Company Reports

After several years of elevated utilization that has not been fully offset by rate increases yet, covered MCO shares have risen about 35% on average since our last managed care industry report in September 2025, in anticipation of rising profits in at-risk medical insurance plans.

On July 15, Elevance reported second-quarter results that included $49.8 billion in net revenue (above FactSet consensus of $48.8 billion) and adjusted EPS of $7.45 (above consensus of $6.21). Management only increased its 2026 EPS guidance by $0.25, though.

Elevance Health continues to capitalize on its enviable position as the exclusive licensee of the Blue Cross Blue Shield brand in 14 states. We believe that the Blue Cross Blue Shield brand is the most recognizable and trusted franchise in the US health insurance industry. As the largest Blue Cross Blue Shield operator, Elevance only lags UnitedHealth in US medical membership, which is particularly impressive given Elevance's limited geographic reach compared with UnitedHealth's national network. Specifically, Elevance's market share dives deep in licensed states where it insures about one out of every 3 people. This high local market share appears particularly valuable in health insurance since medical-care providers typically only operate in a limited geographic area, making local market share the most relevant to most reimbursement negotiations with caregivers.

Elevance reported first-quarter results including 2% revenue growth and adjusted EPS of $12.58, well above FactSet consensus of $11.03, albeit helped by $1 of nonrecurring investment income. The company raised its 2026 adjusted EPS guidance to at least $26.75, up from at least $25.50.

After hours on April 6, the Centers for Medicare & Medicaid Services released its final rate notice for the 2027 Medicare Advantage program, which included a 2.5% overall increase, compared with a flat initial rate notice in late January.

Elevance Health continues to capitalize on its enviable position as the exclusive licensee of the Blue Cross Blue Shield brand in 14 states. We believe that the Blue Cross Blue Shield brand is the most recognizable and trusted franchise in the US health insurance industry. As the largest Blue Cross Blue Shield operator, Elevance only lags UnitedHealth in US medical membership, which is particularly impressive given Elevance's limited geographic reach compared with UnitedHealth's national network. Specifically, Elevance's market share dives deep in licensed states where it insures about one out of every 3 people. This high local market share appears particularly valuable in health insurance since medical-care providers typically only operate in a limited geographic area, making local market share the most relevant to most reimbursement negotiations with caregivers.

When medical utilization started surging in its important Medicaid end market, Elevance Health sold off from roughly $550 per share in mid-2024 to around $310 in early trading on March 2. On a forward basis, the shares are trading at about 12 times deflated 2026 earnings.

Elevance Health reported fourth-quarter results, including 10% revenue and 3% adjusted EPS growth. The firm also gave its 2026 outlook, including a low-single digit decline on the top line and a midteens decline in adjusted EPS. Beyond 2026, management still expects 12% annualized earnings growth.

Elevance Health continues to capitalize on its enviable position as the exclusive licensee of the Blue Cross Blue Shield brand in 14 states. We believe that the Blue Cross Blue Shield brand is the most recognizable and trusted franchise in the US health insurance industry. As the largest Blue Cross Blue Shield operator, Elevance only lags UnitedHealth in US medical membership, which is particularly impressive given Elevance's limited geographic reach compared with UnitedHealth's national network. Specifically, Elevance's market share dives deep in licensed states where it insures about one out of every 3 people. This high local market share appears particularly valuable in health insurance since medical-care providers typically only operate in a limited geographic area, making local market share the most relevant to most reimbursement negotiations with caregivers.

After hours on Jan. 26, the Centers for Medicare & Medicaid Services released its initial rate notice for the 2027 Medicare Advantage program, which included a flat overall rate increase rather than the 5% increase in 2026. Most of that differential is related to new risk assessment-related changes.

On Nov. 9, the US Senate agreed to terms that would reopen the US federal government after a record shutdown period. However, the solution did not include a plan to extend federal subsidies on the individual exchanges.

Elevance Health's third-quarter results included low-double-digit revenue growth and a 30% decline in adjusted earnings per share. Despite the lower profits, the company is tracking toward management's 2025 guidance, which includes a roughly 10% decline in adjusted EPS.

MCO shares have been volatile in 2025 due to surging medical utilization and new regulatory threats. Elevated medical utilization has cut profits in most medical insurance end markets, and several potential policy changes could hurt Medicaid, individual plans, Medicare Advantage, and the PBMs, too.

Elevance Health continues to capitalize on its enviable position as the exclusive licensee of the Blue Cross Blue Shield brand in 14 states. We believe that the Blue Cross Blue Shield brand is the most recognizable and trusted franchise in the US health insurance industry. As the largest Blue Cross Blue Shield operator, Elevance only lags UnitedHealth in US medical membership, which is particularly impressive given Elevance's limited geographic reach compared with UnitedHealth's national network. Specifically, Elevance's market share dives deep in licensed states where it insures about one out of every 3 people. This high local market share appears particularly valuable in health insurance since medical-care providers typically only operate in a limited geographic area, making local market share the most relevant to most reimbursement negotiations with caregivers.

Despite 14% operating revenue growth in the second quarter, Elevance's adjusted EPS declined 14% due to mismatched rates and utilization in its individual and Medicaid businesses. Management cut its 2025 EPS outlook by roughly 14% to about $30, and shares initially fell about 10% in July 17 trading.

Elevance Health continues to capitalize on its enviable position as the exclusive licensee of the Blue Cross Blue Shield brand in 14 states. We believe that the Blue Cross Blue Shield brand is the most recognizable and trusted franchise in the US health insurance industry. As the largest Blue Cross Blue Shield operator, Elevance only lags UnitedHealth in US medical membership, which is particularly impressive given Elevance's limited geographic reach compared with UnitedHealth's national network. Specifically, Elevance's market share dives deep in licensed states where it insures about one out of every 3 people. This high local market share appears particularly valuable in health insurance since medical-care providers typically only operate in a limited geographic area, making local market share the most relevant to most reimbursement negotiations with caregivers.

On May 11 and 12, Republicans revealed updated regulatory stances that included plans to lower drug prices and pull back on Medicaid spending by about $715 billion over the next 10 years versus $880 billion expected previously.

As foreshadowed in its preliminary release last week, Elevance turned in strong first-quarter operating results, including revenue growth of 15% and adjusted EPS growth of 11%. Elevance also maintained its 2025 adjusted EPS outlook.

Elevance shares rebounded a bit after it released preliminary financial results for the first quarter, including above-consensus adjusted EPS of $11.97. Elevance also highlighted that it intended to keep its 2025 outlook intact and that its medical costs were trending in line with expectations.

Over the past week, tariff-related news has created significant volatility in the US market, including in medical services-related firms like managed care organizations, caregivers, and medical suppliers.