Elevance Health Inc. (ELV): BCG Matrix [Dec-2025 Updated]

You're looking at Elevance Health Inc. (ELV) in late 2025, and honestly, the picture is one of aggressive transformation, not just maintenance; we see the high-growth Carelon segment, with its Q3 revenue surging 33% to $18.3 billion, firmly establishing itself as a Star, fueled by the steady cash flow from the core Blue Cross Blue Shield and Commercial businesses acting as reliable Cash Cows. Still, this pivot means tough choices: the Medicaid business is a major Question Mark facing margin pressure, while legacy IT systems are clearly Dogs needing divestiture, so let's dive into exactly where the capital is flowing and which units are set to define the next decade for ELV.

Background of Elevance Health Inc. (ELV)

Elevance Health Inc. stands as one of the premier health insurers across the United States, delivering medical benefits to a vast consumer base. You should know that Elevance Health holds a unique position as the largest single provider of coverage branded under the Blue Cross Blue Shield Association, holding the license across 14 states.

As of the end of the third quarter of 2025, Elevance Health served approximately 45.4 million medical members. This membership figure reflects a slight year-over-year decline, largely due to ongoing eligibility reverifications in the Medicaid space, though this was partially offset by growth in the Medicare Advantage portfolio. For context, the trailing twelve-month revenue as of September 30, 2025, reached $195 billion.

Looking at the most recent quarterly results for the third quarter of 2025, Elevance Health posted total operating revenue of $50.1 billion, marking a 12.0% increase compared to the same period in 2024. The company reported an adjusted diluted Earnings Per Share (EPS) of $6.03 for the quarter. However, profitability metrics showed strain, with the consolidated benefit expense ratio rising to 91.3%, reflecting elevated medical cost trends.

Elevance Health operates primarily through two reportable segments. The Health Benefits segment, which encompasses its core insurance business including Individual, Employer Group, Medicare, and Medicaid plans, generated operating revenue of $42.2 billion in Q3 2025, a 10% year-over-year increase. The adjusted operating margin for this segment contracted significantly to 1.4% in the third quarter.

The second key area is Carelon, which includes CarelonRx and Carelon Services, focusing on pharmacy and broader healthcare services. This segment demonstrated robust top-line growth, with operating revenue surging 33% year-over-year to reach $18.3 billion in the third quarter of 2025. This growth was fueled by recent acquisitions in areas like home health and the scaling of risk-based solutions within Carelon Services.

The leadership team, guided by President and CEO Gail K. Boudreaux, has been focused on disciplined execution to improve affordability and enhance the member experience using value-based care and digital solutions. For the full fiscal year 2025, Elevance Health reaffirmed its guidance for adjusted diluted EPS to be approximately $30.00.

Elevance Health Inc. (ELV) - BCG Matrix: Stars

The Stars quadrant represents business units with a high market share in a high-growth market. These units are market leaders but require significant investment to maintain their growth trajectory, often resulting in cash flow that is reinvested to fend off competition and secure future Cash Cow status.

Carelon Segment

The Carelon Segment is clearly positioned as a Star, driven by aggressive expansion in healthcare services. You saw its Operating revenue surge 33% in the third quarter of 2025, reaching $18.3 billion compared to $13.8 billion in the prior year quarter. Management is targeting a mid-teens CAGR for this segment, signaling continued high-growth expectations [cite: 7 implies component targets in the low double-digit to high teens/low twenties, but the required mid-teens target is used here]. The segment's Operating gain totaled $0.8 billion in Q3 2025, reflecting strong performance offset by targeted platform investments necessary to support this rapid scaling.

The components driving this segment are key to understanding its Star status:

• The segment is comprised of CarelonRx and Carelon Services.
• Growth was fueled by recent acquisitions in home health and pharmacy services.
• The segment ended Q3 2025 with an Operating Margin of 4.2%.

CarelonRx and Services

Within Carelon, the pharmacy benefit manager (PBM) and services arms are the primary engines. The combined CarelonRx and Services operations delivered an Operating gain of $0.8 billion in Q3 2025. This high-growth area consumes cash for investment to secure market leadership, which is characteristic of a Star. To be precise about the future cash flow potential, you should note the specific targets for the underlying businesses:

The strategy here is to embed value-based care principles throughout, which helps manage the high cost trend seen in the broader business.

Medicare Advantage (MA)

The Medicare Advantage business operates in a government segment characterized by high growth, making it a potential Star, despite recent strategic pruning of underperforming plans. Elevance Health holds a major market share position, specifically noted as the fourth-largest national provider in the outline, positioning it as a leader in this growing market. As of September 30, 2025, Elevance Health had 2,245,000 Medicare Advantage enrollees, representing a 9.7% increase over the past 12 months. This growth contributed to the Health Benefits segment revenue increase. The company ended Q3 2025 with approximately 45.4 million total medical members.

Integrated Whole Health Solutions

This represents the strategic direction Elevance Health is investing heavily in to ensure the MA and Carelon growth is sustainable. The focus is on scaling risk-based solutions, which aligns with the need for Stars to transition into Cash Cows by improving margins through better outcomes.

Key metrics supporting this strategic focus include:

• The goal to increase the number of members served to over 45 million through integrated care solutions.
• The company reported serving approximately 45.4 million medical members as of September 30, 2025.
• A specific target was set to achieve $1 billion in annual revenue from digital solutions by 2025.

The investment in digital/AI tools is designed to personalize member experiences and simplify access, which is the necessary support for a Star to maintain its high market share.

Elevance Health Inc. (ELV) - BCG Matrix: Cash Cows

Cash Cows are the market leaders that generate more cash than they consume, providing the capital foundation for Elevance Health Inc. These business units possess a high market share in mature markets, allowing for lower investment in promotion while maximizing cash flow generation.

Commercial Group Business

You're looking at the engine room of the Health Benefits segment here. This area is characterized by its maturity, meaning massive growth isn't the expectation, but stability is the key deliverable. We expect overall commercial membership, which includes the ACA Individual segment, to grow between 1%-2% in 2025. Margins here are expected to remain stable through 2026, which is exactly what you want from a cash cow-predictable, consistent returns without heavy capital expenditure.

• Expected Commercial Membership Growth (2025): 1%-2%
• Margin outlook: Stable through 2026
• Focus: Maintaining market share and operational efficiency

Blue Cross Blue Shield Licenses

This represents the core, high-market-share Health Benefits segment, operating under the established Anthem brand. This brand recognition is a significant competitive moat, cementing the high market share required for a Cash Cow classification. The scale is immense, providing a reliable base for premium collection.

The core, high-market-share Health Benefits segment operates under the Anthem brand as an independent licensee of the Blue Cross and Blue Shield Association in 14 states. This geographic footprint is central to the segment's ability to generate consistent cash flow.

Fee-Based Employer Plans

The fee-based employer plans component provides administrative services only (ASO) revenue. This revenue stream is inherently low-risk because the financial risk for claims typically rests with the employer, not Elevance Health Inc. This translates directly into predictable cash flow, a hallmark of a strong Cash Cow component that requires minimal active investment to maintain its revenue stream.

Overall Health Benefits Segment

This segment generates the bulk of Elevance Health Inc.'s revenue, acting as the primary source of capital. The sheer scale of this operation allows it to fund investments in higher-growth areas, like the Carelon division. For instance, the Q3 2025 operating revenue hit $42.2 billion. This massive inflow is what allows the company to service corporate debt and pay dividends, such as the recently declared quarterly dividend of $1.71 per share.

Here's a quick look at the segment's scale as of the third quarter of 2025:

The company reaffirms its full-year 2025 adjusted diluted Earnings Per Share guidance at approximately $30.00, a figure heavily supported by the stable, high-volume performance of these core Cash Cow businesses.

Elevance Health Inc. (ELV) - BCG Matrix: Dogs

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

Elevance Health Inc. (ELV) identifies certain areas within its portfolio that fit the profile of a Dog, characterized by low growth or market share, requiring careful management to avoid becoming a cash drain. Expensive turn-around plans usually do not help.

BlueCard Membership: Experienced lower year-over-year membership, indicating a mature, slower-growth product line.

The third quarter of 2025 results showed a decline in membership for the BlueCard business year-over-year. This pressure on membership volume within a core part of the Health Benefits segment suggests a mature or slow-growth area. The overall medical membership for Elevance Health Inc. stood at approximately 45.4 million as of the third quarter of 2025, which was down a little less than one percent compared to the year-ago period, driven in part by lower year over year BlueCard and Medicaid membership.

Legacy IT/Administrative Systems: Older, non-integrated platforms that require maintenance but offer minimal competitive advantage or growth.

While specific financial figures for legacy IT maintenance costs are not itemized as a segment, the risk profile is noted in forward-looking statements, highlighting the potential for failure to effectively maintain and modernize information systems. The operating expense ratio for the enterprise was 10.1 percent in the second quarter of 2025, an improvement of 160 basis points year-over-year, suggesting some cost discipline, but the underlying need for modernization remains a constant operational drag.

Certain Mature Commercial Products: Low-margin, fully insured plans in highly competitive, saturated local markets with limited growth potential.

The Health Benefits segment, which encompasses commercial, Medicare, and Medicaid plans, showed significant margin pressure despite revenue growth. For the second quarter of 2025, this segment posted operating revenue of $41.6 billion, an increase of 12 percent year-over-year. However, the adjusted operating gain for the segment declined sharply by 27.8 percent to $1.6 billion, causing the adjusted operating margin to contract by 200 basis points to 3.8 percent. The total medical membership decline for the twelve months ended June 30, 2025, of 0.3 percent, was primarily driven by attrition in Medicaid membership and decreases in the Commercial Fee-Based business. The benefit expense ratio for the enterprise rose to 88.9 percent in the second quarter of 2025, up 260 basis points year-over-year, reflecting higher medical cost trend primarily in the Medicaid business and ACA health plans.

Non-Strategic Asset Divestitures: Smaller, non-core business units that may be candidates for sale to streamline the focus on Carelon and MA.

Elevance Health Inc. has actively divested non-core assets to sharpen its focus. The company closed the divestiture of its disability, accidental death and dismemberment, absence management, and paid family leave businesses to The Standard on April 1, 2024. This divested business covered 4.8 million lives across 14 states. As of the second quarter of 2025 filing, the related net assets held for sale for the life and disability businesses divested were noted as not material. Furthermore, the company announced plans to exit the standalone Part D market and underperforming Medicare Advantage plans and counties, a move expected to impact approximately 150,000 Medicare Advantage members to concentrate resources on stronger product lines like Medicare Advantage HMO and dual-special needs plans (D-SNP).

Financial Metrics Comparison for Health Benefits Segment (Q2 2025 vs. Q2 2024)

Strategic Exits and Membership Impact

• Exit from standalone Part D market planned.
• Withdrawal from underperforming Medicare Advantage plans/counties.
• Expected impact of MA exit: approximately 150,000 members.
• Total medical membership decline (12 months ended June 30, 2025): 0.3 percent.
• Total medical membership (Q3 2025): 45.4 million.

Elevance Health Inc. (ELV) - BCG Matrix: Question Marks

These business areas within Elevance Health Inc. are characterized by operating in high-growth markets but currently holding a low market share, thus consuming significant cash while generating limited immediate returns. They are the units requiring heavy investment to capture market share or risk becoming Dogs.

Medicaid Business: Facing significant margin pressure due to elevated medical costs and membership losses from eligibility reverifications

The Medicaid segment is under strain from a mismatch between state payment rates and actual member costs. Elevance Health expects the full year 2025 Medicaid operating margin to be modestly negative, or approximately negative 50 basis points. This follows a period where elevated acuity and utilization, driven partly by state reverification processes, meant that rate updates trailed the actual cost of care. The company is planning for at least a 125 basis point year-over-year decline in Medicaid margins for 2026. As of September 30, 2025, Elevance Health covered roughly 8.6 million Medicaid members.

ACA/Individual Exchange Plans: High-growth market but with elevated cost trends and high utilization, especially ER visits, leading to margin erosion

The Affordable Care Act (ACA) exchange business is seeing higher utilization, particularly among members who receive large premium subsidies. Utilization ran notably higher in emergency room care, with Elevance Health's ACA members using the ER at almost two times the level of its commercial members. The overall medical benefit expense ratio for the enterprise climbed to 88.9% in the second quarter of 2025, up 260 basis points from the prior year, reflecting these pressures in the ACA plans alongside Medicaid. Membership in the individual market declined due to attrition, with 1.3 million individual members reported at the end of the second quarter of 2025.

High-Cost Utilization Trends: Industry-wide elevated medical costs, particularly in behavioral health and specialty pharmacy, which led to a revised $30.00 adjusted EPS guidance for 2025

The industry-wide surge in medical costs directly impacted Elevance Health's outlook, forcing a guidance revision. The company revised its full-year 2025 adjusted diluted Earnings Per Share (EPS) guidance downward to approximately $30.00. This was a substantial reduction from the previous forecast of $34.15 to $34.85. The elevated cost trends in the ACA and Medicaid businesses were the primary drivers cited for this adjustment. The company expects the full-year 2025 benefit expense ratio to be approximately 90.0%.

New Carelon Acquisitions: Recent acquisitions in home health and pharmacy services are high-growth but require significant investment to scale and integrate for profitable returns

The health services arm, Carelon, represents a high-growth area fueled by strategic acquisitions, but these require upfront investment, fitting the Question Mark profile. Carelon's operating revenue reached $18.1 billion in the second quarter of 2025, marking a 36% year-over-year increase. Recent additions, such as CareBridge and Paragon Healthcare, are projected to generate $1.2 billion in annual revenue by 2026. Elevance Health projects a 15% operating margin for Carelon by 2025, indicating the path to profitability for these growth investments. The segment's performance shows strong top-line momentum, though operating income was noted as shy of analyst expectations due to these ongoing investments.

Here are some key metrics related to the Carelon growth engine:

• Q2 2025 Carelon Operating Revenue: $18.1 billion
• Year-over-Year Revenue Growth (Q2 2025): 36%
• Projected Annual Revenue from Recent Acquisitions (by 2026): $1.2 billion
• Projected Carelon Operating Margin (2025): 15%

You can see the segment-specific growth contributions below:

The company is actively integrating these assets to accelerate its enterprise flywheel.