Elevance Health NYSE: ELV reported first-quarter 2026 adjusted diluted earnings per share of $12.58, exceeding management’s expectations, as the company pointed to favorable claims experience, seasonality in its individual ACA business, and a non-recurring boost in investment income.
President and CEO Gail Boudreaux said performance in the quarter “exceeded expectations,” driven by “underlying business strength, along with ACA seasonality and non-recurring investment income.” Based on early-year trends, the company raised its full-year 2026 adjusted diluted EPS guidance to at least $26.75.
Guidance raised; investment income boosted Q1 results
CFO Mark Kaye said the quarter included “approximately $1 per share from non-recurring valuation adjustments within net investment income.” He added that the company’s increased 2026 EPS outlook is “supported by current operating trends,” with management citing actions to manage cost trend and maintain expense discipline.
Kaye also outlined how the outperformance in the quarter translated into updated full-year expectations. He said first-quarter EPS came in ahead of the company’s initial outlook and included about $0.45 of core outperformance, with roughly $0.30 tied to underlying business favorability and about $0.15 driven by seasonality-related timing dynamics. The company increased its full-year EPS guide by $1.25 per share relative to its prior outlook, with $0.25 attributed to underlying, non-seasonal business favorability and the remaining $1 tied to the non-recurring investment income item. Kaye emphasized that the $1 “should clearly be excluded from the 2026 earnings baseline,” and he referenced an ending 2026 baseline of at least $25.75 when discussing the company’s expectation to return to at least 12% adjusted EPS growth in 2027.
Membership, revenue, and medical cost metrics
Elevance ended March with 45.4 million members, an increase of nearly 200,000 from year-end, driven by commercial fee-based membership growth and higher individual ACA enrollment, Kaye said. He noted that growth was “partly offset by anticipated declines in Medicare Advantage, employer group risk, and Medicaid.”
Operating revenue totaled $49.5 billion, up 1.5% year-over-year, as higher premium yields were largely offset by lower health plan membership versus the prior year, according to Kaye.
The consolidated benefit expense ratio was 86.8%. Kaye said medical costs were “modestly better” than assumed in the company’s outlook, citing favorable claims experience and the impact of actions taken to manage trend. The adjusted operating expense ratio was 10.5%, improving 20 basis points year-over-year.
CMS risk adjustment matter and other excluded items
Management discussed two notable items recorded in the quarter that were excluded from adjusted earnings. Kaye said the company recorded an accrual of $935 million tied to steps it has initiated to submit risk adjustment data related to historical periods to CMS, describing the amount as the company’s “current best estimate of the identified potential exposure” based on information available at the time. He also said Elevance recorded a $129 million charge related to business optimization, reflecting actions “to simplify organizational structures and support accelerated decision-making.”
During Q&A, Boudreaux said the $935 million accrual reflects management’s “current best estimate of the probable exposure” related to a historical matter involving “the interpretation of the risk adjustment policy during that period in question.” She said Elevance has engaged “directly and quite constructively” with CMS since receiving a notice in February and that CMS extended the compliance timeline; Boudreaux said the company has through July 31 to meet compliance requirements. Based on the steps CMS has prescribed and the current timeline, she said the company believes that if it completes those steps, “the sanctions will not go into effect.”
Segment commentary: Medicaid, Medicare, commercial, ACA, and Carelon
Medicaid: Kaye said Medicaid performance was slightly favorable to expectations, supported by progress on cost-management initiatives. However, he reiterated the company’s full-year operating margin outlook for Medicaid of approximately -1.75%, adding that guidance maintains “a prudent stance towards rate adequacy and trend development.” Boudreaux said the company is seeing early evidence that actions are lowering costs, particularly in behavioral health and specialty pharmacy. She also said Elevance is addressing growth in applied behavior analysis (ABA) therapy through “rigorous clinical oversight” and is using predictive analytics to identify members at risk of substance use disorder earlier.
On rates, Chief Health Benefits Officer Felicia Norwood said Medicaid rates through April were “right in line” with expectations and “coming in close to the mid-single-digit range,” but she said they remain “slightly below the trend” the company continues to see. She described conversations with state partners as “very constructive” and said the company has begun discussions around July rates, while noting it is still early.
On membership, Kaye said Elevance remains comfortable with its 2026 Medicaid membership guidance, which reflects a high single-digit percentage decline due to ongoing eligibility reverifications and disenrollment activity. He said the company expects to finish the year toward the higher end of that range, with timing “modestly more favorable” so far, while guidance assumes greater membership pressure later in the year.
Medicare Advantage: Boudreaux said actions to reposition the Medicare Advantage business are driving improved performance, and the company remains on track to achieve an operating margin of at least 2% in 2026. Kaye attributed stronger-than-anticipated Medicare results to portfolio actions taken for 2026, including product repositioning and selective market exits. Boudreaux also said the company was “encouraged to see CMS address a portion of the funding challenges in the final rates for 2027,” adding that Elevance will remain disciplined as it prepares for bid submissions.
Commercial: Boudreaux said the company maintained a disciplined pricing approach for 2026, and she said early signals for the 2027 selling season include “strong employer interest,” supported by a “robust pipeline and early wins.” During Q&A, she said employers are focused on affordability and experience, and she also cited a continuing theme of client consolidation to a single carrier.
Morgan Kendrick, president of the commercial health benefits business, said clients are aligned with Elevance’s focus on affordability and simplification, and emphasized employer interest in reducing complexity for consumers navigating care. He also said the company is seeing “a shift in way of funding,” with self-funded business prevalent upmarket and a more balanced mix in the downmarket.
Individual ACA: Boudreaux said the company is seeing “modestly stronger retention,” particularly in bronze-tier plans, and that first-quarter results reflected pronounced seasonality given product mix. Kaye said individual ACA membership grew sequentially in the first quarter, with growth driven by expansion states and more consumers selecting bronze plans. He said the company’s view of membership effectuation indicates it is on track to end the second quarter with about 1.2 million members ahead of its initial outlook, but management has not revised its full-year outlook of at least 900,000 members due to “unique market dynamics” and product mix shifts.
Addressing risk pool questions, Kaye said it is early in the year and more time is needed for retention patterns to settle and claims to mature, but he noted an early indicator showing prior claims experience for renewing members in paid status running “moderately higher” than canceled or non-payment cohorts, a dynamic he said is consistent with the company’s pricing assumptions.
Carelon: Kaye said Carelon’s first-quarter operating gain declined modestly from the prior year, reflecting lower health plan membership and continued investment in risk-based capabilities, partially offset by improvement in specialty pharmacy and CareBridge. He said CarelonRx performance and margin were in line with expectations and consistent with a “mid 5% margin range” for the full year, citing normal seasonality, mix, and improvements in specialty and home dispensing.
On regulatory developments affecting pharmacy benefit managers, Kaye said recent federal actions suggest a move toward greater transparency and reporting, and he said that direction is consistent with CarelonRx’s model, including rebate pass-through and transparent fee-based arrangements. He added that CarelonRx’s strategy is “not dependent upon any single economic mechanism,” but instead focused on integrated medical and pharmacy management and total cost of care.
AI, care delivery initiatives, and cash flow/capital deployment
Boudreaux said the company is “embedding and scaling AI across clinical, operational, and administrative workflows,” and she described AI as part of the company’s broader strategy to lower costs and simplify healthcare navigation. She said Elevance is investing more than $1 billion in digital and AI-enabled capabilities. As examples, she cited an AI-enabled virtual assistant used by 22 million commercial members and a personalized matching tool, Sydney, which uses more than 500 data points to match members with providers; she said more than 20% of members have connected with it. She also said the company is using technology to reduce denials tied to missing information in prior authorization workflows, claiming denials can be reduced by nearly 70% in that context.
On care delivery, Boudreaux said Carelon is advancing an integrated whole health approach, including combining CareBridge and care-at-home capabilities into a single risk-based solution. She said these programs have reduced hospital readmissions by 20% and generated more than 10% savings on post-acute care. Kaye added that CareBridge is focused on Medicaid and dual-eligible members with complex needs and said first-quarter results were in line with expectations as the platform scales.
Financially, Kaye said operating cash flow was $4.3 billion in the quarter, and Elevance still expects full-year operating cash flow of at least $5.5 billion, inclusive of potential cash payments tied to the CMS matter. He said the company repurchased 3.7 million shares for $1.1 billion at an average price of just over $300 per share and remains on track for at least $2.3 billion of share repurchases in 2026.
Kaye also addressed claims payable, saying days in claims payable ended the quarter at 46.6 days, up 5.3 days sequentially, driven mainly by normal first-quarter seasonality and higher medical claims inventory. He said the change was largely seasonal and mix-related and did not reflect a change in the company’s underlying reserve approach.
About Elevance Health NYSE: ELV
Elevance Health, Inc NYSE: ELV is a large U.S.-based health benefits company that provides a broad range of health insurance products and related services. Headquartered in Indianapolis, the company rebranded from Anthem, Inc to Elevance Health in 2022 while continuing to operate consumer-facing health plans under established state and national brands. Gail Boudreaux serves as chief executive officer and president, leading the company's strategic focus on integrated health care and benefit delivery.
Elevance's core activities include offering medical and specialty health plans for individuals, employers and government programs, including Medicare and Medicaid managed-care products.
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