the growth rate that makes the model value equal the report-date share price.
Accelerated Carelon service growth and favorable demographic shifts drive higher Medicare Advantage enrollment, pushing EPS growth above historical averages and expanding margins.
Elevance maintains steady growth despite near-term headwinds, with solid execution in Anthem and steady Carelon integration anchoring long-term compounding and capital returns.
Monitor earnings quality, guidance, and valuation-sensitive operating metrics.
Warning level: Medical loss ratio increases by more than 100 basis points sequentially over two consecutive quarters. Persistent upward drift in medical utilization signals unpriced healthcare inflation and elevated inpatient demand across commercial and government plans. Sustained medical cost overruns reduce underwriting profit margins and force painful commercial repricing cycles that dampen membership growth.
Warning level: A formal federal reduction of more than 1.0% in Medicare Advantage or Medicaid benchmark rates over a calendar year. Regulatory cuts to government healthcare programs compress premium yields faster than benefit designs can adjust. Reduced reimbursement squeezes operating margins across core senior and low-income demographics, forcing benefit reductions that drive member switching and constrain top-line revenue momentum.
Warning level: Carelon external contract revenue growth decelerates below 2.0% over an annual period. Inability to capture external health services mandates stalls the high-margin diversification thesis away from pure risk-based insurance. Stagnation in services removes an essential driver of structural margin expansion, capping corporate returns on capital and triggering a valuation re-rating.
Warning level: Operating margin declines below 3.5% over two consecutive quarters. Structural margin degradation reflects inability to pass along rising hospital and prescription drug costs to employers and plan sponsors. Persistent compression below historical norms impairs earnings power, restricting free cash flow allocation toward technology investments and capital return programs.
Warning level: Annual share repurchase spending decreases by more than 30% year-over-year. Curtailing share repurchases reveals operating cash flow constraints and forces reliance entirely on organic top-line expansion for EPS compounding. Reduced share retirement eliminates an important EPS booster, making valuation multiples vulnerable to deceleration in baseline insurance underwriting earnings.
| — |
| $156.60B |
| $171.34B |
| $176.81B |
| $199.13B |
| +8.3% |
| Gross profit | — | — | — | — | — | — |
| Operating income | — | $8.45B | $8.75B | $9.09B | $8.11B | -1.4% |
| Net income | — | $5.89B | $5.99B | $5.98B | $5.66B | -1.3% |
| EPS (diluted) | — | $24.81 | $25.22 | $25.68 | $25.21 | +0.5% |
| EBITDA | — | — | — | — | — | — |
| R&D | — | — | — | — | — | — |
| SG&A | $15.91B | $17.69B | — | — | — | +11.1% |
Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.
| Total assets | 121,494,000,000 |
|---|---|
| Cash | 9,491,000,000 |
| Total liabilities | 77,468,000,000 |
| Shareholders’ equity | 43,882,000,000 |
Point-in-time financial data used in the 2026-05-13 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022-12-31 | 156.6B | — | 5.9B | 8.4B | 7.2B | 1.2B | 1.7B | 264M | 2.3B | 1.2B | 1.8B | — | — | — | — | 7.4B | 24.1B | 5.4% | — | — | — |
| 2023-12-31 | 171.3B | — | 6B | 8.1B | 6.8B | 1.3B | 1.7B | 289M | 2.7B | 1.4B | 662M | — | — | — | — | 6.5B | 25.1B | 5.1% | — | 5.9% | — |
| 2024-12-31 | 176.8B | — | 6B | 5.8B | 4.6B | 1.3B | 1.4B | 191M | 2.9B | 1.5B | 5.5B | — | — | — | — | 8.3B | 31.2B | 5.1% | — | 6.2% | — |
| 2025-12-31 | 199.1B | — | 5.7B | 4.3B | 3.2B | 1.1B | 1.5B | 276M | 2.6B | 1.5B | 2.3B | — | — | — | — | 9.5B | 32B | 4.1% | — | 5.4% | — |
ELV trades at 13.1x forward earnings against a peer median of 13.3x; EV/EBITDA of 9.1x against a peer median of 7.6x; 6 peers.
| Accumulate at current levels to capture the wide margin of safety. |
| CVS Health Corporation |
| 11.1x |
| 0.3x |
| 12.0x |
| 3.8% |
| 4.1% |
| CI | The Cigna Group | 8.6x | 0.3x | 7.4x | 16.3% | 5.5% |
| HUM | Humana Inc. | 18.0x | 0.2x | 7.6x | 6.3% | 4.7% |
| CNC | Centene Corporation | 13.3x | 0.2x | 7.1x | -26.0% | 5.1% |
