Key Highlights
- Elevance Health anticipates 2026 revenue to decline slightly amid persistent medical cost pressures.
- Full-year profit forecast falls below Wall Street expectations.
- The company sees 2026 as a year of execution and repositioning across key government-backed plans.
Elevance Health on Wednesday said it expects revenue to fall slightly in 2026 and forecast full-year profit below Wall Street estimates. This signals that elevated medical costs will continue to weigh on the health insurance industry.
Health insurers have faced sustained cost pressures over the past two years, driven by increased demand for behavioral health services and the rising use of specialty drugs across government-backed healthcare programs. While cost trends in the most recent quarter remained elevated, Elevance said they were largely in line with internal expectations.
Despite near-term challenges, the company said it is focused on improving operational performance through the remainder of 2025 and into next year.
Strategic Repositioning Across Government Plans
Chief Executive Officer (CEO) Gail Boudreaux described 2026 as a year focused on execution and repositioning across Medicaid, Medicare Advantage, and Affordable Care Act (Obamacare) plans. She noted that the company’s forecast reflects anticipated policy changes and pricing decisions aimed at improving the mix of members enrolled in its plans.
Boudreaux added that Elevance remains confident in its ability to return to at least 12% adjusted earnings per share growth in 2027, offering reassurance to long-term investors.
Shares of Elevance rose more than 4% in early trading, reversing premarket losses. Analysts said the rebound likely reflected investor relief following recent sector-wide pressure tied to Medicare Advantage payment updates.
Medicaid and Medicare Challenges Persist
Elevance said proposed government payments for Medicare Advantage plans do not keep pace with the rising costs of care or increased medical service utilization among members aged 65 and older. The company also cited continued pressure in its Medicaid business, which analysts have flagged as a key drag on earnings visibility.
Total operating revenue is expected to decline by a low-single-digit percentage in 2026, reflecting a low-double-digit membership decline in some plans. This is expected to be partially offset by higher premiums and growth in Carelon, Elevance’s health services segment.
Medical Loss Ratio and Earnings Outlook
Elevance reported a medical loss ratio of 93.5% for the quarter, slightly above analyst expectations, reflecting higher utilization in Affordable Care Act-compliant plans.
The company expects its 2026 medical loss ratio to be approximately 90.2%, plus or minus 50 basis points, reflecting management’s prudent view of cost trends.
Elevance forecast 2026 adjusted profit of at least $25.50 per share, below analyst estimates of $26.90. However, its fourth-quarter adjusted profit of $3.33 per share exceeded expectations, even as quarterly revenue narrowly missed forecasts.