Elevance Health Inc.

(New York Stock Exchange)
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Bullish +75

Elevance Health stock enters 2027 with Medicaid recovery in focus

Earnings report Guidance raised AI-generated analysis

πŸ“ˆ Elevance Health raised its 2026 adjusted diluted earnings guidance to at least $29.00 per share following a strong third quarter.

πŸ’° Operating revenue grew 0.7% year over year to $50.4 billion, while adjusted EPS reached $6.99 in Q3 2026.

πŸš€ Management targets at least 12% adjusted earnings growth for 2027 from a higher baseline of $26.75 per share.

πŸ₯ The benefit expense ratio improved by 70 basis points to 90.6%, driven by better performance in Medicare Advantage and ACA segments.

πŸ“‰ Total medical membership declined by 487,000 to 44.9 million as of September 30, 2026, across Medicaid and other risk-based businesses.

πŸ’Š Carelon generated $19.3 billion in Q3 operating revenue with a 17% increase in operating gain to $0.9 billion.

πŸ“‰ Health Benefits revenue rose 3% to $43.4 billion, though operating gain declined due to investments in the long-term operating model.

πŸ‘©β€πŸ’Ό CEO Gail Boudreaux emphasized that membership trends and medical cost control are key tests for the 2027 path.

πŸ“Š Operating cash flow guidance was raised to at least $6.5 billion for the full year 2026.

Bullish Signals
  • Elevance Health raised its 2026 adjusted diluted earnings guidance to at least $29.00 per share, up from a previous estimate of $27.00.
  • The company lifted its GAAP diluted earnings guidance to at least $22.00 per share and increased operating cash flow guidance to at least $6.5 billion.
  • Management expects at least 12% adjusted diluted earnings-per-share growth in 2027 from a higher baseline of at least $26.75.
  • The benefit expense ratio improved by 70 basis points to 90.6%, reflecting better performance in Medicare Advantage and Individual ACA segments.
  • Carelon generated $19.3 billion of third-quarter operating revenue, a 5% increase from the prior-year quarter.
  • Carelon's operating gain increased 17% to $0.9 billion, supported by improved specialty-pharmacy profitability and risk-based solutions.
Risk Factors
  • The company faced lower membership in Medicaid, Medicare Advantage, and employer risk-based businesses during the quarter.
  • Total medical membership declined by 487,000 to 44.9 million as of September 30, 2026, creating pressure on premium yields.
  • Health Benefits operating gain declined year over year as Elevance invested in its long-term operating model.
Full Analysis
Elevance Health reported stronger-than-expected third-quarter results on October 21, 2026, leading the company to raise its full-year outlook. Operating revenue increased by 0.7 percent year over year to reach $50.4 billion, while adjusted diluted earnings per share climbed to $6.99. These figures reflect a robust performance that sets a higher baseline for future growth projections. Following the strong quarterly execution, Elevance Health raised its guidance for 2026 adjusted diluted earnings to at least $29.00 per share, up from the previous estimate of $27.00. The company also lifted its GAAP diluted earnings guidance to at least $22.00 per share and increased operating cash flow guidance to at least $6.5 billion for the year. Looking ahead to 2027, Chief Executive Gail Boudreaux stated that the company expects adjusted diluted earnings-per-share growth of at least 12 percent from a higher 2026 baseline. Management highlighted that membership trends, medical cost control, and the profitability of its Carelon subsidiary remain central to the insurer's investment case for the coming year. The health insurer noted an improvement in its benefit expense ratio by 70 basis points to 90.6 percent, driven by better performance in Medicare Advantage and Individual ACA segments. However, the company acknowledged lower membership numbers across Medicaid, Medicare Advantage, and employer risk-based businesses, with total medical membership standing at 44.9 million as of September 30, 2026.