Elevance Health Inc.

Elevance reported 3Q adjusted diluted EPS of $6.99, with approximately $0.50 per share of operating outperformance and a $1.85 per share net non-operating benefit, mainly from investment-income valuation adjustments partly offset by state tax items. Operating revenue was just under 1% higher at $50.4 billion, consolidated benefit expense ratio was 90.6% (down 70 bps), and adjusted operating expense ratio was 11.3% (up 90 bps). The company ended the quarter with approximately 44.9 million medical members and days in claims payable of 44.9 days, up 3.5 days year over year. Management raised 2026 adjusted diluted EPS guidance to at least $29, increased the earnings baseline to at least $26.75, and reiterated at least 12% adjusted EPS growth in 2027; it also lifted full-year operating cash flow guidance to at least $6.5 billion.

Gail Boudreaux said the quarter reflected strong execution across Medicaid, Medicare Advantage, and Individual ACA, and that the business is entering 2027 with greater visibility and a higher earnings base. Her tone was confident and constructive, emphasizing that growth should come from continued health benefit margin improvement, broader adoption of Carelon solutions, and greater operating efficiency rather than reliance on any single business or assumption. She also highlighted measurable operational progress, including a 15% reduction in avoidable inpatient admissions in Carelon’s oncology engagement program and more than $300 million in anticipated savings identified by the Elevate medical cost platform.

Mark Kaye said 3Q adjusted EPS of $6.99 reflected enterprise-wide operating outperformance, with favorable Medicaid, Medicare Advantage, and ACA results. He noted operating revenue of $50.4 billion, a 90.6% benefit expense ratio, a 11.3% operating expense ratio, and operating cash flow of $1.3 billion in the quarter, with full-year operating cash flow guidance raised to at least $6.5 billion. He framed Medicaid as the main margin recovery story, saying rate actions improved second-half margins, 2026 should be the trough, and 2027 should improve further as rates and medical-cost actions catch up; he also said commercial pricing assumes a low double-digit cost trend and that capital deployment will remain disciplined, with opportunistic buybacks and continued investment in margin and Carelon growth.

Analysts focused heavily on what supports the jump to at least 12% EPS growth in 2027, especially Medicaid margins, work requirements, and whether any single business was carrying the outlook; management said it is not relying on any one segment and pointed to broader health benefit margin improvement, Carelon growth, and operating efficiency. Several questions probed Medicaid rate adequacy and work requirements, and management said states are still finalizing implementation details, but 2027 rates are starting to reflect more recent cost trends and some membership/acuity effects. Other notable topics were CarelonRx strength, commercial pricing amid elevated trend and IDR pressure, and ACA membership; management said ACA retention and effectuation have been better than expected, with at least 1.2 million members expected at year-end.