Elevance Health, Inc. (ELV) Earnings & Analysis

Latest quarter

Elevance Health reported third-quarter operating revenue of $50.4 billion, above the $48.5 billion consensus estimate, and adjusted earnings per share of $6.99, above the $4.66 consensus. The company reported total revenue of $51.4 billion, compared with $50.7 billion a year earlier.

Elevance’s filing attributed the increase in operating revenue primarily to premium rate increases in Health Benefits and growth in CarelonRx product revenue. Lower Medicare Advantage, Medicaid and employer group risk-based membership partly offset those gains. The filing said total medical membership declined 1.1% year over year, driven in part by Medicaid eligibility redeterminations.

The company reported diluted earnings per share of $6.27, up from $5.32. Its filing attributed the increase primarily to higher shareholders’ net income and fewer diluted shares outstanding. Elevance reported an operating margin of 4.18%, compared with 3.46% a year earlier, and free cash flow of $1.0 billion, compared with $775.0 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Gail Boudreaux said Medicaid, Medicare Advantage and Individual ACA each contributed to third-quarter performance ahead of Elevance’s expectations. CFO Mark Kaye attributed approximately 50 cents per share of operating outperformance to results across the business and said a net non-operating benefit of $1.85 per share primarily reflected investment valuation adjustments, partly offset by state tax items.

Asked about Medicaid, Kaye said recent rate actions supported second-half margins, although underlying cost trends remained elevated and broadly stable. He said, “Rates are certainly not fully caught up with the underlying costs.” Boudreaux said the company was also working on medical cost management, care coordination and network performance. Kaye declined to provide a specific fourth-quarter Medicaid margin outlook, while saying he expected normal seasonal patterns.

Kaye said Medicare Advantage results benefited from the membership mix retained after product and geographic changes, as well as plan design and medical cost management. In Individual ACA, he said the seasonal increase in plan-paid costs associated with a greater mix of bronze plans emerged more slowly than expected. He also said retention and the rate at which customers activated coverage were better than expected, and that lower-premium bronze plans helped people maintain coverage.

On commercial coverage, Kaye said Elevance had priced 2026 and 2027 for a low double digit cost trend. He said pressure from independent dispute resolution was more pronounced in the company’s administrative-services-only business than in fully insured plans. Boudreaux said Elevance supported consumer protections but was advocating changes to eligibility controls and administration of the process.

Asked about Carelon, Kaye said the company uses affiliated health plans to refine clinical models before offering them to external customers. He said the services business had secured new business across behavioral health, clinical care, specialty and post-acute services. Boudreaux said Elevance had invested in digital solutions, care management and advocacy as employers sought integrated medical and pharmacy offerings.

Guidance

Elevance raised its 2026 adjusted diluted earnings guidance to at least $29.00 per share and its earnings baseline to at least $26.75. Kaye said the baseline increased by 75 cents, reflecting third-quarter operating outperformance and an improved Individual ACA outlook.

The company raised its 2026 operating cash flow guidance to at least $6.5 billion from $6.0 billion. Kaye also said Elevance now expects a modestly higher full-year Individual ACA operating margin and at least 1.2 million Individual ACA members at year-end, compared with its prior expectation of at least 1 million.