Elevance Health, Inc.
Combined average of Moat (AI Resilience), Growth, and Valuation scores.
Moat Score
Elevance is the largest Blue Cross Blue Shield (BCBS) licensee in the US (14 states), giving it brand-protected, state-level managed care contracts that competitors cannot replicate. The Carelon services arm (analytics, pharmacy, behavioral, post-acute) is the UNH-Optum analog and is the primary growth engine, but it remains smaller and less integrated than Optum.
Elevance's competitive position rests on regulatory lock-in (state-level Medicaid contracts + BCBS branding), bilateral provider network effects, and proprietary claims data on 47M+ medical members:
- BCBS License: A Brand-Protected Geographic Monopoly: Elevance holds exclusive BCBS licenses in 14 states (CA, NY, GA, OH, IN, KY, VA, WI, CO, CT, ME, MO, NV, NH). The BCBS brand carries decades of provider trust and member familiarity that single-state plans cannot match. Switching out of an Elevance BCBS plan typically means switching out of the BCBS network — a meaningful behavioral and clinical disruption for members.
- State Medicaid + Medicare Advantage Contracts: Elevance administers Medicaid managed care in many of its BCBS states under multi-year capitation contracts that require state-specific licensure, actuarial certification, and network adequacy compliance. Each contract represents 3-5 years of regulated revenue with built-in renewal mechanisms; exit is operationally and politically difficult. Medicare Advantage contracts add another federal-program embedding layer.
- Carelon: The Healthcare Services Build: Carelon (formerly IngenioRx + various M&A) is Elevance's pharmacy benefit, analytics, behavioral health, and post-acute services platform. Carelon Services and Carelon Rx now generate ~$60B+ of segment revenue and are growing faster than the legacy Health Benefits business. The strategy mirrors UNH's Optum playbook with a 5-7 year lag; the directional thesis is sound but execution risk is real.
- Claims Data on 47M+ Members: Decades of claims data across 47M+ medical members and additional pharmacy/dental/vision lives feed risk-adjustment models, care management programs, and underwriting. While the dataset is meaningfully smaller than UNH's 140M-member base, it is still a structural asset for population health analytics and value-based care contracting in BCBS states.
Moat Verdict
Elevance's lock is still BCBS exclusivity in 14 states, Medicaid contracts, and the provider network. Those are AI-resilient. The May stamp had every resilient pillar at strong and printed 100, which put a Blue-plan insurer next to Moody's. Proprietary data is intact (47M vs UNH 140M). Bundling is weakened (Carelon is a lag, not Optum). Moat 90 sits just under UNH at 91. Growth and valuation stay. Coverage only. Not a print restamp.
77.6 resilient · 56.9 vulnerable · 80/20 = 73.5 · = 73
Open a moat to read its note.
Provider portals, claims submission systems, and Carelon care-management workflows accumulate years of organizational learning across hospital systems, physician groups, and HR benefits teams. Switching adds material retraining cost across thousands of users.
Risk-adjustment models, actuarial pricing, network-adequacy algorithms and Carelon clinical-decision tools are tuned to Elevance's BCBS state populations and government-program rules. UnitedHealth, Cigna, Humana and Centene run the same kinds of models, and no figure shows Elevance's are better, so it rates intact.
Carelon uses some publicly available CMS and NIH datasets in its analytical products, but Elevance's data advantage is private claims data on 47M+ members, rated under proprietaryData. It never held a public-data-access moat, so the pillar is not applicable rather than weakened. Previously weakened.
Healthcare actuaries, BCBS-license-trained underwriters, and clinical informaticists are genuinely scarce. Elevance is one of the largest employers of MA-experienced actuaries in the US, though the talent base is smaller than UNH/Optum's.
Health Benefits + Carelon Rx + Carelon Behavioral + Carelon Services is a vertical build, not Optum. The card already called it a 5–7 year lag with execution risk. Employers and state agencies can still unbundle PBM, behavioral, and analytics. Directionally similar to UNH, not peer-equal.
47M+ medical members generate decades of claims data that power risk-adjustment and care-management analytics. That is a real dataset. It is not UNH's 140M-member base. Marked intact, not strong, so ELV does not sit above UNH on data gravity.
BCBS license exclusivity in 14 states is a brand-protected regulatory monopoly within those geographies — the BCBS Association's licensing framework restricts which entity can use the brand in each state, effectively granting Elevance a multi-decade BCBS franchise in its footprint. State Medicaid managed-care contracts add multi-year regulated revenue with high re-licensure barriers. Federal MA contracts add another layer.
Bilateral provider-employer network effects: Elevance's 1.7M+ provider relationships in BCBS states make it the broadest network for employers in those geographies, and providers cannot afford to be out-of-network for the dominant BCBS plan in their state. Decades of network compounding create real switching friction on both sides.
Carelon Rx, claims processing, utilization management and care coordination run inside employer, hospital, Medicaid and Medicare Advantage operations. Employers and states re-bid insurers on multi-year cycles, and no retention figure is on file, so it rates intact — the same rating UnitedHealth carries.
Elevance's claims systems are the record of member health and financial transactions across 47M+ lives, and Carelon's care-management and behavioral-health platforms hold clinical records in provider practices in BCBS states. But every insurer's claims system is the record for its own members; that is table stakes, not a record third parties reconcile against. UnitedHealth rates strong on this pillar because Change Healthcare's clearinghouse touches roughly one in three US patient records across payers; Elevance has no equivalent cross-payer position. Re-rated from strong to intact.
Blue plan membership concentration secures provider discounts in its states, but UnitedHealth runs a larger national book.
Franchise reputation matters but is inseparable from the regulatory standing and relationships rated elsewhere; not credited twice.
Combined average of Moat (AI Resilience), Growth, and Valuation scores.
Moat Score
Elevance is the largest Blue Cross Blue Shield (BCBS) licensee in the US (14 states), giving it brand-protected, state-level managed care contracts that competitors cannot replicate. The Carelon services arm (analytics, pharmacy, behavioral, post-acute) is the UNH-Optum analog and is the primary growth engine, but it remains smaller and less integrated than Optum.
Growth Score
Q2 2026 (reported July 15, 2026) operating revenue of $49.8B grew only 0.8% YoY, after +1.5% to $49.5B in Q1: higher Health Benefits premium yields and CarelonRx product revenue were largely offset by anticipated declines in Medicare Advantage, Medicaid and Employer Group risk membership. Medical membership of ~44.9M fell 469K sequentially on a known commercial fee-based customer transition and Individual ACA and Medicaid attrition. Carelon revenue grew 6% to $19.2B, slower than Q1's +7.9%. The benefit expense ratio rose 80bps YoY to 89.7% on elevated Government-business cost trend (Q1: 86.8%, +40bps), and the adjusted operating expense ratio rose 100bps to 11.0% on workforce and capability investment. Adjusted diluted EPS was $7.45, and management raised FY2026 adjusted EPS guidance to at least $27.00 and operating cash flow guidance to at least $6.0B. Medium-term revenue growth depends on premium-yield repricing and Carelon scaling outrunning risk-membership attrition.
Valuation Score
At ~$369, ELV trades at ~14× FY2026 EPS guidance — a significant discount to its ~17× historical average and below most managed-care peers despite a Q1 beat that triggered a guidance raise. The discount reflects Medicare Advantage uncertainty (industry-wide), the $935M risk-adjustment accrual, and skepticism on Carelon's path to Optum-like margins. The dividend yield is ~1.8% and the company has been an aggressive buyer of its own stock.
The BCBS Anchor + Carelon Build
Elevance's competitive position rests on regulatory lock-in (state-level Medicaid contracts + BCBS branding), bilateral provider network effects, and proprietary claims data on 47M+ medical members:
- BCBS License: A Brand-Protected Geographic Monopoly: Elevance holds exclusive BCBS licenses in 14 states (CA, NY, GA, OH, IN, KY, VA, WI, CO, CT, ME, MO, NV, NH). The BCBS brand carries decades of provider trust and member familiarity that single-state plans cannot match. Switching out of an Elevance BCBS plan typically means switching out of the BCBS network — a meaningful behavioral and clinical disruption for members.
- State Medicaid + Medicare Advantage Contracts: Elevance administers Medicaid managed care in many of its BCBS states under multi-year capitation contracts that require state-specific licensure, actuarial certification, and network adequacy compliance. Each contract represents 3-5 years of regulated revenue with built-in renewal mechanisms; exit is operationally and politically difficult. Medicare Advantage contracts add another federal-program embedding layer.
- Carelon: The Healthcare Services Build: Carelon (formerly IngenioRx + various M&A) is Elevance's pharmacy benefit, analytics, behavioral health, and post-acute services platform. Carelon Services and Carelon Rx now generate ~$60B+ of segment revenue and are growing faster than the legacy Health Benefits business. The strategy mirrors UNH's Optum playbook with a 5-7 year lag; the directional thesis is sound but execution risk is real.
- Claims Data on 47M+ Members: Decades of claims data across 47M+ medical members and additional pharmacy/dental/vision lives feed risk-adjustment models, care management programs, and underwriting. While the dataset is meaningfully smaller than UNH's 140M-member base, it is still a structural asset for population health analytics and value-based care contracting in BCBS states.
Moat Verdict
Elevance's lock is still BCBS exclusivity in 14 states, Medicaid contracts, and the provider network. Those are AI-resilient. The May stamp had every resilient pillar at strong and printed 100, which put a Blue-plan insurer next to Moody's. Proprietary data is intact (47M vs UNH 140M). Bundling is weakened (Carelon is a lag, not Optum). Moat 90 sits just under UNH at 91. Growth and valuation stay. Coverage only. Not a print restamp.
77.6 resilient · 56.9 vulnerable · 80/20 = 73.5 · = 73
Open a moat to read its note.
Provider portals, claims submission systems, and Carelon care-management workflows accumulate years of organizational learning across hospital systems, physician groups, and HR benefits teams. Switching adds material retraining cost across thousands of users.
Risk-adjustment models, actuarial pricing, network-adequacy algorithms and Carelon clinical-decision tools are tuned to Elevance's BCBS state populations and government-program rules. UnitedHealth, Cigna, Humana and Centene run the same kinds of models, and no figure shows Elevance's are better, so it rates intact.
Carelon uses some publicly available CMS and NIH datasets in its analytical products, but Elevance's data advantage is private claims data on 47M+ members, rated under proprietaryData. It never held a public-data-access moat, so the pillar is not applicable rather than weakened. Previously weakened.
Healthcare actuaries, BCBS-license-trained underwriters, and clinical informaticists are genuinely scarce. Elevance is one of the largest employers of MA-experienced actuaries in the US, though the talent base is smaller than UNH/Optum's.
Health Benefits + Carelon Rx + Carelon Behavioral + Carelon Services is a vertical build, not Optum. The card already called it a 5–7 year lag with execution risk. Employers and state agencies can still unbundle PBM, behavioral, and analytics. Directionally similar to UNH, not peer-equal.
47M+ medical members generate decades of claims data that power risk-adjustment and care-management analytics. That is a real dataset. It is not UNH's 140M-member base. Marked intact, not strong, so ELV does not sit above UNH on data gravity.
BCBS license exclusivity in 14 states is a brand-protected regulatory monopoly within those geographies — the BCBS Association's licensing framework restricts which entity can use the brand in each state, effectively granting Elevance a multi-decade BCBS franchise in its footprint. State Medicaid managed-care contracts add multi-year regulated revenue with high re-licensure barriers. Federal MA contracts add another layer.
Bilateral provider-employer network effects: Elevance's 1.7M+ provider relationships in BCBS states make it the broadest network for employers in those geographies, and providers cannot afford to be out-of-network for the dominant BCBS plan in their state. Decades of network compounding create real switching friction on both sides.
Carelon Rx, claims processing, utilization management and care coordination run inside employer, hospital, Medicaid and Medicare Advantage operations. Employers and states re-bid insurers on multi-year cycles, and no retention figure is on file, so it rates intact — the same rating UnitedHealth carries.
Elevance's claims systems are the record of member health and financial transactions across 47M+ lives, and Carelon's care-management and behavioral-health platforms hold clinical records in provider practices in BCBS states. But every insurer's claims system is the record for its own members; that is table stakes, not a record third parties reconcile against. UnitedHealth rates strong on this pillar because Change Healthcare's clearinghouse touches roughly one in three US patient records across payers; Elevance has no equivalent cross-payer position. Re-rated from strong to intact.
Blue plan membership concentration secures provider discounts in its states, but UnitedHealth runs a larger national book.
Franchise reputation matters but is inseparable from the regulatory standing and relationships rated elsewhere; not credited twice.
Growth Analysis
Growth Drivers
Key Risk
If the Medicare Advantage risk-adjustment accrual booked in Q1 2026 (~$935M, range -$585M to +$565M) proves materially under-reserved AND CMS imposes additional MA benchmark cuts for 2027, the Government business swings to operating losses while risk membership is still shrinking, leaving the raised ≥$27.00 EPS guide dependent on Carelon alone.
Score Derivation
58.8 base − 1.3 trajectory − 4 margin − 5 risk = 48
Base 58.8 (2-5% revenue CAGR, midpoint 3.5%) − 1.3 trajectory (Carelon decelerating from +7.9% to +6%; Health Benefits and Medicare Advantage stable) − 4 compressing margin (benefit expense ratio +40bps YoY in Q1 and +80bps in Q2; adjusted operating expense ratio +100bps in Q2) − 5 moderate MA risk-adjustment/CMS benchmark risk = 48
Price Scenarios (12–24 Months)
Valuation Multiples
| Trailing P/E (GAAP) | ~16× |
| Forward P/E (NTM) | ~14× |
| PEG Ratio | ~3.0× |
| Price / Sales (NTM) | ~0.4× |
| Price / FCF | ~12× |
ELV screens cheap on absolute multiples (~14× forward, ~12× FCF), with a meaningful discount to UNH (~13×, but with active DOJ probe) and other managed-care peers. The PEG of ~3.0 reflects modest near-term EPS growth, but the asymmetry comes from Carelon's eventual contribution and any positive MA risk-adjustment resolution (the $935M accrual could be revised down by up to $585M).
Approximate figures as of May 2026.
Where We Are vs Targets
Loading live price…
Medicare Advantage benchmarks are cut further in 2027, the $935M risk-adjustment accrual proves under-reserved, and Carelon margins disappoint relative to the Optum playbook.
- CMS imposes additional MA benchmark reductions of 3-5% in 2027, forcing Elevance to exit unprofitable MA markets and shrink the segment by 10%+ of members
- The Medicare Advantage risk-adjustment liability is settled at the high end of the disclosed range (+$565M above accrual) and a parallel DOJ-style investigation extends to Elevance's coding practices
- Carelon services growth decelerates to single digits as competitive pressure from Optum + CVS Caremark intensifies, leaving margin expansion below plan
- Multiple compresses to ~10× forward EPS as the stock trades on Health Benefits earnings alone with no Carelon premium
FY2026 EPS lands at the high end of >$26.75 guidance, MA repricing produces stable 2027 economics, Carelon continues 12-15% organic growth, and the multiple expands modestly toward historical average.
- Adj. EPS reaches ~$27 in FY2026 with the MA risk-adjustment accrual resolved within the disclosed range
- Carelon Services + Rx revenue grows 12-15% in FY2026 and reaches $70B+ segment revenue, with operating margins expanding toward 7-8%
- Medicaid redetermination headwinds fully wash out by mid-2026; member count stabilizes and dual-eligible SNP enrollment grows
- Multiple re-rates to ~16× forward EPS on FY2027 EPS of ~$28-29, with $4-5B of annual buyback supporting per-share growth
Carelon scales toward Optum-comparable margins, MA returns to growth in 2027 after repricing, and Elevance re-rates to peer-leading multiples.
- Carelon Services + Rx reaches $80B+ in FY2027 with operating margins expanding toward 9-10% (closing half the gap to Optum), driving segment operating income above $7B
- Medicare Advantage member count returns to growth in 2027 as competitors retreat from unprofitable markets, allowing Elevance to expand share with disciplined pricing
- AI-powered claims and care management products from Carelon become licensed externally, opening a healthcare-services-as-a-platform revenue stream valued at premium multiples
- Multiple expands to ~18-19× forward EPS on FY2027 EPS of ~$30, with continued capital return providing additional total-return cushion