ELV · Elevance Health Inc.

Elevance Health reported first quarter 2026 results that exceeded expectations, with adjusted diluted EPS of $12.58, driven by strong operating results and approximately $1 per share of non-recurring investment income. Operating revenue grew 1.5% to $49.5 billion, supported by higher premium yields in the Health Benefits segment and growth in CarelonRx product revenue, partially offset by anticipated membership declines in Medicare Advantage, Medicaid, and Employer Group risk. The benefit expense ratio increased 40 basis points to 86.8%, reflecting elevated medical cost trend in Medicaid, partly offset by improved Medicare performance. The operating expense ratio of 12.8% included a $935 million accrual for potential CMS-related exposure and a $129 million business optimization charge; the adjusted operating expense ratio improved 20 basis points to 10.5% due to disciplined expense management. Health Benefits segment operating revenue rose 2.6% to $42.5 billion, but operating gain declined 2.7% to $2.2 billion due to higher medical costs. Carelon segment revenue grew 7.9% to $18.0 billion, driven by scaling of risk-based solutions and product revenue, though operating gain fell 3.8% to $1.1 billion on lower health plan membership and investment in risk-based capabilities. Operating cash flow surged to $4.3 billion from $1.0 billion a year ago, reflecting business strength and favorable working capital. The company returned $1.5 billion to shareholders through $1.1 billion in share repurchases (3.7 million shares at $304.68 average) and $376 million in dividends. Management raised full-year 2026 adjusted diluted EPS guidance to at least $26.75, supported by underlying business strength, actions to reduce medical costs, and increased visibility. GAAP diluted EPS guidance is at least $19.85, including the estimated financial impact of the CMS matter. The company reaffirmed operating cash flow guidance of at least $5.5 billion, inclusive of potential CMS payments. CEO Gail Boudreaux noted that first quarter results exceeded expectations, reflecting underlying business strength and improving claims experience, positioning the company for continued improvement.