Elevance Health raises FY26 GAAP EPS guidance to over $22 vs $20.74 est
- Elevance Health raises FY26 GAAP diluted EPS guidance to more than $22.00
- New GAAP EPS forecast beats the analyst estimate of $20.74
- Adjusted diluted EPS guidance also raised to at least $29.00 vs $27.23 est
- Q3FY26 operating revenue grew 0.7% YoY to $50.4 billion
- Benefit expense ratio improved 70 bps YoY to 90.6%
*this image is generated using AI for illustrative purposes only.
Elevance Health Inc reported third quarter 2026 results ahead of expectations, with operating revenue of $50.4 billion and adjusted diluted EPS of $6.99, prompting the company to raise its full-year 2026 guidance.
Consolidated financial highlights
For the three months ended September 30, 2026, total operating revenue rose 0.7% year over year, driven by higher premium yields, increased CarelonRx product revenue, and growth in service fees. This was partially offset by lower Medicare Advantage, Medicaid, and Employer Group risk membership. The following table summarises key consolidated metrics.
| Metric | Q3 2026 | Q3 2025 |
|---|---|---|
| Operating Revenue | $50.4 billion | $50.1 billion |
| Operating Gain | $1.3 billion | $1.3 billion |
| Adjusted Operating Gain | $1.3 billion | $1.3 billion |
| Operating Margin | 2.5% | 2.6% |
| Adjusted Operating Margin | 2.7% | 2.7% |
| Shareholders' Net Income | $1,365 million | $1,189 million |
| Diluted EPS | $6.27 | $5.32 |
| Adjusted Diluted EPS | $6.99 | $6.03 |
| Benefit Expense Ratio | 90.6% | 91.3% |
| Operating Expense Ratio | 11.4% | 10.5% |
| Adjusted Operating Expense Ratio | 11.3% | 10.4% |
The benefit expense ratio of 90.6% improved 70 basis points year over year, driven by better performance in Medicare Advantage and Individual ACA. The adjusted operating expense ratio of 11.3% increased 90 basis points from the prior year, reflecting targeted one-time investments in capabilities and spending to advance business growth and quality initiatives.
Days in Claims Payable stood at 44.9 days as of September 30, 2026, an increase of 3.5 days year over year.
Segment performance
Elevance Health operates through two primary reportable segments: Health Benefits and Carelon.
Health Benefits
The Health Benefits segment encompasses Individual, Employer Group risk-based, Employer Group fee-based, BlueCard®, Medicare, Medicaid, and Federal Employee Program businesses.
| Metric | Q3 2026 | Q3 2025 |
|---|---|---|
| Operating Revenue | $43.4 billion | $42.2 billion |
| Operating Gain | $0.4 billion | $0.6 billion |
| Operating Margin | 1.0% | 1.4% |
Health Benefits segment operating revenue was $43.4 billion in the third quarter of 2026, an increase of $1.1 billion, or 3%, compared to the prior year quarter. Growth was driven primarily by higher premium yields and service fee revenue, partially offset by lower Medicare Advantage, Medicaid, and Employer Group risk membership. Operating gain was $0.4 billion, a decline year over year, reflecting the impact of targeted investments to support the long-term operating model, partially offset by improvement in the benefit expense ratio.
Medical membership of approximately 44.9 million as of September 30, 2026 decreased by 487 thousand compared to the prior year. The decline reflected lower enrollment in Medicaid, Medicare Advantage, and Employer Group risk-based businesses, partially offset by growth in Commercial fee-based membership.
Carelon
Carelon is comprised of CarelonRx and Carelon Services.
| Metric | Q3 2026 | Q3 2025 |
|---|---|---|
| Operating Revenue | $19.3 billion | $18.3 billion |
| Operating Gain | $0.9 billion | $0.8 billion |
| Operating Margin | 4.7% | 4.2% |
Carelon operating revenue was $19.3 billion in the third quarter of 2026, an increase of $1.0 billion, or 5%, compared to the prior year quarter. Growth was driven by CarelonRx product revenue and continued expansion of Carelon Services risk-based solutions. Operating gain totalled $0.9 billion, an increase of 17% year over year, reflecting strong performance of Carelon Services risk-based solutions and improved profitability of the specialty pharmacy.
Cash flow and balance sheet
Operating cash flow of $1.3 billion in the quarter increased $0.1 billion relative to the prior year, primarily reflecting favorable working capital dynamics. As of September 30, 2026, cash and investments at the parent company totalled approximately $2.4 billion. Total assets stood at $127,801 million as of September 30, 2026, compared to $121,494 million as of December 31, 2025.
During the third quarter of 2026, the company repurchased 0.8 million shares of its common stock for $330 million, at a weighted average price of $398.75 per share, and paid a quarterly dividend of $1.72 per share, representing a cash distribution totalling $373 million. As of September 30, 2026, the company had approximately $5.0 billion of Board-approved share repurchase authorization remaining.
FY26 guidance raised
On the back of continued operating momentum, Elevance Health raised its full-year 2026 guidance across key metrics. The new adjusted diluted EPS outlook of at least $29.00 exceeds the analyst estimate of $27.23. Additionally, the company now expects GAAP diluted EPS to be more than $22.00, surpassing the consensus estimate of $20.74.
| Guidance Metric | FY26 Outlook |
|---|---|
| Diluted EPS (GAAP) | More than $22.00 |
| Adjusted Diluted EPS | At least $29.00 |
| Operating Cash Flow | At least $6.5 billion |
Quarterly dividend declared
On October 20, 2026, the Audit Committee of the company's Board of Directors declared a fourth quarter 2026 dividend of $1.72 per share to shareholders. The fourth quarter dividend is payable on December 18, 2026 to shareholders of record at the close of business on December 4, 2026.
How will the continued decline in Medicare Advantage and Medicaid membership impact Elevance's long-term revenue stability and market share strategy?
What specific regulatory or competitive factors are driving the shift toward CarelonRx growth, and can this segment sustain its 17% operating gain increase?
Will the 90 basis point increase in the adjusted operating expense ratio prove temporary, or does it signal a permanent structural change in Elevance's cost base?
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