Elevance Health (ELV)

Health insurance provider Elevance Health (NYSE:EVH) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 12.4% year on year to $50.71 billion. Its non-GAAP profit of $6.03 per share was 22% above analysts’ consensus estimates.

Company Overview

Formerly known as Anthem until its 2022 rebranding, Elevance Health (NYSE:ELV) is one of America's largest health insurers, serving approximately 47 million medical members through its network-based managed care plans.

Upfront premiums collected by health insurers lead to reliable revenue, but profitability ultimately depends on accurate risk assessments and the ability to control medical costs. Health insurers are also highly sensitive to regulatory changes and economic conditions such as unemployment. Going forward, the industry faces tailwinds from an aging population, increasing demand for personalized healthcare services, and advancements in data analytics to improve cost management. However, continued regulatory scrutiny on pricing practices, the potential for government-led reforms such as expanded public healthcare options, and inflation in medical costs could add volatility to margins. One big debate among investors is the long-term impact of AI and whether it will help underwriting, fraud detection, and claims processing or whether it may wade into ethical grey areas like reinforcing biases and widening disparities in medical care.

Elevance Health's main competitors include other major health insurers such as UnitedHealth Group (NYSE:UNH), Cigna Group (NYSE:CI), CVS Health/Aetna (NYSE:CVS), Humana (NYSE:HUM), and Centene Corporation (NYSE:CNC).

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $194.8 billion in revenue over the past 12 months, Elevance Health is one of the most scaled enterprises in healthcare. This is particularly important because health insurance providers companies are volume-driven businesses due to their low margins.

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Elevance Health’s 10.6% annualized revenue growth over the last five years was decent. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Elevance Health’s recent performance shows its demand has slowed as its annualized revenue growth of 7.5% over the last two years was below its five-year trend.

Elevance Health also reports its number of customers, which reached 45.37 million in the latest quarter. Over the last two years, Elevance Health’s customer base averaged 2.2% year-on-year declines. Because this number is lower than its revenue growth, we can see the average customer spent more money each year on the company’s products and services.

This quarter, Elevance Health reported year-on-year revenue growth of 12.4%, and its $50.71 billion of revenue exceeded Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 5.8% over the next 12 months, a slight deceleration versus the last two years. We still think its growth trajectory is satisfactory given its scale and indicates the market is baking in success for its products and services.

Elevance Health was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.7% was weak for a healthcare business.

Looking at the trend in its profitability, Elevance Health’s operating margin decreased by 1.8 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 1.8 percentage points. We still like Elevance Health but would like to see some improvement in the future.

In Q3, Elevance Health generated an operating margin profit margin of 2.8%, down 1.6 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Elevance Health’s EPS grew at a decent 5.2% compounded annual growth rate over the last five years. Despite its operating margin improvement and share repurchases during that time, this performance was lower than its 10.6% annualized revenue growth, telling us the delta came from reduced interest expenses or taxes.

Diving into Elevance Health’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Elevance Health’s operating margin declined by 1.8 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Elevance Health reported adjusted EPS of $6.03, down from $8.37 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Elevance Health’s full-year EPS of $30.68 to stay about the same.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Elevance Health has shown mediocre cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4%, subpar for a healthcare business.

Taking a step back, we can see that Elevance Health’s margin dropped by 5.1 percentage points during that time. If the trend continues, it could signal it’s in the middle of a big investment cycle.

Elevance Health’s free cash flow clocked in at $775 million in Q3, equivalent to a 1.5% margin. The company’s cash profitability regressed as it was 3.7 percentage points lower than in the same quarter last year, which isn’t ideal considering its longer-term trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Elevance Health’s five-year average ROIC was 27%, placing it among the best healthcare companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Elevance Health’s ROIC has decreased significantly over the last few years. Only time will tell if its new bets can bear fruit and potentially reverse the trend.

Elevance Health reported $8.71 billion of cash and $32.1 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $10.7 billion of EBITDA over the last 12 months, we view Elevance Health’s 2.2× net-debt-to-EBITDA ratio as safe. We also see its $674 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Elevance Health beat analysts’ EPS expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its customer base slightly missed. Overall, this print had some key positives. The stock traded up 5.9% to $374.80 immediately following the results.

Updated: December 4, 2025 at 10:48 PM EST

Before deciding whether to buy Elevance Health or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

There are definitely a lot of things to like about Elevance Health. To kick things off, its revenue growth was good over the last five years. And while its diminishing returns show management's recent bets still have yet to bear fruit, its scale gives it meaningful leverage when negotiating reimbursement rates. On top of that, its stellar ROIC suggests it has been a well-run company historically.

Elevance Health’s P/E ratio based on the next 12 months is 12x. Looking at the healthcare space right now, Elevance Health trades at a compelling valuation. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $387.16 on the company (compared to the current share price of $331.70), implying they see 16.7% upside in buying Elevance Health in the short term.