Elevance Health Q3 2026 Earnings: Carelon Growth Supports Higher Guidance

Elevance Health (NYSE: ELV) reported Q3 2026 operating revenue of $50.44 billion, up 0.7% year over year, while diluted EPS increased 17.9% to $6.27 from $5.32. Carelon delivered higher operating profit, Health Benefits faced investment-related pressure, and the company raised its full-year earnings and operating cash flow guidance.

Core Financial Results

Operating revenue growth was modest because higher premium yields, CarelonRx product revenue, and service fees were partly offset by lower Medicare Advantage, Medicaid, and Employer Group risk membership. By revenue type, product revenue rose 4.8% and service fees increased 6.8%, while premium revenue declined 0.2%.

Underlying operating results were more mixed. The benefit expense ratio improved by 70 basis points, but operating expenses increased 9.1% as Elevance funded targeted one-time capability investments, business growth, and quality initiatives. Operating gain is the company’s segment performance measure and excludes items including investment income, interest expense, certain intangible amortization, and income taxes.

Business and Segment Performance

Health Benefits generated higher revenue but lower operating profit, while both Carelon businesses expanded revenue and operating gain. Carelon Services recorded the largest profit growth among the operating segments.

Health Benefits revenue benefited from higher premium yields and service fees, but targeted investments reduced operating gain. The improved benefit expense ratio, driven by better Medicare Advantage and Individual ACA performance, only partly offset that pressure.

Medical membership ended the quarter at 44.882 million, down 1.1% from a year earlier. Medicare Advantage membership fell 15.5%, Medicaid declined 4.9%, and Employer Group risk-based membership decreased 6.9%. Commercial fee-based membership increased 2.2%, providing a partial offset.

CarelonRx growth came from higher product revenue, while its operating margin increased 20 basis points to 5.3%. Carelon Services benefited from the continued expansion of risk-based solutions, lifting its operating margin by 80 basis points to 3.8%. Management also attributed Carelon’s profit growth to improved specialty pharmacy profitability.

Profitability, Cash Flow, and the Balance Sheet

The 70-basis-point improvement in the benefit expense ratio reduced medical cost pressure, but the operating expense ratio increased 90 basis points to 11.4%. The adjusted operating expense ratio was 11.3%, also up 90 basis points, reflecting targeted investments and spending on growth and quality programs.

Nine-month operating cash flow reached $7.512 billion, compared with $4.206 billion in the prior-year period. The improvement primarily reflected working capital changes, which contributed $2.784 billion in 2026 after using $2.753 billion in the comparable 2025 period. This nine-month figure is separate from the $1.3 billion generated during Q3.

As of September 30, consolidated cash and cash equivalents totaled $10.348 billion, while cash and investments at the parent company were approximately $2.4 billion. Medical claims payable stood at $18.438 billion, and days in claims payable increased by 3.5 days year over year to 44.9 days.

During the quarter, Elevance repurchased 0.8 million shares for $330 million at a weighted average price of $398.75. It also distributed $373 million through its quarterly dividend. Approximately $5.0 billion remained under the board-authorized repurchase program at quarter-end.

Non-Operating Income Lifted EPS While Segment Profit Slipped

Elevance’s reportable segments generated 2.0% less operating gain, yet shareholders’ net income increased 14.8% and diluted EPS rose 17.9%. Net investment income increased 65.9% to $1.037 billion, and the company said quarterly results included a net non-operating benefit of $1.85 per share.

A 2.7% reduction in diluted shares also helped EPS grow faster than shareholders’ net income. Adjusted diluted EPS still increased 15.9%, but adjusted operating gain remained approximately $1.3 billion and adjusted operating margin was unchanged at 2.7%. The difference between operating performance and per-share earnings is therefore important when assessing the durability of the quarter’s EPS growth.

Full-Year Guidance

Elevance raised its 2026 EPS and operating cash flow outlook, citing continued operating momentum. The company also stated that it expects at least 12% adjusted diluted EPS growth in 2027 from a higher 2026 earnings baseline.

The $26.75 baseline used for the 2027 growth outlook excludes nonrecurring net investment income and other non-operating items, as well as targeted one-time investments. It therefore differs from the full-year 2026 adjusted diluted EPS guidance of at least $29.00.

Recent Insider Transactions

The supplied insider data shows 13,513 shares purchased and 2,051 shares sold over the latest six-month period, resulting in net purchases of 11,462 shares across 17 total transactions. Total insider holdings were listed at approximately 409,880 shares; the transactions below are the recent non-zero purchases, sales, and derivative conversion included in the data.

The disclosed transactions should be viewed individually: stock purchases and sales differ from compensation-related awards or derivative exercises, and the data alone does not establish insiders’ views on Elevance’s outlook.

Risks Investors Should Monitor

• Membership contraction: Total medical membership fell 1.1%, including declines of 15.5% in Medicare Advantage and 4.9% in Medicaid. Continued enrollment pressure could limit premium growth even when pricing improves.
• Health Benefits margin pressure: The segment’s operating gain fell 27.5% and its margin declined 40 basis points as targeted investments weighed on profitability. Future results depend partly on whether medical cost improvement can continue offsetting higher spending.
• Operating expenses are growing faster than revenue: Consolidated operating expense increased 9.1% against 0.7% operating revenue growth, pushing the operating expense ratio higher.
• Reliance on non-operating benefits: Q3 EPS included a $1.85-per-share net non-operating benefit. The company’s separate 2026 earnings baseline excludes nonrecurring investment income and other non-operating items, underscoring that not all quarterly EPS support is recurring.
• CMS-related exposure: Nine-month non-GAAP adjustments included a $935 million accrual tied to Elevance’s current estimate of potential exposure involving historical Medicare Advantage risk-adjustment data. Although it was not a Q3 charge, the matter remains relevant to full-year results.

Summary

Elevance Health’s Q3 2026 results combined modest revenue growth with better medical cost performance, expanding Carelon profit, and higher cash generation. Health Benefits profitability remained under pressure from targeted investments and declining risk-based membership, while non-operating income helped EPS grow faster than segment operating gain. The main issues to watch are whether Carelon can maintain its momentum, Health Benefits margins stabilize, and operating performance supports the company’s raised 2026 guidance and 2027 growth outlook.