Elevance Health 8-K

EarningsGuidance raisedImpairment / charge

Government medical costs squeezed margins despite improved Individual ACA performance; management raised FY2026 guidance.

Filed 2026-07-15 06:01 ET

Summary

Q2 2026 results with raised FY2026 guidance. Operating revenue grew 0.8% Y/Y, while operating gain and shareholders’ net income declined; management cited elevated medical costs and targeted investments. Favorable benefit expense performance and an ≈$0.80 per-share net below-the-line benefit supported EPS. Elevance also expects at least 12% adjusted EPS growth in 2027 from its 2026 earnings baseline.

Key Figures

Metric Q2 2026 Q2 2025 Y/Y
Operating revenue $49.8B $49.4B 0.8%
Operating gain $1.76B $2.43B (27.3)%
Adjusted operating gain, non-GAAP $1.82B $2.49B (26.9)%
Net income $1.45B $1.74B (16.6)%
Shareholders’ net income $1.46B $1.74B (16.1)%
Adjusted shareholders’ net income, non-GAAP $1.62B $2.0B (18.7)%
Diluted EPS $6.71 $7.72 (13.1)%
Adjusted diluted EPS, non-GAAP $7.45 $8.84 (15.7)%
  • Revenue growth reflected higher premium yields and CarelonRx product revenue, partly offset by anticipated membership declines. The benefit expense ratio was 89.7%, up 80 bp, with elevated medical cost trend in Government businesses partly offset by improved Individual ACA performance. Total operating margin fell 140 bp to 3.5%.
  • Operating cash flow was $1.9B for the quarter, reflecting timing of a state Medicaid pass-through payment and underlying business strength. Parent-company cash and investments were ≈$2.1B at quarter-end.
  • Q2 repurchases: 0.7M shares for $234M at a $344.62 weighted-average price; diluted shares declined 3.5% Y/Y. The company paid $1.72 per share in dividends, totaling $373M. Six-month results included a $935M accrual for potential exposure related to historical Medicare Advantage risk-adjustment data and $129M in business optimization charges.

Guidance

Metric Period Guidance Prior Direction
Diluted EPS, GAAP FY2026 At least $20.10 — Raised
Adjusted diluted EPS, non-GAAP FY2026 At least $27.00 — Raised
Operating cash flow FY2026 At least $6.0B — Raised
Adjusted diluted EPS growth, non-GAAP FY2027 At least 12% Y/Y from the 2026 earnings baseline — —

Investor Takeaways

  • Track medical cost trends and operating margins in upcoming results; elevated Government medical costs weighed on the quarter.
  • FY2026 delivery against the raised adjusted EPS and operating cash flow floors will inform the 2026 earnings baseline for the stated 2027 adjusted EPS growth outlook.

The summary is written by an AI model reading the filing.

Model 005 · prompt 01d34d48e3

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