Elevance Health, Inc. (ELV) — Executive Summary Elevance Health, Inc. is a large diversified health insurer and care-services provider that generates roughly $49.75B in recent quarterly revenue and combines very high operating efficiency with strong cash-generation characteristics. Strengths in Top-Line Growth and Margins The company exhibits clear strengths in top-line per-share growth and margin
Elevance Health, Inc. is a large diversified health insurer and care-services provider that generates roughly $49.75B in recent quarterly revenue and combines very high operating efficiency with strong cash-generation characteristics.
The company exhibits clear strengths in top-line per-share growth and margin structure: revenue per share has accelerated to $875.64 (split-adjusted) with one-year RPS growth of 12.5% and a five-year RPS CAGR of 10.32% (EPS Diluted & Revenue per Share, Revenue & EPS Growth). Operational profitability is robust, with a recent gross margin of 89.4% and an operating margin of 78.8% while operating cash flow (TTM) stood at $7.61B versus trailing net income of $4.96B, indicating cash generation that exceeds reported earnings (Profit Margin Trends, Earnings Quality Analysis).
Balance-sheet metrics are conservative for the sector: debt-to-equity is 0.6833 and the current ratio is 1.5353, and book value per share has compounded at about 5.12% over five years.
There are notable areas of concern. Diluted EPS has dropped sharply year-over-year, declining by about 34.7% with the most recent split-adjusted EPS at $21.82 versus a peak of $35.90 earlier in 2025 (EPS Diluted & Revenue per Share, Revenue & EPS Growth). Net income and profitability at the bottom line have been volatile: quarterly net income swung from $2.66B to a trough of $547M before a partial recovery to $1.46B, and trailing net profit margin narrowed to 2.8% even as gross and operating margins remain high (Revenue & Net Income, Profit Margin Trends). Return on equity has trended down from a 2025 peak near 19.2% to 11.1% most recently, and ROE growth is negative year-over-year (Return on Equity (ROE)).
The foundation of business quality and long-term value creation
Elevance Health, Inc.'s revenue shows a multi-year increase from the low-$30 billions in 2020 toward the high-$40s/low-$50 billions by 2024–2025. In 2025 the company reported quarterly revenues of $48.89B (Q1), $49.78B (Q2), $50.71B (Q3) and $49.75B (Q4), reflecting relative stability around the $49–51B range in the most recent full-year quarters.
Net income has been more volatile quarter-to-quarter. After a peak of $2.66B in 2024–12 and $2.18B in 2025–03, net income declined through 2025 to $547.0M in 2025–12, then recovered to $1.76B in 2026–03 and $1.46B in 2026–06. The most recent reported revenue was $49.75B, and the most recent reported net income was $1.46B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Jan 2025 to Dec 2025
Revenue composition by disclosure category for the latest period
Risk-based premiums from managed care health plans offered to Individual, Employer Group, Medicare, Medicaid and other markets.
Administrative fees and service revenues from fee-based and self-funded employer customers, including claims processing, provider network access, medical management, care management, wellness programs, actuarial services and other administrative services.
Pharmacy services and pharmacy-related fees through CarelonRx, including home delivery and specialty pharmacy services, claims adjudication, formulary management, pharmacy networks, rebate administration, prescription drug database services, member services, and ambulatory infusion center services.
Pharmacy and health service fees and other Carelon business revenues from integrated whole-health capabilities (Carelon Health and Carelon Insights), including care delivery, behavioral health management, post-acute services, care navigation, payment integrity, subrogation, clinical data exchange, research and data services, reporting and clinical analytics, and information technology and business process support.
Specialty insurance and product revenues (sold on either risk-based or fee-based bases) such as stop loss insurance, dental, vision and supplemental health insurance benefits.
Revenues from participation in federal government programs, including the Federal Employee Program and Medicare Administrative Operations where the company provides administrative services for the Medicare program (Parts A and B).
Service fees received under BlueCard arrangements for performing certain administrative functions for out-of-area Blue plan members.
Corporate & Other revenues from businesses not meeting separate operating segment thresholds and from enterprise-level investments supporting long-term initiatives, digital and technology development, and portfolio optimization activities.
Medical members/memberships comprised of Individual consumers, Employer Group members under risk-based and fee-based arrangements, BlueCard host members, Medicare beneficiaries (including Medicare Advantage, Special Needs Plans, Medicare-Medicaid Plans, Medicare Part D historically), Medicaid and state-sponsored program members, and Federal Employee Program participants.
Employers and plan sponsors, including self-funded employers that purchase administrative services or stop loss insurance.
Government agencies and programs at the federal and state levels, including customers for Medicare administrative services and state Medicaid programs.
Unaffiliated health plans and other third-party payors that purchase specialty services such as pharmacy services, stop loss, dental, vision and integrated health services.
Distribution intermediaries and influencers including independent agents, brokers, retail partnerships, consultants, and in-house sales specialists.
Internal and external customers of Carelon businesses, including health plans (both affiliated and external), providers, and other healthcare system participants.
Licensed to conduct insurance operations in all U.S. states, the District of Columbia and Puerto Rico through subsidiaries.
Serves members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield licensee for specified states, and conducts business through various brands (Anthem Blue Cross/Anthem Blue Cross and Blue Shield, Wellpoint, Carelon, MMM, Simply Healthcare) across multiple service areas.
Participates in state- or federally-facilitated marketplaces (Public Exchanges) in nearly all Anthem Blue Cross and Anthem Blue Cross and Blue Shield service areas and in select service areas under other brands.
Provides Medicaid and other state-sponsored services in a list of specified states and territories.
An immaterial amount of consolidated revenues is derived from activities outside the United States and Puerto Rico.
Direct marketing to consumers for Individual and certain Employer Group products.
Extensive network of independent agents, brokers and retail partnerships for distribution of Individual, Medicare and certain Employer Group products.
Independent brokers or consultants and in-house sales specialists for commercial customers with larger employee bases.
Digital platforms and member-facing digital engagement tools (including the Sydney Health platform) to supplement broker-facing distribution and enhance consumer engagement.
Participation in Public Exchanges (state- or federally-facilitated marketplaces) for Individual market products.
BlueCard arrangements and inter-licensee coordination through the Blue Cross and Blue Shield Association to serve members who are away from their home plan’s service area.
Government procurement and contracting channels for Federal Employee Program and Medicare administrative services.
Risk-based premiums are collected as periodic, prepaid premiums and represent ongoing membership-driven revenue where the company assumes medical cost risk for the contract period.
Fee-based administrative services and administrative fees from self-funded employers generate recurring contractual revenues tied to ongoing administrative relationships.
Pharmacy services produce recurring fee-based revenues tied to prescription volume, formulary and network arrangements, and ongoing clinical program adoption and rebate administration.
Specialty and stop loss insurance revenues may be structured as underwriting arrangements assuming risk for a contract period; stop loss contracts assume risk on a client’s claims.
Medicare revenues are influenced by annual bid submissions to CMS and by program quality ratings that affect future payments.
Carelon risk-based contracts replace variable claims costs with agreed-upon pricing, creating recurring contracted revenue streams that interact with seasonality of covered services.
Members generally pay periodic prepaid premiums and, when they receive services, copayments, coinsurance and/or deductibles, indicating an ongoing premium-plus-service payment structure.
Revenue from contracts with agencies of the U.S. government is included primarily in the Health Benefits segment; the filing states the majority of revenues from federal government programs are reported in that segment.
Results of operations depend materially on accurate prediction and management of healthcare costs through provider contracting, product pricing, medical management and care management programs.
Payment and revenue for Medicare Advantage plans are influenced by CMS Star Ratings and eligibility for quality-based bonus payments, which affect reimbursements.
Pharmacy services depend on contractual arrangements with third parties; CarelonRx delegates certain core pharmacy services to a named third-party (CaremarkPCS Health, L.L.C.) pursuant to a contract with a defined term and renewal provisions.
Continued use of Blue Cross and Blue Shield names and marks is governed by license agreements with the BCBSA, which impose operational, financial and governance requirements and include license fees and other conditions that could affect the ability to market BCBS-branded products.
Operations are subject to comprehensive and varied federal and state regulation (including licensure, rate approval, solvency monitoring, audits and other regulatory oversight) that can restrict conduct of business and affect revenues and pricing.
Ability to contract with providers on cost-effective terms and to maintain and expand provider networks is identified as a driver of results and thus a dependency for controlling medical costs and delivering competitive products.
Analyzing long-term margin stability and competitive positioning
Elevance Health, Inc.'s gross and operating margins show a long-term mild decline from the early-2021/2022 highs (gross 92.6–92.1% and operating 80.7–80.8%) toward the high-80s and upper-70s more recently. The most notable inflection occurs around 2022 when gross margin moved from the low-90s downward and operating margin stepped down from roughly 80–81% into the high-70s. Net profit margin has been more variable over the period, ranging mostly in the mid-single digits and showing intermittent peaks (4.5% in 2025-03) and troughs (3.3% in 2021-06), indicating greater quarter-to-quarter movement than the other two metrics.
Focusing on the most recent year, gross margin and operating margin have been broadly stable to modestly improving quarter-to-quarter in 2025 (88.6% → 88.7% → 88.9% → 89.4%); operating: 77.4% → 77.9% → 78.4% → 78.8%), while net profit margin declined over the same four quarters (4.5% → 4.0% → 4.0% → 2.8%). The latest observed values are: Gross Margin 89.4%, Operating Margin 78.8%, Net Profit Margin 2.8%.
Understanding Profit Margins
Between Jan 2025 and Dec 2025, Elevance Health Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Over the past year Elevance Health, Inc.'s trailing twelve-month net income has trended downward, moving from $7.78B at 2025-09-30 to $5.66B at 2025-12-31, then to $5.24B at 2026-03-31 and $4.96B at 2026-06-30. Operating cash flow TTM showed more variability over the same window: it was $4.91B at 2025-09-30, declined to $4.29B at 2025-12-31, then rose sharply to $7.61B at 2026-03-31. This recent increase in operating cash flow resulted in operating cash flow exceeding net income in the most recent paired observations.
Looking further back, periods across 2020–2023 often show operating cash flow above net income, while several quarters in 2024–2025 exhibited the opposite pattern (net income above cash flow). The key recent inflection is the jump in operating cash flow to $7.61B as of 2026-03-31 alongside a continuing decline in net income to $4.96B as of 2026-06-30. The most recent Net Income (TTM) was $4.96B. The most recent Operating Cash Flow (TTM) was $7.61B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Elevance Health, Inc.'s ROE has moved lower over the past year after a period of mid- to high-teens performance. Quarterly trailing twelve-month ROE peaked at 19.2% on 2025-03-31, held around 17% through mid-2025, then fell to 12.9% at 2025-12-31 and continued declining to 11.9% on 2026-03-31 and 11.1% on 2026-06-30. The recent quarters therefore show a clear downtrend from the 2025 highs.
Over the longer run, ROE for Elevance Health, Inc. has generally ranged from roughly 9%—18% across the 2010s and early 2020s, with an isolated early outlier of 23.2% on 2010-09-30. The most recent trailing twelve-month Return on Equity was 11.1% as of 2026-06-30.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Elevance Health, Inc.'s operating cash flow (TTM) shows sizable variability over the sample period with a large peak of $12.33B at 2023-03-31, a multi-quarter trough around mid-2024 (near $2.07–$2.13B at 2024-06–09-30), and a recovery through 2025 into early 2026. The most recent observation is an uptick to $7.61B as of the 2026-03-31 TTM, up from $4.29B at 2025-12-31 TTM.
Investing cash flow (TTM) has been consistently negative but has trended materially toward less negative values in recent quarters, moving from larger outflows (e.g., -$5.17B at 2024-12-31 TTM) to -$1.34B at 2025-12-31 TTM.
Financing cash flow (TTM) has been more variable, with both meaningful outflows in 2022–2023 and a brief positive reading of $1.19B at 2024-12-31 TTM before returning to outflows; the latest financing cash flow (TTM) is -$1.74B as of 2025-12-31. The most recent trailing-twelve-month values: Operating CF TTM \$7.61B; Investing CF TTM -$1.34B; Financing CF TTM -$1.74B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Elevance Health, Inc.'s trailing twelve-month P/E has moved from historically low single-digit levels in the early 2010s into a generally higher range in the past decade, with pronounced elevations around 2021–2023 (peaking near 20.5x in 2021-06-30 and remaining above ~16x through 2023). In the most recent 12–18 months the series shows a sharp trough at 9.4x on 2025-09-30 followed by a clear rebound, indicating a material re-rating back toward the mid-to-high teens by mid-2026.
The latest reported price-to-earnings ratio was 17.7x as of 2026-06-30.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.